On Monday, November 16th, the Tax Commission released the TC-23 revenue summary, along with the GOMB/LFA Revenue Snapshot, detailing collections through the first four months of Fiscal Year 2021. Similar to last month’s report, important caveats exist within the income and sales collection figures, and also year-over-year comparisons. October of 2019 was the first month that the state collected sales tax from marketplace facilitators (such as eBay); the lag between collections and reporting leaves sales tax with a somewhat artificially inflated growth rate, posting a 10.2% increase over the same period last fiscal year. This does provide the state with an idea of the effect of marketplace facilitators, which may have impacted sales tax revenues more than was previously anticipated. Next month’s report will provide a clearer view on year-over-year comparisons.
The Education Fund revenues from income taxes totaled just over $2 billion through November 1st; the growth rate moderated slightly, dropping by 30 percentage points compared to last month. It is expected that the income tax growth rate will continue to temper over the course of the fiscal year, as these figures include income taxes which would have normally been received during the previous fiscal year.
Transportation Fund revenues, having fewer provisos than the other two state funds, are trending positive and are within the expected target range, posting a 4.9% growth rate over last year’s collections.
Current revenues to both the Education and General Fund tell a story of economic activity which took place in previous months, due to the timing delay in collections and reporting. Expectations for both sales and income tax are that the growth rates will normalize to within target ranges. The outlook for federal stimulus and the course of the pandemic will also heavily influence these two state funds.