State Revenue Forecast Appears Strong, Economic Uncertainty Remains

In their July revenue report, states economists presented a mixed bag. While the Transportation Fund underperformed, both the General Fund and Education Fund surpassed monthly targets. Despite this, only the General Fund exceeded its cumulative annual target as per the fiscal year 2023 consensus revenue forecast established in January. Due to the timing of the report, the forecast did not include consideration of recent flooding. However, economists stated that they anticipate that it will not impact growth expectations as corporate income and interest rates continue to keep state tax revenue afloat.

General Fund receipts are expected to increase by $78.4 million for FY24 and an additional $18.3 million for FY25. The economists project moderate growth for the Transportation and Education Funds, driven by fee increases and stabilized consumption taxes. While flood recovery is expected to stimulate economic activity, uncertainties remain, emphasizing the need for cautious fiscal planning.