Yesterday (August 14) the state’s Economic and Revenue Forecast Council (ERFC) issued its monthly report on general fund revenue collections.

This report covers payments received between July 11 and August 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), while it covers payments received between July 1 and July 31 for liquor taxes, cigarette tax, property tax, real estate excise tax, unclaimed property and other sources.
This report primarily includes payments relating to June activity for monthly filers and April–June activity for quarterly filers.

The total amount received this month was $2,281.6 million, $33.1 million (1.4%) less than the amount expected under the forecast that ERFC adopted at its June 26th meeting. Last month, revenues exceeded forecast by $10.3 million. Thus, for the two months combined, collections are $22.8 million less than the amount forecasted.

For the month, Revenue Act taxes (primarily the sales, use, utility, and business and occupation taxes) fell $52.9 million (2.5%) short of forecast. Retail sales tax collections were down 2.9% year over year, while B&O tax collections were down 2.8%. Much of the decline in sales tax can be attributed to the auto sector, which was discombobulated by the June 19th cyber-attack on its sales systems. The fact that there were two fewer weekdays in June 2024 than in June 2023 contributed to the B&O reduction.

For the month, Non-Revenue Act taxes exceeded forecast by $19.8 million. Within this grouping, real estate excise tax collections were $26.5 million (27.7%) greater than the amount forecasted. Of this, $17.9 million was due to payments triggered by the sale of controlling interest in corporations. (When controlling interest in a corporation, partnership, or trust is sold, the state collects REIT on the value of the entity’s real estate.)

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

Year-over-year inflation is significantly lower than the 9.1% seen in June 2022, which is a positive sign. For 10 of the past 13 months, the year-over-year growth in revenue fell short of the year-over-year growth in consumer prices.

It now seems likely that the Federal Reserve will reduce interest rates at its September meeting. This would be a positive for the state revenue forecast: The ERFC’s current economic forecast assumes that the Fed’s first interest rate cut will not occur until December.

The ERFC report is available here.