As of last Friday, May 3, state tax collections were running $351 million ahead of the previous year.
That’s a more than 6% increase in tax payments to the state over the past 10 months. It’s also 1.5% above the prediction a panel of experts made in March.
Jeff Robinson of the Legislative Services Agency says his analysis intentionally included the first few days in May.
“Twenty-five to 30 percent of the month’s gross revenue deposits occur over the first three processing days of May,” Robinson says.
That’s mostly because April 30 is the deadline for quarterly income tax withholding payments to the state, as well as quarterly payments of sales taxes. April 30 is also the final day for submitting individual income tax returns to the state. Based on last year’s data, Robinson expects most income tax refunds to be paid out by the end of May.
“This is a significant unknown when evaluating how solid the 6.2% revenue growth really is,” Robinson says.
There are two other major factors at work in the final seven weeks of the state fiscal year. The state income tax cuts the Republican lawmakers approved in 2018 didn’t go into effect until January of this year, so there’s likely a reduction in state income tax withholding payments. At the same time, it appears there’s been an uptick in sales tax payments to the state. That’s because GOP lawmakers voted to apply the sales tax to more online transactions, like Netflix subscriptions and Uber rides.