With an unexpected surge in sales-tax and corporate income-tax collections, analysts on Tuesday projected a significant increase in state revenue over two years.
If the revenue projections hold, it will ease the financial pressure on incoming Gov. Ron DeSantis, as he prepares his first budget recommendation, and on the Legislature, which must pass a 2019-2020 state budget when it meets in the spring.
State revenue collections during the fiscal year that started July 1 have been running $365.2 million ahead of projections that had been last revised in August. The two largest components of that increase were $173.5 million in sales-tax collections running ahead of estimates and $126 million in additional corporate income-tax collections.
The sales tax, which generates about $26 billion a year, and the corporate income tax, which generates about $2.2 billion, are the two largest general revenue sources in the state budget. General revenue taxes are closely watched in the Capitol because they play a key role in funding schools, health programs and prisons.
Based on the robust tax collections, the analysts boosted their general revenue projections by $842 million over two years, with a $461.5 million increase in 2018-2019 and a $380.5 million increase in 2019-2020.
In reading the consensus report, Amy Baker, coordinator of the Legislature’s Office of Economic and Demographic Research, noted the $842 million adjustment has come at the same time analysts have adopted state and national economic forecasts that show some weakening in key economic factors.
“While this is the largest combined (two-year) increase since April 2006, during the peak of the housing boom, the conference recognizes that there is an elevated level of risk due to the mature stage of the current economic expansion,” Baker said.
Nonetheless, the new estimates show the state should collect an additional $1.48 billion in general revenue this year, a 4.8 percent increase over the 2017-2018 fiscal year. The new 2019-2020 general revenue projection is 3.1 percent, or $1.01 billion, higher than this year.
Analysts projected a $156 million increase in corporate income- tax collections this year, which they said is likely to result in tax refunds due to a new state law.
“The new level of net collections (receipts minus refunds) forecast for the current year, if they materialize, would trigger the tax rate reduction and refund provisions in (House Bill) 7093 as passed by the 2018 Legislature,” the report said.
It would result in $49.9 million in tax savings for the companies that pay the corporate income tax in 2019-2020 and $12.6 million in 2020-2021.