State revenue forecast continues to improve, increases by $898 million in the current biennium

The quarterly state economic and revenue forecast was adopted this morning during the November meeting of the Economic and Revenue Forecast Council. The forecast will be used by the governor as he crafts his 2022 supplemental budget proposal to be released in mid-December, ahead of the 2022 legislative session.

The revenue report estimated an increase to the state’s current budget by $898 million, projecting a total fund of $60.2 billion in the current 2021-23 biennium. It also improved the next biennial budget by $965 million, totaling $64 billion in the 2023-25 biennium.

Steve Lerch, Executive Director of the Council, reported that the increase in the state’s economic outlook is due to a number of factors. Among those is a financial institutions tax that was upheld by the state Supreme Court last week, along with stronger-than-expected growth in retail and real estate sales and slightly stronger construction employment. Additionally, state tax collections continue to show stronger than projected with the last two revenue reports showing $292.2 million or 7.3 percent higher than the September forecast.

However, potential downsides to the forecast that were detailed by Lerch included higher inflation and national flattening of COVID-19 cases after a few weeks of declines. Also, goods prices rose at their fastest annual rate in 30 years during the month of October. Despite this, consumers continued to buy as US retail trade sales increased in the same month.

The state Office of Financial Management, the governor’s budget office, released a statement that can be found here and the full report from the Council is here.