Idaho’s state tax revenues for August came in much higher than expected — $37 million higher, the second straight month of big overages — putting the state on track to end the current fiscal year with a giant surplus if current trends hold, even as it’s imposed budget cuts due to the anticipated economic impacts of COVID-19.
Those cuts have included a $99 million holdback on the current year’s public school budget, which Gov. Brad Little proactively imposed at the start of the fiscal year July 1 as part of 5% holdbacks statewide.
“Two months does not make a trend,” said Alex Adams, Little’s budget director. “We’re optimistic, but cautiously optimistic.”
The state’s largest categories of general fund tax revenue, individual and corporate incomes taxes and sales taxes, all were up substantially in August. Individual income taxes were 19% higher than forecast and 25.4% higher than last year at the same time. Corporate income taxes came in 206.5% over forecast and 64.1% ahead of last August. And sales taxes were up 7% over forecasts and 8.2% higher than last August, and that’s not even counting $9.6 million in taxes on online sales in August that went directly into a Tax Relief Fund, rather than the state general fund.
“Holdbacks by their nature are reversible,” Adams said. “It’s certainly part of what we’re discussing.”
However, he said any decision likely wouldn’t come before the Legislature convenes in January.
“We’re going to keep seeing what happens between now and the end of the year, and I think we’ll have enough information behind us that we’ll be able to make objective decisions in the governor’s budget in January,” Adams said.
To date for the fiscal year, two months in, individual income tax collections are $109.6 million or 49.3% more than last year. Corporate income tax collections are up $18.0 million, and sales tax collections are up $33.3 million compared to last year.
Adams said as the revenues have come in for the first two months of the new fiscal year, “my jaw has dropped.”
“Right now, revenue is coming in stronger than even the pre-COVID forecast,” he said. “We’ve talked about a lot of things, but they’re just theories at this point. … It’s hard to put a finger on why the numbers are coming in the way they did.”
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