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* Commission on Government Forecasting and Accountability’s latest report…
When the Commission released its FY 2025 revenue estimate in March, it noted that “if income tax revenues come in strong during the upcoming final tax period, and if other revenue sources, such as the sales tax, continue to improve, the Commission could potentially make another upward revision in May.” As discussed earlier in this publication, April revenues did indeed come in above expectations. While the level of growth is only moderately above initial projections, the revenue gains were high enough that a modest upward revision could be made.
As shown in the table below, the Commission is increasing its overall FY 2025 revenue total by $317 million from $53.614 billion to $53.931 billion. Due to the solid performance of many of the State sources over the past couple of months, the Commission is increasing the FY 2025 revenue projection for most revenue categories, though the increases are relatively minor (between 0.4% and 2.1%). Combined, the upward adjustment for these State sources is $664 million.
However, offsetting a large portion of these upward adjustments is a negative adjustment to the Federal Sources line. As discussed on pages 2 and 6 of this publication, revenues from Federal Sources through the end of April are $354 million below FY 2024 levels. To reach GOMB’s February estimate for this revenue line (adopted by CGFA in March), Federal Sources would have to grow $623 million over the final two months of the year, which seems unlikely. Therefore, the Commission is lowering its revenue estimate for Federal Sources by $347 million to $3.750 billion for FY 2025.
The details of CGFA’s revised revenue projection of $53.931 billion are provided on the following page. This revised estimate is now $31 million above GOMB’s February ’25 FY 2025 forecast of $53.900 billion and $650 million above the $53.281 billion assumed in the FY 2025 Enacted Budget.
* Table…
* On to the coming fiscal year…
The revenue growth seen over the past couple of months in many of the economically-tied revenue sources has increased the base to which growth factors can be applied. A higher taxable base creates upward pressure on revenue estimates. In practice, a revenue adjustment for FY 2025 typically results in a similar upward adjustment to FY 2026. However, growing economic uncertainty suggests a more cautious approach to growth expectations should be adopted in the coming fiscal year. […]
Because of the more dire outlook of the economy in recent polls, the Commission is softening its growth factors for FY 2026 for many of the economically-tied revenue sources. To be clear, the growth in the tax base as a result of recent activity in FY 2025 provides a bump to the Commission’s estimates. However, the extent of the increase is diminished by weaker growth expectations. Therefore, the revenue adjustments for FY 2026, as shown in the table below, are less than those shown in FY 2025. A negative adjustment to Federal Sources is also included due to its recent performance and uncertainty in how Federal dollars will be handled by the Federal Government.
The Commission’s revised FY 2026 estimate is $54.490 billion, which is a $266 million upward adjustment from the March estimate of $54.224 billion. This figure remains $471 million below the Governor’s February 2025 “current law” estimate of $54.961 billion and $963 million below the Budget Book estimate of $55.453 billion (when including the Governor’s proposed revenue adjustments).
* Table…
posted by Rich Miller
Friday, May 2, 25 @ 4:10 pm
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