Budget Blog

Despite minimal growth in tax collections in fiscal 2024, most states ended the year near their revenue forecast based on newly released end-of-year revenue totals. Comparing actual collections to forecasts is a better indicator of state revenue performance than year-over-year growth figures which, in many states, have been considerably impacted by recently enacted tax cuts. Early indications are that the majority of states closed fiscal 2024 with revenues above original forecasts, with many also seeing revenues come in above revised forecasts. Most states that saw revenues come in lower than revised forecasts were below projections by less than one percent. Some states with revenues below forecast in fiscal 2024 noted spending was below forecast as well, resulting in an end-of-year budget surplus. While most states are reporting a fourth consecutive year of surpluses, their size in nearly all cases is smaller than the substantial surpluses experienced in fiscal 2021 and fiscal 2022. Similar to fiscal 2023, states are directing these smaller surpluses to a variety of purposes including further strengthening rainy day funds and other reserve funds, fulfilling previously identified spending priorities, and avoiding debt. For some states, this stronger-than-expected growth will trigger phased-in tax cuts or may be directed toward tax reduction proposals. 

Based on NASBO’s Fall 2023 Fiscal Survey of States, enacted budgets for fiscal 2024 forecasted a 1.8 percent decline in general fund revenue compared to preliminary fiscal 2023 levels. This decline was from a high baseline after three consecutive years in which the vast majority of states recorded revenue surpluses and most states enacted tax reductions. Updated data from NASBO’s Spring 2024 Fiscal Survey of States reported fiscal 2024 general fund revenues were on track to increase 0.6 percent compared to actual fiscal 2023 collections; on a median basis, general fund revenues were estimated to decline 1.1 percent in fiscal 2024.

Newly released end-of-year revenue data reveal most states ended fiscal 2024 above their revenue forecasts, while year-over-year growth was more mixed, with some states seeing slow growth in tax collections compared to fiscal 2023, and other states recording modest declines. The reasons for the slow growth or modest declines in tax collections varied but included the impact of previously enacted tax cuts, slower growth in consumption, lower inflation, and higher tax refunds. On a positive note, several states highlighted in their revenue reports increased investment income resulting from higher interest rates.

As states prepared to move into fiscal 2025, they were anticipating slow revenue growth as tax collections continue to stabilize. Recommended budgets for fiscal 2025 are based on general fund revenues increasing 1.6 percent over revenue estimates for fiscal 2024; on a median basis, general fund revenues were estimated to grow 1.9 percent in fiscal 2025. When reporting their end-of-year fiscal 2024 revenue totals, some states discussed they expect revenues in fiscal 2025 to continue to flatten or moderate due to the effects of recent tax cuts, the unwinding of federal stimulus programs, modest economic growth, and easing inflation. States also noted they remain in a healthy financial position and will ensure spending does not exceed available resources.

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Forty-six states and one territory (Puerto Rico) ended the fiscal year on June 30. New York finished fiscal 2024 on March 31, while Texas will finish the year on August 31 and Alabama, Michigan, American Samoa, Guam, and the U.S. Virgin Islands will finish on September 30. Below is a sampling of revenue totals from states that have published preliminary data for the full fiscal year and descriptions of how some are using fiscal 2024 budget surpluses:

• Arkansas’s gross general revenues for fiscal 2024 were $8.71 billion, a decrease of 1.6 percent from fiscal 2023. Net available general revenues totaled $6.90 billion, 4.0 percent, below last year. Year-over-year declines included individual income (-1.7 percent) and corporate income taxes (-11.6 percent), while sales and use taxes grew (1.8 percent). Compared to the June forecast, gross general revenues were below forecast by 0.2 percent. Revenues in excess of the fully funded general revenue budget provided a surplus of $698.4 million. Arkansas’s Department of Finance and Administration noted the year-over-year declines in net available and gross general revenues are primarily attributed to the expected effects of income tax cuts passed in 2023. In addition, the state expects revenues in fiscal 2025 to continue to moderate due to the effects of recent tax cuts and the unwinding of federal stimulus programs.

• California’s total general fund receipts for fiscal 2024 were $215.0 billion, $3.1 billion, or 1.5 percent, above estimate. Total disbursements were $214.4 billion, $3.0 billion, or 1.4 percent, less than estimated. The general fund ending cash balance for fiscal 2024 was $14.7 billion, $6.1 billion, or 71 percent, above estimate. When looking at individual revenue sources, personal income taxes were 1.0 percent above estimate, sales and use taxes came in at estimate, and corporation taxes were 2.5 percent above estimate.

