September 14, 2022
In this post, we provide an interim update to our formal revenue outlook for 2022-23, which was published in May. Using the methods discussed here, this interim update adjusts our May outlook to account for the most recent revenue and economic data and then compares this update to 2022 Budget Act assumptions.
At the time of our May outlook, we cautioned that economic indicators were suggesting a slowdown could be on the horizon. More recent economic data has continued to point in this direction. Consistent with this, our updated estimates suggest collections from the state’s “big three” taxes—personal income, sales, and corporation taxes—are more likely than not to fall below the Budget Act assumption of $210 billion. Much of the fiscal year, however, lies ahead of us and 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. As we discuss here, we expect the Legislature very likely will face additional, significant constraints this year due to the requirements of the State Appropriations Limit.