The Joint Legislative Budget Committee released its April revenue report on Tuesday and revenues have taken a serious hit thanks to the COVID-19 related economic shutdown.
Total tax revenues to the state are more than $244 million under the estimate for the month of April and total year to date revenues are down by $26.3 million.
The report has income tax collections down $125.8 million from estimates, corporate taxes down $89.9 million, sales tax collections down $17.6 million, and gaming taxes down by $11.1 million. The only tax category that had an increase was the use tax, which is a 7 percent tax assessed on all out-of-state purchases. These revenues were up $1.7 million over estimates and $30.2 million over the estimate for the year to date.
For fiscal year 2020 that ends on June 30, total revenue collections are now 2.31 percent below collections from the same time last year. At this time last year, the state had collected $4.7 billion in revenue, whereas this year, those collections sagged to $4.593 billion, a difference of $108.6 million. The tax revenue forecast, which was revised upward by $137.8 million in November, was expected to be $5.996 billion. Barring a massive increase in economic activity, it’s a goal the state likely won’t reach.
The good news is that that the state has plentiful reserves, with $678 million in the so-called rainy day fund and $522 million in unallocated revenues for a total of $1.2 billion. These could be used to fill shortfalls in the fiscal 2020 budget and pad totals for the 2021 budget.
The unallocated funds in the state treasury include:
- $678.9 million Working Cash Stabilization Reserve Funds (known as the Rainy Day fund)
- $234.7 million Capital Expense Funds
- $119.3 million 2 percent set-aside in General Fund
- $105.2 million General Fund
- $87.4 million Gulf Coast Restoration Funds
- $20.0 million BP Settlement Funds
- $16.0 million Idle Special Fund Cash Balances
- $11.0 million Education Enhancement Funds
- $8.5 million Health Care Expendable Funds
- $7.6 million Budget Contingency Funds
- $2.3 million Tobacco Control Funds
The state economist and the Legislative Budget Office provide legislative leaders with an estimate of predicted tax revenues in September, which gives them a baseline to build a budget recommendation. In December, the JLBC issues a budget recommendation, which isn’t binding on the Legislature. Later in the session that starts in January, the Legislature uses the recommendation as a guide as it begins the appropriations process, writing separate bills for each agency.
This is usually performed at the end of the session. This year’s appropriation process was delayed by the COVID-19 shutdown and the Legislature will likely tackle the budget after it finishes this week with how to disburse $1.25 billion in CARES ACT funds.