Actual revenue collections in Idaho surged in April, as expected, but not enough to fully offset the accumulated shortfalls from earlier in the year.
Figures released by the Division of Financial Management on Tuesday indicate the state collected $706 million in tax revenues last month. That was 5.4 percent or $36.1 million above forecast.
Through the first 10 months of the fiscal year, however, actual revenues are still $40 million behind expectations, or 1.3 percent. That shortfall is entirely because of individual income tax collections.
After Congress cut federal tax rates in 2017, Idaho lawmakers followed suit last year, approving the largest tax cut in state history. The projected cost of the bill was $105 million.
That could be a bit of an underestimation. Through the first 10 months of fiscal 2019, combined corporate and individual income tax collections are down $132.6 million. Individual income tax collections are off by $176.7 million, compared to the same period a year ago, while corporate tax receipts are up $44.1 million.
Because of the tax law changes, some taxpayers who didn’t update their W-4 forms had too little money withheld from their monthly paychecks to cover their annual tax liability. As a result, actual income tax collections have been under projections for the entire year.
The State Tax Commission expected that trend to reverse itself in April, when taxpayers squared up their annual tax bill. The actual surge, however, wasn’t enough to offset the first nine months of the fiscal year. Through April, individual income tax collections remain $91.5 million, or 5.9 percent, below forecast.
The Division of Financial Management also released an updated economic forecast this month. Based on a national economic outlook provided by IHS Markit, a global economics firm, the forecast projects continued job and income growth in Idaho for at least another three years.
The current economic expansion will hit the 10-year mark this summer, making it the longest such expansion in U.S. history. IHS Markit expects that growth to continue through 2022, although at a slower pace.
For Idaho, the Division of Financial Management is projecting 2.9 percent job growth this year, followed by a 2.1 percent increase in 2020 and again in 2021.
Through 2022, the agency expects the state to add nearly 50,000 new jobs. The bulk of those — about 32,000 — should come in the service sector, with another 3,000 in manufacturing and 6,000 in construction.
Idaho housing starts are expected to increase in the coming years, from 16,236 in 2018 to 19,000 in 2022. Personal income growth, when adjusted for inflation, should increase by 3.8 percent this year, followed by 3.3 percent next year and 2.9 percent in 2021.
The national forecast from IHS Markit projects a 10 percent likelihood of a short recession in 2020, with a 90 percent chance that the economic expansion will continue unimpeded through 2022.
That scenario is based on a number of assumptions. For example, it assumes President Donald Trump will not raise tariffs on Chinese imports, as he is currently threatening to do. It also assumes oil prices will remain near 2018 levels, and that Congress and the president will agree to raise the debt ceiling without a fight.
The annual federal deficit is expected to top $1 trillion this year, climbing to $1.2 trillion by 2022.
This article first published in the Lewiston Tribune.