• Connecticut’s general fund revenues in fiscal 2024 were $22.6 billion, $100.7 million, or 0.4 percent, above the original budgeted estimate. Personal income – withholding was $252.9 million above estimates, personal income – estimates and finals was $495.1 million above estimates, corporate income was $35.0 million above estimates, and the pass-through entity tax was $140.3 million above estimates, while sales and use was $320 million below estimates. Connecticut’s comptroller projected a fiscal 2024 General Fund surplus of $24.6 million and a Special Transportation Fund surplus of $277.0 million. The Budget Reserve Fund (or Rainy Day Fund) is projected to receive $1.1 billion in volatile revenues from final and estimated income taxes and pass-through entity tax payments.

• Georgia’s year-to-date, net tax revenue totaled almost $33.0 billion, for a decrease of $182.2 million, or 0.5 percent, compared to fiscal 2023, during which the state’s motor fuel excise tax (deposited into the state’s general fund) was suspended for more than half the fiscal year. Net of motor fuel tax changes, net revenues for fiscal 2024 were down 3.4 percent from fiscal 2023. Although net tax revenue was less than fiscal 2023, the governor’s office anticipates tax collections will be approximately $2.2 billion above projections.
  
  
• Idaho’s fiscal 2024 general fund revenues were $5.37 billion, $581.3 million, or 9.8 percent, less than fiscal 2023. Individual income taxes increased 3.7 percent, sales taxes decreased 20.7 percent, corporate income taxes decreased 15.9 percent, product taxes grew 2.0 percent, and miscellaneous revenue declined 5.8 percent. Overall, fiscal 2024 general fund revenues were $52.5 million or 1.0 percent above forecast. By revenue source, individual income tax was 2.7 percent below forecast, sales tax 0.1 percent below, corporate income tax 11.7 percent above, product tax 0.6 percent above, and miscellaneous revenue was 7.4 percent above forecast.
  
  
• Illinois’ total revenues in fiscal 2024 were $52.6 billion, $1.1 billion, or 2.2 percent, above fiscal 2023. Total state revenues were $45.3 billion in fiscal 2024, $1.6 billion, or 3.7 percent, above fiscal 2023. Compared to budgeted amounts, total revenues were 0.2 percent above forecast and total state revenues were 0.1 percent above forecast. Prior year revenues exceeded final projections by approximately $124 million. Revenues were approximately 4 percent above the original forecast for fiscal 2024, but lawmakers allocated much of the additional revenue in a supplemental spending bill in May. The comptroller noted Illinois ended fiscal 2024 with approximately $4.7 billion cash on hand, including $2.1 billion in the state’s rainy day fund.
  
  
• Indiana’s fiscal 2024 total general fund revenues were $21.5 billion, a 2.0 percent increase from fiscal 2023. Major taxes were $19.9 billion in fiscal 2024, a 0.6 percent increase. Revenue growth by source included: sales and use (-0.9 percent), individual (6.9 percent), and corporate (-21.6 percent). Compared to the December 2023 forecast, total general fund revenues were 0.1 percent below projections while major taxes were 0.9 percent below forecast. The state comptroller announced Indiana ended fiscal 2024 with reserves of nearly $2.6 billion, including $665 million in the general fund, $181 million in the Medicaid Contingency & Reserve, $672 million Tuition Reserve, and a $1.03 billion Rainy Day Fund.
  
  
• Iowa’s fiscal 2024 general fund receipts totaled $11.8 billion, $265.9 million, or 2.3 percent, more than fiscal 2023; the estimate for fiscal 2024 was an increase of 0.6 percent. Personal income taxes declined 10.8 percent from fiscal 2023, sales/use taxes grew 5.9 percent, and corporate income taxes declined 9.5 percent.  
  
  
• Kansas’ fiscal 2024 total tax collections were $10.0 billion, 1.5 percent less than fiscal 2023. Individual income taxes declined 0.1 percent, corporate income taxes decreased 5.7 percent, and sales and use taxes declined 1.1 percent. Compared to estimate, total tax collections were 0.7 percent below, individual income taxes were 0.6 percent above, corporate income taxes were 6.6 percent below, and sales and use taxes were 0.3 percent above forecast.
  
