Revenues roared back in June, allowing the state to end its budget year with a positive cash balance and allowing state leaders to breathe a sigh of relief.
For the budget year ending June 30, state revenues beat the forecast by more than $70 million, said Alex Adams, administrator of the Idaho Division of Financial Management.
The news was welcome, as state revenue fell 60 percent short of forecasts in April. That was a result of Gov. Brad Little’s decision to delay the state’s tax filing deadline from April to June.
Little and his budget officials urged calm, saying the revenues would return before the state closed the books on the year.
The June report proves them right.
“It’s very fair to say this is the best possible outcome we hoped for,” Adams said. “Not only do we end the year with a balanced budget, we end the year with a surplus above what we originally expected.”
Revenue and budget news are important in education because K-12 is the state’s largest expense every year. Generally speaking, what happens to the state budget affects the share of the pie that is available for schools, colleges and universities.
For the month of June, revenue receipts were $764 million, beating the forecast by $383.5 million. That alone largely reversed April’s shortfalls, according to the Idaho General Fund Report the state released Friday afternoon.
Sales tax receipts were down for the year by less than 1 percent, which Adams said was mainly due to widespread business closures in April and May amid the pandemic. But sales tax beat the forecast for June, which Adams said may suggest signs of a rebound.
Even though the budget report was viewed as welcome news in the short term, it does not mean the state’s budget and economic concerns are over. It also doesn’t mean Idahoans should expect budget cuts to be reversed. On July 1, the first day of the new budget year, Little ordered a 5 percent, across-the-board spending cut, which would come to about $200 million.
Strong individual income tax filings were one of the big reasons revenue beat the forecasts for the year, Adams said. Those filings are based on what happened in 2019, pre-pandemic.
“So we do still anticipate some impact from that moving forward,” Adams said.
Some economists believe the pandemic and stay-at-home orders could affect budgets for three to four years to come, Adams said.
For the year, revenues exceeded $4 billion for the first time, coming in at $4.03 billion compared a forecast of $3.96 billion.
“The budget that the Legislature set, they were already predicting an ending balance of $56 million, so all told we will end up with an ending balance well exceeding $100 million,” Adams said.
Idaho’s largest sources of revenue are taxes — the individual income tax, sales tax and corporate taxes.