The state collected nearly $16 billion more revenue than expected during the first seven months of the 2021-22 fiscal year, the Department of Finance reported this week.
“Preliminary General Fund agency cash receipts for the first seven months of the 2021-22 fiscal year were $15.954 above the 2022-23 Governor’s Budget forecast of $109.355 billion,” the department stated in its monthly finance report. “Of note, $6.206 billion of this total additional revenue is due to higher-than-expected Pass-Through Entity (PTE) elective tax payments under the corporation tax, a 2021 state tax change designed to allow some taxpayers to reduce their allowable federal tax liability starting with their 2021 tax returns.”
The report continued:
“Every dollar received from the PTE elective tax paid generates a dollar of personal income tax credit. While the amount of PTE elective tax payments can be tracked in monthly cash reports, the extent to which taxpayers will reduce their personal income tax payments to reflect the elective tax credits cannot be determined until more complete tax return data for 2021 are available. Therefore, it is reasonable to assume that a portion of this $6.2 billion may overstate the amount of overall revenue strength to date.”
Two of the ”big three” taxes that provide most of the state’s general fund revenue are running ahead of projections:
- Personal income tax revenue for the first seven months of the fiscal year was $9.17 billion above the forecast of $76.71 billion. In January alone, PIT receipts were $5.98 billion above the forecast of $21.1 billion. “The Governor’s Budget forecast assumed that personal income tax estimated payments would be reduced by $1.74 billion in January by taxpayers who adjusted payments to reflect PTE elective tax credits, but it is unknown by how much taxpayers actually did adjust their estimated payments,” the Department of Finance stated. “It is possible the overage would have been smaller or greater if the effect of the PTE elective tax credits were backed out. Refunds issued in January were $97 million below the expected $529 million.”
- Sales and use tax revenue for the first seven months of the fiscal year was $223 million below the forecast of $17.92 billion. The collections in January were $414 million below the month’s forecast of $2.01 billion.
- Corporation tax revenue for the first seven months of the fiscal year was $7.99 billion above the forecast of $10 billion. “Of that overage, $6.206 billion was from higher PTE elective tax payments,” the Department of Finance reported. “Cash receipts for January were $2.197 billion above the month’s forecast of $843 million. Estimated payments were $197 million above the forecast of $714 million, and other payments were $63 million above the $245 million forecast. PTE elective tax payments were $1.961 billion above the forecast of $0. Total refunds for the month were $25 million higher than the forecast of $116 million.”