Many state budgets are closing out their fiscal year better than projected, driven by a stable economy and overflow effects of federal income tax changes.
Governing reports that state budgets — many of whom end their fiscal year in June – are exceeding cautious projections. They cite a somewhat better-than-forecasted economy, and state-level effects of income tax reforms as major drivers of this effect. From the article:
Much of the better-than-expected performance is being credited to a continually improving economy and booming stock market. Corporate income tax revenues posted a more than 3 percent increase after two straight years of declines.
States also saw a spike in personal income tax collections as many high-income taxpayers rushed to take advantage of expiring federal tax breaks under the December overhaul. “States are still working to untangle and better understand these trends and the impact of the federal tax law on their revenues,” the NASBO survey reported.
The article cites a survey by the National Association of State Budget Officers, reviewing the fiscal posture of each state’s budget.
Maryland has not released indications of its expected close-out, but did place restrictions on a $200 million segment of anticipated income tax returns as a set-aside for future education spending, in anticipation of some state-level effect of the federal income tax reforms.