According to the Utah State Tax Commission’s preliminary 2021 fiscal year-end TC-23 revenue summary and an accompanying Revenue Snapshot from the Office of the Legislative Fiscal Analyst and the Governor’s Office of Planning and Budget, preliminary data show total state revenues up 30.5 percent at the end of FY 2021 compared to FY 2020. This increase surpasses economists’ expectations and indicates strong economic growth coming out of the COVID-19 pandemic and economic downturn. However, there remains considerable uncertainty regarding the extent to which unprecedented federal stimulus throughout the fiscal year has buoyed revenues and created a one-time bolster effect that will not aid revenues moving forward. All year-end numbers are tentative at this point pending final accounting adjustments. Such adjustments could include deposits to rainy day funds and allocations to earmarked restricted funds, which may decrease final General and Education Fund numbers.
General Fund collections grew 16.5 percent on a year-over-year (YoY) basis, compared to a target of 9.6 percent. Taxable sales are up 20.0 percent YoY, with some of the hardest-hit sectors experiencing dramatic bouncebacks, such as transient room taxable charges up 246 percent and restaurant taxable charges up 47.7 percent YoY. Two rounds of stimulus checks, coupled with pent-up demand being released as the economy gained steam, bolstered General Fund collections in FY2021.
Education Fund collections grew by 41.3 percent YoY, compared to a target growth rate of 27.9 percent. While individual income tax grew by 53.3 percent, corporate income tax hit an astonishing 108.1 percent YoY growth rate. Once again, the effect of federal stimulus legislation is at play in Education Fund collections; loans enabled businesses to keep employees on their payrolls, and unexpectedly high consumer spending likely aided income tax collections as well. Additionally, due to the delay in the income tax filing deadline in 2020, the YoY growth rate does not include total 2020 collections, and so should be interpreted cautiously.
The numbers presented here and in the attached reports will change in the coming weeks, as state accountants make adjustments and close the books on the fiscal year. Thus, in spite of significant growth in many areas of collections, potential surplus amounts will not be estimated until later in the calendar year.
The reports referenced in this post are available at the links below:
TC-23 Revenue Summary (Year-end, FY 2021)
Revenue Snapshot – July 2021 (FY21)