Winter is Coming… Yet Revenue Remains Hot

November 21, 2022

On Thursday, November 17th, the Tax Commission released their Revenue Summary report through the first four months of the fiscal year (FY), in conjunction with the Monthly Revenue Snapshot produced by the Legislative Fiscal Analyst and Governor’s Office of Planning and Budget. From July to October of FY 2023, collections to the General Fund are up 14.5 percent over FY 2022. Similarly, the Income Tax Fund posted 15.4 percent year-over-year (YoY) growth. Collections to the General Fund have been primarily driven by Sales Tax while the Income Tax Fund has been spurred by its namesake revenue source.

Earlier this week, the Executive Appropriations Committee (EAC) received the preliminary Financial Highlights report for FY 2022 from the Division of Finance. The report details surpluses for the fiscal year ending June 30th, 2022. As opposed to a forecasted surplus, this report details cash already collected, which can be appropriated during the 2023 General Session for new projects, programs, or set aside in preparation for an economic slowdown. (When revenues are above the 10-year trend, Legislative economists advise treating them as one time, to avoid appropriating them for ongoing expenses.) Also included in the report are YoY revenue changes by source. Standouts include Federal Mineral Lease revenue (up 54.2%), Oil, Gas and Mining Severance Taxes (up 153.1%), and Corporate Income Tax (up 27.4%). The Financial Highlights details the amount of funding left over from the budget appropriated by the legislature; the state ended the year 14.6% under budget statewide.

December’s EAC agenda will include stress testing results and adoption of updated revenue estimates for FY 2023 and FY 2024. By statute, stress testing is part of a three-year cycle of long-term fiscal sustainability analysis. Stress testing examines the economy for a 5-year period, determining to what extent the state of Utah is prepared to handle an economic downturns varying in degrees of severity. Consensus revenue estimates will include budgets for one-time and ongoing revenue, which legislators can use during the 2023 General Session.

The reports referenced in this post are available at the links below:
November Revenue Snapshot (FY 2023)
Tax Commission Revenue Summary (Period 4, FY 2023)
Revenue Snapshot Yearend FY 2022
TC-23 (Yearend, FY 2022)
Revenue Publications Archive