With only four more periods in the fiscal year (excluding close out), Legislative economists watch with anticipation to see how close their brackets revenue projections are to the yearend tally. In the latest Tax Commission Revenue Summary, a picture of mixed performance is seen across the state’s revenue streams, with some surprising upsets and strong advances. The Income Tax Fund continues to shine, despite Corporate Taxes being down 20% compared to this time last year. The March Revenue Snapshot, published jointly by the Governor’s Office and Legislative Fiscal Analyst, describes revenues to all sources just inching past the annual growth rate, by 0.8%. A break down of the matchups is summarized below.
General Fund
This month the General Fund showed moderate growth, with Sales and Use Tax posting a 3.1% increase. However, other sources to the General Fund fell by 6.3%, meaning that the General Fund only grew 1.3% year-over-year (YOY). Like last month, a key factor in the “other sources” decrease is from investment income, due to lower interest rates. This is compounded by the fact that the state is spending down funds accumulated post-pandemic, resulting in lower balances that would otherwise generate interest.
A caveat to this month’s General Fund collections are referees from the Tax Commission reviewing key plays related to earmarks transfers (related to water and transportation), due to those sources posting after the 5-day accrual period. The outcome of this official review will likely bring General Fund growth closer to 0.5%.
Income Tax Fund
The Income Tax Fund collections grew 2.5% through March, with Individual Income Tax being the MVP, posting a 4.8% increase. As mentioned in January’s post about timing, the current period included an extra Friday when compared to the previous year’s report, meaning that there was likely an additional pay period in the current year’s collections. (TGIF?) As mentioned, Corporate Tax collections are roughly $70 million lower when compared to March of 2024, though this revenue source comprises only about 10 percent of the total Income Tax Fund.
Transportation Fund
The Transportation Fund retains the title of the budgetary Cinderella, with Motor Fuel Tax revenues up by 9.2%, and Motor Vehicle Registration Fees increasing 25.0% YOY. In total, the Transportation Fund is up 12.2% over FY 2024.
Key Takeaways:
As with any fiscal year, there are standout players and underperformers. Economists will wait until May to see how close their picks are, when April’s filing deadline will start to appear in collection reports. (And if their brackets were as well informed as their consensus revenue projections, our economists would all be in Las Vegas right now.)
The reports referenced in this post are available at the following links:
March Revenue Snapshot (FY 25)
Tax Commission Revenue Summary (Period 8, FY 2025)
Revenue Publications Archive