Early March tax revenue numbers could show promise of turnaround
Preliminary reports for Idaho income and sales tax revenue for March suggest that the state may exceed its forecasted collections. That would reverse the trend of revenues coming in below projections that’s persisted for several months and ease concerns about the state budget. Final March tax revenue numbers won’t be available until the end of this month, but two lawmakers who saw rough drafts of the report say the state could bring in at least $10 million more than expected.
“They are up, and they are a good sign,” said Sen. Dean Cameron, R-Rupert. “It may be the first time that we’ve hit (state economist) Mike Ferguson’s projection and exceeded it in a number of months.” Cameron co-chairs the Joint Finance-Appropriations Committee (JFAC), which writes the state budgets.
Rep. Maxine Bell, R-Jerome, the other chair of JFAC, agreed that the positive early tax report is good news. “I’m delighted,” she said. Bell added that the revenue report for March could counter February numbers that were $16.2 million below Ferguson’s projections. “February and March are not big months (for tax revenue) and you don’t worry much about them. But when February came in $16.2 million down, you worry. So, March just almost made that up.” Bell said that the preliminary numbers show that the state sales tax and individual and corporate income taxes are all above expectations.
The preliminary March numbers are $15.1 million above expectations, according to Wayne Davis, executive director of the Idaho Association School Administrators. That number could shift by several million before Ferguson releases a final revenue report.
April is the largest month in tax collections, and revenue numbers from April remain critical to the current and next state budget. In March, the state expected to collect $114.9 million. In April, that amount triples to $373.5 million, due to the April 15 income tax filing deadline. “April and June will be the telling months,” Cameron said. “If April’s numbers are bad, the governor will have to pull from the reserves for [next year], which is already a tough budget.”
The budget put together by lawmakers would allow Gov. Butch Otter to transfer up to $107 million to plug a budget gap. That money is already set to be spent in the next budget, which begins July 1, so mending a hole in the current budget could open up a hole in the next one. Possible solutions to fix the next budget include holdbacks to state agencies from the governor or a special session to examine spending cuts or revenue increases, including new taxes. With the positive preliminary March tax revenue numbers, there would be a cushion of at least $30 million before the governor would need to dip into reserves. Revenues from the next three months could deplete or enlarge that cushion.