  
• Kentucky’s fiscal 2024 general fund receipts totaled $15.6 billion, a $423.6 million, or 2.8 percent, increase from fiscal 2023. For the year, sales and use taxes rose 4.1 percent, individual income taxes declined 0.6 percent, and corporate income taxes grew 2.3 percent. Compared to a December 2023 forecast, general fund receipts exceeded projections by $16.8 million, or 0.1 percent. Final general fund receipts were $1.4 billion more than the original estimate used when the fiscal 2024 budget was set in the 2022 legislative session. Additionally, fiscal 2024 will mark the fourth consecutive year with a surplus over $1 billion. Kentucky’s budget director noted that beyond the economic gains underlying the revenues, the emergence of investment income as a significant general fund revenue source has occurred over the past two fiscal years.
  
  
• Maine ended fiscal 2024 with a $93.5 million general fund surplus as year-end revenues exceeded projections. According to state law, state surplus funds must be spent in specific areas in order of priority including: the Reserve for Operating Capital; Governor’s Contingency Account; Fame Loan Insurance Review; Retiree Health Insurance; and Maine Child Care Affordability Program. After the priorities are met, state law then requires the balance to be split between the Budget Stabilization Fund and the Highway and Bridge Capital Fund. Since the Budget Stabilization Fund is at its maximum allowed level, the Highway and Bridge Capital Fund will receive $75 million. The commissioner of the Department of Administrative and Financial Services said that with revenues flattening, the state will continue to ensure spending does not exceed available resources.

• Minnesota’s fiscal 2024 total revenues were $30.3 billion, $421 million, or 1.4 percent, higher than the February forecast. Individual income (0.3 percent), the corporate franchise tax (5.7 percent), and other revenues (5.5 percent) were all above the revised forecast for fiscal 2024, while the general sales tax was slightly below projections (-0.4 percent).
  
  
• Mississippi’s fiscal 2024 total revenue collections were $7.71 billion, $18.4 million, or 0.24 percent, above fiscal 2023’s level. For the year, sales taxes increased 2.99 percent, individual income taxes decreased 5.94 percent, corporate income taxes decreased 6.70 percent, and the use tax rose 4.87 percent. Fiscal 2024 total general fund revenues were also $181.7 million, or 2.41 percent, above estimate, including sales tax (3.42 percent), individual income tax (-7.60 percent), corporate income tax (7.83 percent), and use tax (0.98 percent).
  
  
• Missouri’s net general revenue collections for fiscal 2024 were $13.43 billion, an increase of 1.5 percent compared to fiscal 2023. Individual income tax collections decreased 9.4 percent for the year, sales and use tax collections increased 8.2 percent, and corporate income and corporate franchise tax collections decreased 0.8 percent. The governor also announced the revenue growth triggered an additional income tax cut under legislation approved in 2022, lowering Missouri’s top income tax rate to 4.7 percent.
  
  
• Nebraska’s fiscal 2024 total net receipts were $7.16 billion, a $787.83 million, or 12.37 percent, increase from fiscal 2023. For the year, sales and use taxes rose 5.26 percent, individual income tax declined 17.53 percent, corporate income tax increased 148.92 percent, and miscellaneous taxes grew 47.98 percent. Compared to projections, net general fund receipts were 0.1 percent below forecast. Sales and use were 1.6 percent below, individual income was 11.5 percent below, corporate income was 23.2 percent above, and miscellaneous taxes were 5.7 percent above forecast. The governor said the general fund receipts put Nebraska in a good position to pursue substantial property tax reductions.
  
  
• New York’s state tax receipts totaled $29.9 billion through the first quarter of the state fiscal year 2025 (April-June), $2.2 billion higher than the same period last year, and $594 million higher than projections. Personal income tax receipts for the April-June quarter were $1.7 billion higher than last year and $194.8 million above projections. Consumption and use tax collections were $140.5 million higher than the same period last year, and $8 million higher than anticipated. The state ended the April-June quarter with a balance $5.4 billion higher than last year, and $2.1 billion higher than projected. The state comptroller said economic growth is fueling tax collections, including record financial market levels, near full employment recovery, and easing inflation. However, he added any sudden shock can quickly reverse this position.  
  
