(The Center Square) — The Arizona Joint Legislative Budget Committee’s July fiscal highlights indicate that some taxes in the state did not generate the amount of revenue anticipated.
State tax revenues were at $1.11 billion in July, which the group said resulted in a “forecast loss” of $13 million and a 5.1% downtick from the prior year.
The main sources of revenue came from both the corporate income tax and the Insurance Premium Tax (IPT). There was a 44.2% increase in corporate income tax revenue and a 25% increase in IPT revenue, which was $20.7 million and $5.5 million higher than projected from the last fiscal year, according to the JBLC’s report.
Sales tax and individual income tax (IIT) were ultimately responsible for the lower overall figure, despite the individual income tax having a notable increase from “withholding collections.” Still, IIT saw a decrease of nearly 12% compared to July 2022.
“The main reason for July’s higher-than-projected level of collections is related to the timing and processing of withholding deposits – July 2023 had an additional Monday compared to the prior year, which is important since the largest withholding deposits of the week typically occur on Mondays. In particular, the deposit made on this “extra Monday” in July was much larger than usual,” the report states.
As for the sales tax, the report attributes revenues have been slowing down in the retail and restaurant sectors since the spring.
“The lower-than-expected growth rate for this combined retail category was primarily attributable to standard retail sales, which increased by only 0.4% in July. The growth in standard retail sales began trending down since the first quarter of FY 2023,” the report states.
July 1 marked the start of the fiscal year 2024 after a lengthy budget battle in the state Legislature. According to the JBLC report, the state’s Executive Branch will have until Sept. 15 to release a “preliminary estimate” of the FY2023’s “ending balance.”
