State Reduces Revenue Estimates by $53 Million

The State Board of Revenue Estimates just voted to reduce the State’s revenue projections for fiscal 2018 by $53 million – a .3 percent decrease. Fiscal 2019’s first estimates indicate an estimated reduction of $73.5 million.

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Weak sales tax revenues drove the downward revenue projections, due to sluggish income growth, additional purchasing online and “tepid consumer confidence” resulting from uncertainty about federal actions, according to a statement by the Comptroller’s Office.

From the Comptroller’s prepared statement:

Following a very brief but relatively successful holiday season, sales tax revenue declined this past spring. Over the last several fiscal years, we’ve barely attained 2% growth in sales and use tax revenues. Our prior estimates had generally held that the State would at least see 3% to 3.5% growth. But we know these figures are influenced in large part by the meager income growth that we continue to experience, and the political uncertainties coming out of Washington.

We continue to experience the slowest and most tentative economic recovery of our lifetimes. And as I’ve said in the past, I think that it would be imprudent to expect a return to pre-recessionary patterns of economic expansion.

To be prepared for the fiscal uncertainties of the future, I believe fiscal policymakers need to consider this rate of growth in our revenues as the “new normal,” if you will. And I would encourage my fellow state leaders to adopt this approach when making spending and fiscal policy decisions in the months ahead.

The Board also indicated that individual income tax revenue is projected at $9.8 billion, a 4.1 percent increase from the current fiscal year, for fiscal 2019.