In this post, we provide an interim update to our formal revenue outlook for 2022-23, which was published in November. Using the methods discussed here, this interim update adjusts our November outlook to account for the most recent revenue and economic data and then compares this update to 2023-24 Governor's Budget assumptions.
At the time of our November outlook, we cautioned that economic indicators were suggesting a slowdown could be on the horizon. More recent economic data have continued to point in this direction. (These data do not yet reflect any downstream consequences of very recent developments in the banking sector.) Consistent with this, our updated estimates suggest collections from the state’s “big three” taxes—personal income, sales, and corporation taxes—are likely to fall below the Governor's Budget assumption of $200 billion. That being said, there is a quarter left in the fiscal year and the trajectory of the economy remains very cloudy. As a result, there remains significant uncertainty about how much the state ultimately will collect. Further, we caution that the implications of unanticipated changes in revenues for the state's budget are not straightforward.