Last Friday (November 17) the state’s Economic and Revenue Forecast Council (ERFC) issued its monthly report on general fund revenue collections.

This report covers payments received between October 11 and November 10 for the sales tax, the use tax, the business and occupation tax, the public utility tax, the tobacco products tax, and penalties and interest (collectively the Revenue Act receipts), and it covers payments received between October 1 and October 31 for liquor taxes, cigarette tax, property tax, real estate excise tax, unclaimed property and other sources.

This report includes payments relating to activity in the month of September from monthly filers and activity in the July-September quarter from quarterly filers.

The total amount received this month was $2,417.7 million, $55.6 million (2.2%) less than the amount expected under the forecast that ERFC adopted at its September 26th meeting. Cumulatively, for the two months since that meeting collections have fallen $41.7 million short of forecast.

For the most recent month, Revenue Act taxes (primarily the sales, use, utility, and business and occupation taxes) fell $26.1 million (1.3%) short of forecast. Retail sales tax collections were down 2.7% year over year, while B&O tax collections were up 0.7%.

For the month, Non-Revenue Act taxes fell $30.9 million short of forecast. Within this grouping, real estate excise tax (REET) collections were $13.2 million (15.0%) less than expected and property tax collections were $15.3 million (18.7%) less than expected. (October is not normally a big month for state property tax receipts.)

Payments of court fees, fines and forfeitures into the general fund totaled $1.4 million (49.2%) more than forecasted.

The chart below compares year-over-year growth rates of general fund-state revenues to year-over-year inflation in the consumer price index:

Inflation has trended downward since mid-summer 2022, which is a positive sign. For 11 of the past 13 months, however, the year-over-year growth in revenue fell short of the year-over-year growth in consumer prices. And the year-over-year decline in revenue for the most recent month (3.4%) is the greatest since May 2020, during the COVID shutdown, when collections were down 5.5%. (The year-over-year decline in April 2020 was even greater: 18.1%.)

The ERFC will meet at 10 AM Tomorrow (Monday, November 20) to update its revenue forecast for the state. Information on this meeting is available here. The new revenue forecast will be based on the updated economic forecast (available here) that was presented at the EFRC’s November 6 Revenue Review meeting. This updated economic forecast justifies increasing the forecast of state revenues, and I expect ERFC to do this tomorrow.

Last month’s large year-over-year drop in collections has twanged my spidey sense. Most likely it’s just a false alarm.