  
• Ohio’s total tax receipts for fiscal 2024 were $27.9 billion, $971.2 million, or 3.4 percent, less than fiscal 2023. For the year, non-auto sales and use grew 2.6 percent, auto sales and use decreased 3.9 percent, personal income decreased 11.8 percent, and the commercial activity tax rose 10 percent. Compared to forecast, total tax receipts were $484.7 million, or 1.7 percent, below projections. Non-auto sales and use came in at forecast, auto sales and use were 4.3 percent below forecast, personal income was 4.6 percent below forecast, and the commercial activity tax was 4.1 percent above forecast. Ohio closed fiscal 2024 with a cash balance of $1.1 billion. The state budget director noted that while revenues were below forecast in fiscal 2024, spending was below forecast as well, leading to a solid year-end cash balance.

• Oklahoma’s total general fund revenue in fiscal 2024 was $8.47 billion, $547.2 million, or 6.1 percent, less than fiscal 2023. Year-over-year, net income taxes were 8.0 percent below, gross production decreased 44.3 percent, sales tax decreased 0.7 percent, and the use tax rose 7.0 percent. Compared to forecast, general fund revenues were $177.7 million, or 2.1 percent, above estimate for the year. In addition, fiscal 2024 registered $262.2 million and $91.3 million in deposits to the Revenue Stabilization Fund and Constitutional Reserve (Rainy Day) Fund, respectively. The director of Oklahoma’s Office of Management and Enterprise Services said the state’s strong reserves allows it to enter fiscal 2025 with a strong foundation. Following the release of the year-end revenue data, the governor called for cuts to the state’s personal and corporate income tax rates.

• Pennsylvania’s fiscal 2024 general fund collections were $45.5 billion, $862.9 million, or 1.9 percent, above estimate. For the year, sales tax receipts were 1.7 percent more than anticipated, personal income tax collections were 0.7 percent below estimate, and corporation tax revenue was 2.2 percent above estimate.
  
  
• South Dakota closed fiscal 2024 with a budget surplus of $80 million. Total revenue finished above the legislative adoptive forecast by $24.3 million, while the state government spent $56.4 million less than appropriated in fiscal 2024. The governor announced her intention of using the surplus for prison construction costs and avoiding unnecessary debt.
  
  
• Tennessee’s general fund revenues through 11 months are $555.2 million less than the budgeted estimate; on an accrual basis, June is the eleventh month in fiscal 2024. The budgeted revenue estimates are based on a consensus recommendation from November 2022. In April, general fund revenue estimates were lowered by $718.8 million. Tennessee’s Department of Finance and Administration Commissioner said that with one month left in the fiscal year, the state seems to be on track to meet the revised growth rate.
  
  
• Utah’s fiscal 2024 revenue to the General and Income Tax Funds was $11.4 billion, a year-over-year growth rate of -0.8 percent. This is below the -0.4 percent growth projected in year-end forecasts. General fund collections totaled $4.3 billion, growing 2.7 percent year-over-year, below the target of 2.9 percent. Investment income benefited from higher interest rates and grew by 38.1 percent. The Income Tax Fund collections were $7.2 billion, a year-over-year growth rate of -2.8 percent, below the target rate of -2.2 percent. Corporate tax collections experienced stronger than expected growth, growing 1.4 percent year-over-year compared to the forecast of 0.0 percent.
  
  
• Vermont’s fiscal 2024 general fund revenue collections were $2.27 billion, a 2.1 percent increase from fiscal 2023. Total education fund revenue was $2.05 billion, a 6.1 percent increase from fiscal 2023. Total transportation fund revenue was $713.64 million, a 2.6 percent decline from fiscal 2023. General fund revenue collections finished the year 6.5 percent above forecast. The Secretary of Administration said the state ended the year in a healthy financial position, with personal income taxes the main driver of the revenue performance.   
  
  
• Virginia’s fiscal 2024 general fund revenue collections grew 5.5 percent compared to fiscal 2023, above the 1.3 percent increase assumed in the official forecast. Virginia ended fiscal 2024 $1.2 billion ahead of the official forecast. Higher than expected revenue collections are primarily attributable to increased net individual income taxes and higher than projected sales and use taxes, partially offset by lower than forecasted corporate income taxes. The Secretary of Finance said the excess revenue collections are sufficient to meet all identified investment priorities.
  
  
• West Virginia’s fiscal 2024 general revenue fund collections were $5.71 billion, $772.7 million, or 11.9 percent, less than fiscal 2023. However, general revenue fund collections were $590.0 million, or 11.5 percent, above forecast. The governor announced the revenue surplus would trigger a further personal income tax cut of 3 or 4 percent, following legislation enacted in 2023. The bill’s automatic trigger system reduces the personal income tax rate when revenue collections exceed the rate of inflation.

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