Haunting Inflation Brings Strong First Quarter Collections

October 19, 2022

In the first three periods of Fiscal Year (FY) 2023, collections have averaged 10.4% year-over-year (YoY) growth to state funds, exceeding consensus forecasts released in May. Inflation appears to have aided the General Fund in its 16.4 percent growth over the same period last year, while it may be negatively impacting the Transportation Fund.

Collections from Sales Tax totaled $881 million through the first quarter of the fiscal year, exceeding the range of projections by over $70 million. Oil and Gas Severance Tax (a General Fund contributor) continues to post strong numbers, even after having a banner FY 2022. In the first three months of the fiscal year, Oil and Gas Severance Tax is up 149% over last October’s collections.

The Income Tax Fund (previously known as the Education Fund) increased collections by 9.8 percent when compared to the first quarter of FY 2022. Corporate Tax shrank by 2.6% this year, dropping from $186 million in FY 2022, to $181 million this year. By comparison, this is still more than half of the total Corporate Tax collected in all FY 2020, and $44 million more than pre-pandemic collections at this point in the fiscal year.

The Transportation Fund totaled just 0.2% YoY growth, a product of growing Special Fuel Tax and lagging Motor Fuel Tax. It remains to be seen what impact these collections will have on Oil and Gas production in the coming year. In November, state economists will re-estimate revenue projections for the current fiscal year, and for the budget year (FY 2024). Consumer sentiment, persistent inflation, the Russia/Ukraine conflict, and other factors will all be considered when estimating revenue collections through June. These updated projections will guide appropriators in their work during the General Session.

The reports referenced in this post are available at the links below:
October (Q1) Revenue Snapshot (FY 2023)
Tax Commission Revenue Summary (Period 3, FY 2023)
Revenue Publications Archive