Idaho is on track to have roughly $63 million less in tax revenue than budget forecasters predicted, with general fund revenue collections for the month of November coming in nearly $16 million lower than expected.
A report from the Legislative Services Office released Monday says that when the 2019 Legislature convenes next month, lawmakers on the budget-setting committee could see an estimated ending balance of $43.7 million. That’s about $1.4 million less than the budget they set last March.
It’s an unusual situation that state officials hope will come down to a matter of timing rather than an actual shortfall — the state’s fiscal year runs from July 1 to June 30, and individual income tax receipts often get a bump on tax day in April.
Still, lawmakers will have to come up with a budget long before April 15.
“This is unusual, a real outlier than what we’ve seen in the past several years,” said Paul Headlee, the Budget and Policy Analysis Division manager for the Legislative Services Office. “It’s really a timing issue, but that doesn’t help with the decision-making. It will make the upcoming budget-setting session more challenging.”
So far this year revenue collections total more than $1.4 billion, according to the Idaho Division of Financial Management. Budget officials say weak individual income tax collections are dragging down stronger revenue collections in other categories, like sales taxes and corporate income taxes.
Individual income tax receipts have come in below targets every month so far this fiscal year. That’s likely because some haven’t fully adjusted to the new federal and state income tax withholding tables, Headlee said. If people are withholding too little money from their paychecks, they could end up writing checks to the Idaho Tax Commission in April to make up the difference.
“That’s when we are hopeful the revenue will come in,” Headlee said.
In contrast, corporate income tax collections have come in higher than expected every month since July, with the fiscal year-to-date collections totaling $87.8 million, about $31 million more than expected.
Idaho has a balanced budget requirement in the Constitution, and so the Legislature will either have to “take corrective action” with budgets that have already been set, or consider ways to pull in new revenue, Headlee said.
“By the time the session starts, we will have one more month of revenue. Possibly the tax commission could take some action with issuing guidance to taxpayers,” Headlee said. “Maybe we can get some of this timing corrected.”