Idaho tax collections back on track after October revenue

BOISE (AP) — Idaho tax collections are back on track after October revenue exceeded expectations and made up for the first three months of the current fiscal year, state budget officials said Monday.

Idaho collected about $48 million more than expected in October, the Division of Financial Management said. About $34 million of that was from a 19% increase over projected individual income taxes, an indication of increased employment and higher wages.

Idaho’s unemployment rate in September was 2.8%, the eighth consecutive month below 3%, according to the Idaho Department of Labor.

Corporate income taxes also exceeded expectations in October by $4.3 million, about 24%.

Tax revenue the previous three months was about $50 million below expectations. But the state overall is seeing revenue growth and bringing in more money compared to the same period last year.

“Idaho’s powerful economy and enduring budget stability are proof that fiscal conservatism leads to prosperity and opportunity for the people we serve,” Republican Idaho Gov. Brad Little said in a statement.

Idaho in recent years has most often seen monthly revenue greatly exceed projections, spurred by a combination of fast population growth and three influxes of federal COVID-19 rescue money that heated up the state’s economy.

Idaho’s expected net revenues are about $6.2 billion for the current fiscal year, which ends June 30, while total appropriations are about $4.7 billion. That leaves a projected budget surplus of about $1.5 billion, potentially setting up debate for additional tax cuts when lawmakers in the deeply conservative state meet in January when the Legislature convenes.

In September, Idaho lawmakers approved — and Little signed into law — a $500 million income tax rebate, as well as an ongoing income and corporate tax cut that takes effect Jan. 1. The ongoing cut comes from creating a 5.8% flat tax that is expected to cut more than $100 million from revenue for the current fiscal year. Those tax cuts came out of a budget surplus then estimated at about $2 billion.

Little in February signed into law what was then the biggest tax cut in Idaho’s history — a combined $600 million that included a one-time $350 million in tax rebates and $250 million in permanent income tax reductions going forward for people and businesses.

That’s on top of tax cuts in 2021, which combined with the tax cuts enacted in February, reached nearly $1 billion.