Better-than-expected individual income and sales tax receipts in August helped Idaho’s general fund beat revenue projections so far during the new budget year.
According to the Division of Financial Management’s latest Idaho General Fund Revenue Report, revenue collections are up by 1.4 percent, or $6.9 million, through the first two months of fiscal year 2016, which began July 1.
Combined revenues totaled $492 million through Aug. 31, ahead of the projected $485.1 million.
Overall, revenues were up 6.3 percent from the same two-month period in 2014.
The August receipts represent the latest batch of positive news for Idaho’s budget and economy. State officials closed the books on fiscal year 2015 on June 30 with revenues eclipsing their forecast by $92 million.
Then in August, chief state economist Derek Santos revised 2015-16 revenue projections upwards by $53.5 million, revising projections from the 2015 legislative session.
August revenues still beat Santos’ projection.
Although it is very early in the current fiscal year, if numbers continually meet or beat the revised revenue marks, Idaho could end the year with a balance of more than $100 million.
So why do general fund revenue collections matter? The K-12 public school budget is the state’s largest general fund expense. Good news on the revenue side could, generally, mean good news for public schools and state financial reserves. Superintendent of Public Instruction Sherri Ybarra last week unveiled a 2017 budget proposal calling for a 7.5 percent increase in public school spending for 2016-17 — a $110 million increase. The 2015-16 K-12 budget represents a 7.4 percent funding boost from the preceding year.
Division of Financial Management Administrator Jani Revier stressed that August’s numbers alone do not constitute a trend. Nevertheless, she was optimistic about the strong revenue performance in fiscal year 2015 and the overall health of the state’s economy.
“Those are all really good signs as our economy appears to come out of the Great Recession, and we’re not limping along like we did through the first few years after the Great Recession,” Revier said. “We seem to be returning to a more normal pace, and I don’t think it’s an inflated economy.”
There are still 10 months to go in the current budget year, so it’s too early to tell what the state’s ending balance will be or where that money will go. Some of it could pay for any additional year-end costs for fighting wildfires or any other supplemental expenses. The fiscal year 2016 revenue projection will be revised again when lawmakers return to the Statehouse in January, with that revision helping determine how much money goes to the state’s Budget Stabilization Fund (sometimes called a rainy-day fund) or transportation infrastructure costs.
August’s revenue gains also offset July receipts that fell just below the projected amount of $256.4 million.
Keith Bybee, a principal budget and policy analyst with the Legislative Services Office, said August’s increase in individual income tax partially stems from withholding payments, which signals Idaho’s economy is “humming along.”
During August, individual income tax and sales tax collections beat projections, while corporate income tax receipts fell short of projections. The corporate income tax shortfall did not hurt the overall revenue picture much because corporate income tax receipts ($1 million for August) are a much smaller revenue source than individual income tax ($117.4 million) and sales tax ($113 million).
Idaho’s 2016 revenue picture, by the numbers:
- Projected: $485.1 million.
- Actual: $492 million.
- Difference: $6.9 million, 1.4 percent.