* From the Commission on Government Forecasting and Accountability…

General Funds revenues took a dramatic turn in April 2023 as receipts fell a stunning $1.844 billion as compared to the same month the year prior. Despite having the second highest monthly revenue total on record, this month’s General Funds total of $6.193 billion was well short of the historic monthly high of $8.037 billion received a year ago. Greatly contributing to the decline was April 2023 having one less receipting day than April 2022.

The main contributor to the falloff was Personal Income Taxes, which fell $1.763 billion below last April’s levels, a drop of $1.507 billion on a net basis. While a substantial decline was anticipated, as final tax payments were expected to struggle to repeat last year’s extraordinary performance, the extent of the decline is much steeper than the Commission had projected. Midway through April, revenues were on pace with last year with a month-to-date total of $1.0 billion. However, this changed drastically over the last ten receipting days of the month as only $2.7 billion was receipted in the second half of April 2023 compared to the whopping $4.4 billion that was receipted at the end of April 2022. This discrepancy was greatly enhanced by an extra receipting day in April 2022 where $553 million in gross personal income taxes were receipted, thereby contributing to a year-over-year 32.4% decline in April revenues. [Further details behind this sharp decline and a history of April receipts are provided on page 13 of this briefing].

Corporate Income Tax receipts were also down in April, but not nearly as severe as personal taxes, with a decline of $94 million or down $66 million on a net basis. Considering the comparatively high levels from a year ago, the extent of the corporate income tax declines here is better than anticipated. Sales Tax revenues slowed again in April with a year-over-year decrease of $5 million, a drop of $31 million when adjusting for the nongeneral funds distributions to the Road Fund and to other transportation funds. […]

The substantial declines in April erased nearly all of the growth accrued throughout the fiscal year. With only two months remaining in the fiscal year, General Funds receipts in FY 2023 are now only $132 million above last year’s pace. In comparison, at the end of February, FY 2023 receipts were $2.5 billion higher than FY 2022 year-to-date levels, which shows the extent that revenues have fallen over the last two months. When removing the increase of $325 million from one-time ARPA reimbursement funds, “base” receipts in FY 2023 are now actually down $193 million through April.

Again, the driver of this sharp decline is Personal Income Tax receipts, which is now $1.430 billion behind last year’s levels on a gross basis [-$1.241 billion on a net basis]. Year-to-date gains in the majority of the other State sources have helped soften this dramatic falloff. Despite the April declines, Corporate Income Tax receipts remain $467 million above last year’s levels [+$398 million on a net basis]. Sales tax receipts remain up $544 million [+$203 million net] despite its recent slowdowns.

* COGFA has now updated its FY23 revenue forecast…

The steeper-than-expected drop in General Funds revenues necessitates that the Commission make a downward adjustment of $728 million to its forecast, reducing the FY 2023 outlook to approximately $51.2 billion.

* But its FY24 forecast will not be significantly revised…

In regard to FY 2024, in light of April’s tax performance, the reduced revenue expectations for FY 2023 instantly created downward pressure on the Commission’s FY 2024 revenue projections. Despite this, the Commission will not be making a significant change in the overall FY 2024 general funds estimate, thereby keeping the estimate at approximately $50.4 billion. While the appropriate adjustments to the revenue base have been made in response to April’s revenue falloff, the primary reason that the FY 2024 estimate will not be effectively altered relates to the implementation of future tax disbursement changes by the Department of Revenue.

* Putting it into perspective…

The CGFA FY 2023 updated forecast of $51.176 billion is now $183 million below the GOMB February FY 2023 estimate of $51.359 billion. CGFA’s May FY 2024 projection of $50.446 billion is $729 million below CGFA’s FY 2023 updated forecast.

CGFA’s updated FY 2024 forecast is now $501 million higher than the Governor Office’s February FY 2024 estimate of $49.945 billion. However, it should be noted that the GOMB estimate would not reflect the recent information from the Department of Revenue and the expected modification of income tax disbursements into FY 2024.