Arizona revenue better than expected in February despite revenue decline
Revenue was down in Arizona last month from last year, but it was better than expected.
According to the Arizona Joint Legislative Budget Committee, the state’s general fund collected $725 million in February 2022. It was a 12.5% decrease in revenue compared to February 2021. However, it was a much better-than-expected month. The state’s general fund collected $198 million more than the state’s projected forecast.
Sales tax collection wasn’t the issue. Year-to-year, the state saw a 16.2% increase in sales tax revenue, according to the report.
“Retail/Remote Seller collections continue to grow,” the report said. “This is the 20th consecutive month that collections grew by double-digits. While both categories continue to consistently perform well, Remote Seller collections are growing at a faster rate than Retail collections, posting an average growth rate of 42.1% in the past year compared to 18.8% for retail.”
The biggest culprit of the revenue decline was income tax collection. The state saw $170.6 million in net collections in February 2022. It was a 52.9% decrease from February 2021.
The state thinks that the issue is the timing of tax season in the state. Tax season started earlier this year than it did in 2021,
“We believe that these February results are primarily due to a timing issue,” the report reads. “This year’s tax filing season began January 24th compared to February 12th last year. Moreover, last year’s filing due date was delayed to May 17th compared to April 18th in the current year. As a result of the changes made to the 2021 tax filing season, a significantly smaller amount of refunds ($140.7 million) was deposited in February 2021 than normal. These changes have added significant uncertainty in terms of predicting the timing of refund deposits during the 2022 tax filing season. For this reason, we believe that February’s large forecast gain is overstated and likely will be reversed in the coming months.”
The report found that revenue from lottery ticket sales was up 0.7% in February 2022 compared to February 2021, and liquor tax revenue was up 48% from February 2021 to February 2022. However, there was a 33.3% drop in tobacco tax revenue in that same span.
This article was originally posted on Arizona revenue better than expected in February despite revenue decline
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