This past week during IAC’s biweekly conference call with Governor Little, Alex Adams, Director of the Division of Financial Management, announced that the state of Idaho was revising its revenue forecast for the current fiscal year. Unemployment is currently hovering around 5.6% and consumer spending has rebounded since April lows. Given these important indicators, the state is now predicting a 5.4% year-over-year increase in sales tax revenues. Information on state sales tax collections, as well as other state general fund revenue collection information, can be found in the monthly State General Fund Revenue Report (by clicking here).
This trend has played out in revenue sharing estimates during the prior three months. While year-over-year revenue sharing was down 5.29% for the month of April, year-over-year revenue sharing estimates for May and June increased 7.23% and 5.97% respectively. Online sales tax collections dedicated to the state tax relief fund were particularly strong, increasing from $4.8 million in July 2019 to $10.9 million in July 2020. Overall, the state projects remote online sales purchases from retails not having a physical nexus to Idaho to increase 10% year over year. This is an important indicator to track as online sales tax collections have increased sharply over the last year and are not included in revenue sharing to counties.
Revenues to the Highway Distribution Account and Local Highway Distribution also increased year-over-year for the month of July, increasing by 11.17% and 11.24% respectively. These increases reflect more idahoans going back to work and recreating after the initial stay home order was lifted.
Idaho’s improving unemployment rate, increased mobility, and increased consumer spending are all positive signs heading into county fiscal year 2021. While there is still uncertainty, counties will enter fiscal year 2021 on a better financial footing than was originally anticipated.