State tax collections are $650 million more than compared to last year, even with the delayed tax filing deadline
The April 2021 state tax revenues have been published, and overall, it’s good news again.
The revenues are broken down into two measures, one for the month and another for the fiscal year. For the month of April 2021, the revenues do not meet the state’s expected forecast of revenue – however, this may be a misleading takeaway.
Comparing this year to last April’s net revenues show an increase of $180 million. Last year’s April revenue report was the first full month into the pandemic with many people out of work and businesses shut down. The explanation for the lower-than-expected tax collections last year was mostly due to the delay of the tax filing deadline and people choosing not to file their income taxes.
This year, I believe the same explanation can be used for the less-than-expected collections. For the month of April, all tax revenue sources are above their forecast except for personal income tax. Because the new 2021 tax filing deadline is May 17, I expect to see higher-than-expected revenues for the May report.
The measure of tax revenue for the fiscal year, however, remains positive. As of April 2021, (there are only 2 more months in the fiscal year) the state is 13.6% above its certified forecast, reporting $4.658 billion. All tax revenues are above the forecast and well exceed where the state was 12 months ago.
You can see from the chart above that the state has an extra $657.3 million than it had last year. That is why the Legislature is operating a bit differently this session. There has been more focus on spending and targeted tax cuts, whereas this time 12 months ago, the focus on was on conserving and saving as much as possible due to economic uncertainty.
In closing, please be careful comparing the state’s revenues to the forecasted amount. A forecast is just an educated guess and is used for planning purposes, but should not be the sole basis for public policy decisions. Using actual collections is a much more solid and a realistic variable for evaluating the impact of policy decisions and people’s behavior. That is why I take the time to pull the previous year’s revenue figures for a comparison.
Thankfully, LB180 was signed by the governor, and we can expect to see more accurate and realistic revenue reports in the future. This legislation requires the Tax Commissioner to amend the monthly revenue report to include the most recent forecast, not just the certified forecast, as well as comparing it to the same month for the previous fiscal year. The Platte Institute supported this piece of legislation in written testimony.