Budget Watch - Actual GR Collections in 2017-18 Exceed Estimates

The total collections of General Revenue (GR) collected in the fiscal year which ended on June 30 have now been tallied. These numbers, along with the current cycle of the state’s Estimating Conferences, can begin to define the fiscal outlook for the next state budget that will be developed by the 2019 Legislature.

The actual collections in last year (FY2017-18), the estimates for the current year (FY2018-19), and the estimates for the next budget year (FY2019-20) all impact the amount of revenue that the 2019 Legislature will have at its disposal. Any change from the estimates on which appropriations were made in last year and the current year will add or subtract from reserves—which will be carried forward into the next budget year.

This Budget Watch examines these revenue estimates, as well as some estimates that impact the need for spending, in advance of the important General Revenue Estimating Conference. That Conference, scheduled for August 16, will be examined in the next Budget Watch. Those estimates will be used for the state’s Long-Range Financial Outlook which will attempt to quantify the size of the budget shortfall or surplus facing the Legislature.

Actual net GR collections for the fiscal year that that just ended exceeded the last estimate (February 2018, adjusted for legislative changes) by $205.2 million (0.66 percent). This will be added to the unobligated FY2018-19 GR (cash reserve) balance of $1.026 billion to be carried forward to the next budget year (FY2019-20); however, this additional money is more a result of unique events, rather than a strengthening of the underlying revenue forecast. More than half of this surplus is attributable to one-time events: a $54.4 million surplus in Non-Operating Revenue due to one-time repayments in prior months; a $51.7 million surplus in Indian Gaming due to a change in the payment structure; and a combined $14.6 million in Insurance Premium and Parimutuel taxes due to incorrect deposits. Most of this one-time revenue will be offset by reductions in the current year. While actual collection for most sources exceeded the estimate, Earnings on Investments came in $33.4 million (19.7 percent) under estimate. Intangibles Taxes, Documentary Stamp Taxes and Court Fees were also slightly below the estimate. Collections of the state’s largest revenue source—the Sales Tax—were virtually on-target.

FY2017-18 GR collections totaled $31.218 billion—a $1.624 billion (5.5 percent) increase over the prior year (see table on next page). The tax sources with the largest yearly percentage increases were Indian Gaming, Parimutuels, Documentary Stamp, and Insurance Premium taxes. Collections of Court Fees, Beverage Taxes, Intangible Taxes, Tobacco Taxes and Counties’ Medicaid Share decreased in FY2017-18. In terms of dollars, the Sales Tax provided most of the new revenue: $1.151 billion (growth of 5.0 percent).