State revenues continued to exceed projections amid the pandemic and economic slump, a positive sign as newly elected and re-elected lawmakers prepare to head back to the Capitol in less than two months to begin work on the next budget.
The Joint Legislative Budget Committee reported in its monthly fiscal report that state revenues in October were nearly $105 million above last month’s estimate. JLBC attributed the windfall to a short-term shift in consumer spending away from services that are largely exempt from sales taxes to “durable goods” that are expected to last three years or longer, such as cars, appliances and electronics.
Because of that trend, sales tax revenue accounts for the bulk of that extra cash, about $67.5 million. Individual income tax, corporate income tax, insurance premium tax and several other revenue sources also exceeded last month’s projections.
Through the first quarter of fiscal year 2021, state revenue is about $762 million ahead of revenues from the same point last year. Instead of the shortfall that was projected early in the pandemic, JLBC now estimates that the state will have a balance of about $411 million at the end of the fiscal year.
This isn’t the first time since the COVID-19 pandemic and subsequent restrictions began wreaking havoc on the economy that state budget crunchers’ projections have turned out to be too pessimistic.
In April, the committee estimated that the state would face a budget shortfall of up to $1.1 billion as unemployment spiked and revenues dropped. The following month, revenues exceeded projections by about $163 million.
Last month, JLBC reported that revenues for the first three months of the fiscal year had exceeded expectations by $429.5 million. That leaves the state in better fiscal shape than the committee projected at the start of the fiscal year by about $580 million, JLBC said.