One year removed from receipts dropping $2.74 billion as the pandemic abruptly manifested in April 2020 revenues, base general funds revenues in April 2021 grew $1.779 billion. Continued strong performance from both personal income and corporate income tax receipts were again complemented by an impressive month for sales tax revenues. In addition, federal sources also posted an impressive monthly gain. The number of receipting days were the same as last year.
For the month, gross corporate income taxes jumped $767 million, or $614 million on a net basis. Much of the comparative gain can be attributed to last April’s delayed final payments, which fell into early FY 2021. In addition, preliminary analysis suggests that corporations, in the face of pandemic disruptions, quickly adjusted down their estimated payments in the first half of tax year 2020. However, as the economy recovered much quicker than originally expected, those lower estimated payments were insufficient to meet tax year 2020 liabilities and higher final payments have been the result. [Further analysis of component data is needed to confirm this view].
Gross personal income taxes also grew substantially in April as receipts rose $619 million, or $533 million on a net basis. A couple of key reasons likely comprise this level of growth. While the deadline for final personal income tax payments were extended, as they were last year, they were only done so for an extra month [as compared to last year’s three-month extension]. Consequently, taxpayers were less incentivized to put off filing their final return. Preliminary estimated payments, whose deadline was not extended, but reflecting anticipated economic improvement, also appear to have been very strong [again, component breakdowns of monthly data will have to be examined before definitive conclusions can be made].
Gross sales tax receipts jumped $301 million, or $297 million on a net basis. This dramatic year-over-year gain is the consequence of the manifestation of the economic shutdown in last April’s sales tax receipts, coupled with the timing of the most recent stimulus payments and further increase in consumer confidence. […]
Year To Date
Excluding borrowing related activity, through the first ten months of the fiscal year, base receipts are up $4.920 billion. In addition to a surge in federal sources, that growth also reflects the timing of income tax receipts related to last year’s  filing deadline extension, as well as the positive trajectory of underlying economic conditions. Through April, combined net income tax receipts are up $3.406 billion. While approximately $1.3 billion of those gains continue to be attributed to the shift of FY 2020 final payments into early FY 2021, stronger than previously expected income tax performance continues to impress. Also viewed positively is the continued upward trend of sales tax receipt performance as net receipts are up $557 million. Only now beginning to compare against those months most impacted by the economic shutdowns of a year ago, sales taxes seem to be reflecting positive consumer reactions to stimulus payments, improving job picture, and stronger consumer confidence. […]
While the full story of FY 2021 revenues has yet to be written, given the onset of the pandemic, receipts clearly have performed much better than any prognosticator could have foretold one year earlier. Despite periodic upward revisions in the revenue projections throughout the course of the fiscal year, each time those updated expectations have been met and exceeded. That said, as illustrated by the previous section which demonstrates the extreme volatility of some key revenue sources, often times swings in one direction are met with opposing subsequent pressure, particularly when viewed in terms of year-over-year growth measures. Underlying economic performances of the major revenue sources are sometimes trumped by aspects of receipt timing, tax policy changes at the state and/or sometimes federal level, and other unforeseen extraneous events. While uncertainty is less heading into upcoming FY 2022 than last year, it still is much higher than normal. The unwinding of the various stimulus programs such as direct stimulus payments, augmented unemployment benefits, rental assistance and other business and consumer focused benefits, will likely create some headwinds related to growth rates. All that without mentioning the specter of the return of the virus in the fall and/or resistant variant strains.
Remember, this is for the current fiscal year. But this will likely cause at least some readjustment in revenue forecasts for next fiscal year during budget talks.