* Didn’t get to this last week, but here’s COGFA…

August base revenues deposited into the State’s General Funds slowed from July’s strong start, with a slight decline of $34 million. However, when combined with July’s base growth of $396 million, revenues are up a combined $362 million to start the fiscal year, perhaps indicating a timing element to the first two month’s collection activity. The value of the August decline falls to -$214 million when factoring in last August’s $180 million in ARPA reimbursements. August had the same number of receipting days as last year.

Overall, the value of the increases/decreases in August were relatively modest. Personal Income Tax receipts experienced the largest decrease with a decline of -$38 million or -$36 million when accounting for distributions to the Refund Fund and the Local Government Distributive Fund (LGDF). Corporate Income Taxes also slowed from its strong July numbers with a decline of -$23 million, or -$17 million on a net basis. Other State tax sources with declines include Other Sources [-$26 million]; Public Utility Taxes [-$14 million]; and the Corporate Franchise Tax [-$5 million].

The August declines were mostly offset by gains in several other State revenue sources. The largest year-over-year improvement came from Interest on State Funds & Investments, which grew $23 million thanks to comparatively higher interest rates (see page 4). Insurance Taxes bounced back from its low July numbers with a gain of $20 million. In addition, Inheritance Tax receipts were $18 million higher. Sales Tax receipts saw modest improvement with growth of $15 million. But this growth falls to only +$3 million when accounting for the non-General Funds distributions to the Road Fund and certain other transportation funds.

* Context from the Civic Federation…

Total General Funds resources are expected to decrease from FY2023 year-end estimates by approximately $2.5 billion, or 4.7%, from $53.1 billion to $50.6 billion. The largest source of this decrease is due to the end of federal COVID-19 recovery funding directed to the General Funds. During FY2023 the General Funds received transfers of $1.06 billion in American Rescue Plan Act (ARPA) funds and $1.36 billion in Coronavirus Urgent Remediation Emergency (CURE) funding, both of which were allocated by the federal government as part of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF). The FY2024 budget does not include any appropriations from these federal funding sources within the General Funds. Additionally, the amount of refund fund transfers—accounted for in the “Other Transfers” line—decreased significantly, by nearly $1.2 billion in FY2024, from an unusually high amount in the FY2023 budget due to above-average income tax receipts in that year.

Net Corporate Income Tax is also expected to decline by 12.2%, or $712 million. The decline is due to a reallocation in fund distributions that will occur in FY2024 as part of the Department of Revenue’s annual statutory reconciliation of business-related tax payments, which will result in a decline in corporate income taxes and an increase in individual income taxes. The decrease is offset by an estimated increase in Net Individual Income Tax receipts of nearly $2 billion. Sales Tax, Public Utility Tax and other revenues are expected to decline by 0.3%, 4% and 9.1%, respectively.

General Funds receipts from other State-source revenues are projected to decrease by $176 million, or 0.4%. Lottery, gaming and adult-use cannabis revenues transferred into the General Funds are all estimated to increase over FY2023. Other Transfers are expected to decrease in FY2024 by $1.2 billion, or 51.2%, again based on a larger-than-usual transfer into the General Fund from the Income Tax Refund Fund in FY2023. Federal sources, aside from ARPA and CURE funding, are expected to increase by $80 million, or 2.1%, to $3.9 billion.