State tax collections for December almost 20% over projections (thanks, inflation!)
With inflation helping boost sales tax collections, money continues to amass for state lawmakers as they patch together a budget for next fiscal year.
State economists reported Thursday that general-revenue tax collections in December were $610.9 million, or 19.3 percent, over a projection made in August. General revenue totaled $3.771 billion during the month, compared to the projection of about $3.16 billion.
Nearly 87 percent of the gains in the December figures came from sales taxes, which were boosted as consumers paid more for goods because of inflation.
“The immediate response to inflation is an increase in sales tax collections that reflects the higher prices,” the monthly report from the Legislature’s Office of Economic & Demographic Research said.
For the month, tax revenue from tourism was 18.8 percent higher than projected; auto-sales tax revenue was up 21 percent over the projection; documentary-stamp tax revenue, which is mostly collected on real estate transactions, was up 33.5 percent from the projection; and corporate income-tax revenue was up 4 percent over the projection.
While economists have warned of a slowing in the coming months because of an end of federal stimulus payments and anticipated interest-rate hikes, the December figures reflected some consumers still being able to spend money saved during the coronavirus pandemic.
The report said the December collections “continued to benefit from federal stimulus payments that will be wrapping up next month, redirected spending from the hard-hit service sector, and some consumers’ ability to draw down atypically large savings that built up during the pandemic.”
The personal savings rate, the percentage of disposable income that people save, was 7.9 percent in December, up from 7.2 percent in November and equal to the rate in the 2018-2019 fiscal year. The saving rate ballooned to a historic 33.7 percent during the early stages of the pandemic.
The report came about two weeks after economists revamped overall general-revenue estimates for this fiscal year and next year. The concluded the state will collect nearly $4 billion more in general-revenue taxes over the two years than had been expected.
House and Senate subcommittees this week released initial budget proposals, as the two chambers prepare to pass their spending plans before negotiating a final version. The 2022-2023 fiscal year will start July 1.
Gov. Ron DeSantis proposed a $99.7 billion budget that would boost spending on areas such as education. He also is seeking to suspend state gasoline taxes for five months starting in July. DeSantis anticipates about $1 billion in federal money would be used to make up the lost gas-tax revenue, which ordinarily goes to transportation projects.