Arizona’s economy appears to be outperforming the state economists’ expectations as tax revenue came in above-expected levels for the eighth consecutive month.
The Arizona Joint Legislative Budget Committee released its October revenue numbers, showing the state brought in $1.17 billion; $100 million more than expected.
Sales taxes, individual income taxes, and corporate income taxes all came in at higher levels than expected, the Friday report said.
A major tourist destination, Arizona relies more heavily on sales tax revenue than many other states.
“Sales tax collections of $577.7 million were 14.8% above October of last year and $31.1 million above the October … forecast,” the report said. “Through the first 4 months of FY 2022, sales tax revenue is up by 15.4%. Sales tax collections have grown at double-digit rates in each of the last eight months.”
The report showed passengers at Phoenix Sky Harbor International Airport, hotel occupancy, and the percentage of restaurant reservations made on the online service OpenTable are elevated compared with the same month in 2020.
The state collected $519.6 million in individual income taxes; 19% more than the previous October and $51.6 million above what the state estimated would be collected.
Corporate income tax net revenue in October was $69 million, which was more than double the collections in October 2020. The report said net collections in October was the highest on record for any October.
It might not be fair to compare current fiscal conditions to the same month in 2020, considering much of 2020 was spent in a COVID-19-induced lockdown of sorts that slowed business transactions and kept employment levels low. In addition, the state followed suit with the federal government in deferring tax filings from April 15 to July 15.
However, the report said the state’s general fund revenues are 5.3% higher than the previous fiscal year when urban revenue disbursements are excluded.
“This percentage growth in year-to-date revenues is impacted by the state’s 2020 income tax deferral from April 15 to July 15, which caused the July 2020 revenue base (in early FY 2021) to be artificially higher. After adjusting for the deferral, FY 2022 year-to-date revenues are 18.9% above the prior year,” the report said.
By Cole Lauterbach | The Center Square
Republished with the permission of The Center Square.
