The increase in revenue over last year is good news for a state beset by multiple rounds of spending cuts in anticipation of a budget shortfall. But if there is extra money at the June 30 end of the state’s financial year, it likely won’t be enough to significantly reverse the austerity measures previously passed, Bullock budget director Dan Villa said.
Revenues had fallen short since 2015 and the state had one of its most expensive fire seasons last year, leading to a state budget shortfall that was projected to reach $227 million by 2019.
The Legislature and governor filled the gap in a special session last fall by cutting spending and transferring money from special revenue accounts.
Now, four major revenue sources — individual income taxes, corporation income taxes, property taxes and video gaming taxes — are all higher compared to last year. Oil and gas production taxes also jumped nearly 12 percent, due to the rising price of oil, not because any increase in production, legislative analysts said.
The Legislative Fiscal Division’s update released Wednesday estimated 13.9 percent growth over last year. Final 2018 revenues could range between $2 million below to $21 million above the $2.4 billion estimate the Legislature used to write the state’s 2017-2019 spending plan.
Legislative analysts cautioned the increase in tax collections is partially due to people to paying next year’s property taxes early because of changes to the federal tax law that limit deductions, and that may level off or drop.
Villa said he believes the actual growth rate is 7.2 percent and that final revenue numbers will end up somewhere between the Legislature’s $2.4 billion estimate and his own forecast of just under $2.3 billion.
Villa said refunds are now going out to the large number of people who paid taxes early in December and January. Those refunds will diminish the overly optimistic revenue picture by legislative analysts by the end of the financial year, he said.
If there is extra money on July 1, lawmakers passed a bill during the special session on how to distribute it.
If revenue and fund transfers total more than $2.26 billion for the year, the first $20 million in extra cash will go to the treasury. The rest will be split between a new budget stabilization fund and agencies to offset budget cuts, up to $111 million total.
Anything above $111 million would go to the general fund.