Revenue Estimates Increased Slightly, Shortfalls Still Loom
Lawmakers received a small measure of positive fiscal news from state economists this week. The General Revenue (GR) Estimating Conference met on December 12, 2016 and increased its revenue forecast by $119.3 million in the current year (FY2016-17) and by $22.6 million for the next budget year (FY2017-18). This $141.9 million increase recovers a little of the $655 million in GR reductions made in the last two conferences (August and January).
The state is now expected to collect $29.452 billion this year and $30.709 billion next year. These amounts represent growth over the prior year of $1.127 billion (4.0 percent) and $1.257 billion (4.3 percent), respectively. For the rest of the years in the forecast horizon (though FY2021-22), growth ranging from 3.5 percent to 4.1 percent is expected.
Even though actual revenue collections have been significantly over estimate so far this fiscal year, the estimators believe most of that is due to timing and technical issues. Moreover, the Conference had already adopted slightly weaker National and Florida Economic Forecasts last month. They took all of this into account, and only adjusted the estimates slightly upward.
In terms of specific revenue sources, results were mixed. Nine sources had their estimates reduced and six were increased (see table on next page). The estimate for tax refunds was reduced, which boosts net collections. Thankfully, the estimate for the state’s big money-maker—the sales tax—was increased, adding $124.6 million over two years. Five of the six sales tax categories were right on target, but greater than expected motor vehicle sales led to the increased estimate.
Higher-than-expected corporate profits increased the corporate income tax estimate by $26.1 million, although the Conference warns the good first quarter may not hold for the entire year. Weaker forecasts for construction and existing home sales were tempered by the continued strength of refinancing activity, but it was not enough to avoid a reduction in the documentary stamp tax estimate of $35.8 million.