Two months into fiscal year 2025, the state is reducing its revenue estimates.
Mark Muchow, deputy secretary for the Department of Revenue, told members of the Legislative Joint Standing Committee on Finance Monday that revenue for the year is expected to be nearly 8 percent lower than estimated in the spring.
That is a difference of $446 million compared to original estimates. The higher numbers were used to create the current fiscal year’s budget.
Muchow explained that several factors are contributing to the reduced estimate. They include:
- The phase-in of the personal income tax cuts, specifically the property tax rebate credits, which are expected to reduce personal income tax collections.
- The 4 percent personal income tax rate reduction scheduled to take effect on January 1, 2025. In 2023, when the legislature passed the 21.25 percent personal income tax cut, it set up triggers to further reduce tax. The first trigger has been met and will reduce personal income taxes further.
- Additionally, corporate income tax collections and lower interest income projections due to expected lower interest rates and the timing of capital improvement project expenditures.
The state ended the 2024 fiscal year with a budgetary excess of $632 million dollars.