Strong growth signaled by state’s revenue forecast

The state’s revenue outlook projected strong growth in an updated state economic and revenue forecast released Wednesday morning. The forecast for the current 2021-23 biennium was increased by $1.4 billion and for the upcoming 2023-25 biennium it was increased by $1.3 billion. This increases the total budget to $58.9 billion in the 2021-23 biennium and $62.1 billion in the 2023-25 biennium. The first forecast for the 2025-27 biennium shows a budget total of $66.5 billion.

The forecast was encouraged by a steep decline in COVID-19 infections and continued retail and real estate transactions. Tax collections since the last revenue outlook in November came in $452 million above forecasted, largely driven by the increase in the cost of retail goods and subsequent sales and business & occupation tax in addition to strong real estate sales. However, possible downsides to the outlook include higher inflation which may dampen consumer spending, geopolitical risks, and a possible return of COVID-19 infections.

The budget writers in the state Senate and House will now finalize their supplemental budget proposals for the current 2021-2023 biennium, which are expected to be released early next week.