* Commission on Government Forecasting and Accountability’s April report…

In the important revenue month of April, General Funds receipts totaled $6.566 billion, a $373 million or +6.0% increase over last April. While this is welcomed growth to State coffers, the overall increase seen this month is largely in line with the Commission’s latest forecast. In other words, there is no “April Surprise” from final income tax payments contained in this month’s numbers that will significantly modify this year’s revenue outlook. The month benefitted from two extra receipting days, as compared to the same month of last year

This month’s gains were led by a sharp rise in Individual Income Tax revenues, which grew $744 million or +20.2% this month. On a net basis, when subtracting out distributions to the Income Tax Refund Fund and the Local Government Distributive Fund, the growth totaled $626 million or +20.0%. While impressive on the surface, the sizeable growth here was largely anticipated due to several reasons: continued moderate growth from withholding tax payments; the fourth of five “true- up” deposits reallocating business-related tax receipts through individual income tax distributions; an expected boost in final tax payments in April due to elevated levels of taxable interest (from comparatively higher interest rates of investment accounts); the expected growth in capital gains income due to strong market conditions in TY 2023; and the two extra receipting days this month.

A large portion of these gains, however, was offset by significantly weaker Corporate Income Tax receipts, which fell $345 million or -19.7% in April. This is a net decline of $268 million or -19.2%. While these receipts were expected to fall to a certain degree in April due to the negative impact of the fourth “true-up” reallocation on this revenue source, the extent that these revenues declined this month was somewhat surprising. It is speculated that the recent expiration of the net operating loss deduction limitation may have impacted estimated tax payments this month, thereby contributing to this source’s comparative falloff. However, more details are needed before a definitive assessment can be made. […]

Year to Date

Incorporating April’s revenues, General Funds receipts now total $44.2 billion for FY 2024 with two months remaining in the fiscal year. This figure is $1.203 billion or 2.8% above last year’s ten- month total. From a base revenue perspective, the cumulative growth is a tad lower at +$1.086 billion or +2.6% when adjusting out the $881 million in combined “one-time” revenues received in FY 2024 and the $764 million in one-time federal receipts received through April from last fiscal year.

As has been the case throughout the fiscal year, most of FY 2024’s gains have come from the Personal Income Tax. Through April, these receipts are up $1.960 billion or +8.4% [net growth of $1.622 billion or +8.2%]. While the growth is impressive, this cumulative total has been aided by “true- up” adjustments totaling approximately $862 million. If these values are removed from the total, the year-to-date net growth rate is a much more modest +3.8%. […]

Estimate Overview

As noted at the beginning of this revenue section, the overall increase seen in April is largely in line with the Commission’s latest forecast expectations. Over the next week, the Commission will be reviewing the latest data from the Department of Revenue and the Comptroller’s Office to see what tweaks need to be made to the Commission’s revenue forecasts for FY 2024 and FY 2025. While some adjustments (both positive and negative) to individual revenue lines is possible, these potential changes may not necessitate an official revision, as it appears, at this time, that the bottom-line revenue totals will not see a significant modification. This assessment is based on current law and is subject to change as more information becomes available. Of course, any pertinent changes to legislation over the next month impacting tax revenues would be cause for further adjustments to be made.

It’s been a crazy four years for revenue forecasters. Maybe - maybe - things are becoming more predictable now.