Revenues Strong but Tempering as Fiscal Year 2022 Comes to a Close

July 15, 2022

On Thursday, July 14th the Tax Commission released their preliminary figures for year-end, Fiscal Year (FY) 2022. The Revenue Summary (TC-23) report indicates that total tax revenues were up 14.7% over FY 2021. According to the Revenue Snapshot, legislative and executive branch economists indicate that these figures surpass expectations, while also highlighting that currently reported collections are not used to calculate a fiscal surplus (due to adjustments made during close out), and that several economic factors indicate a cooling macro-economic environment.

Activity in the extraction industry continues to be a highlight for general fund contributors, with Oil and Gas Severance revenue at $77.4 million, a collection level not seen since FY 2015, and a 250% increase over FY 2021. Despite consumer sentiment reaching the lowest level on record, Sales and Use tax posted a 17.5% growth through 12 months of the fiscal year, moderating from the 22.2% growth seen last fall.

Education Fund collections remain strong, representing a 27.6% increase when adjusting for tax filing delays that pushed 2020 income filings into FY 2021. These collections likely reflect conditions from 2021’s housing and stock markets, which contributed to increased capital gains (up 26.4% year-over-year). Changes in the stock market environment and increased interest rates from the Federal government are likely indicators that this exorbitant growth will slow in the coming year.

While Utah’s fiscal position is promising, larger factors present a unique budgeting challenge for policy makers, including persistent and increasing inflation, supply chain challenges associated with both the pandemic and the Russian invasion of Ukraine, tapering impact of fiscal stimulus, and other factors previously mentioned (including interest rates, housing market changes, and consumer confidence). Expectations from economists are that this cocktail of economic influences will be reflected in slowed collections in the coming fiscal year.

Reports referenced in this post are available at the links below:
Preliminary Yearend Revenue Snapshot (FY 2022)
Tax Commission Revenue Summary (Period 12, FY 2022)
Revenue Publications Archive