The Office of the State Controller this week released its General Fund Monthly Financial Report for the 2021-2022 fiscal year that ended June 30th.
Notable data points include:
- The General Assembly budgeted $26 billion for the fiscal year. They actually spent $25.8 billion, still outspending the year prior by 7.6%.
- At the beginning of FY2021-22, the state had $6.3 billion in unreserved surplus funds, likely encouraging the solid tax reform and savings included in the budget billed passed last November.
- The amount in the Savings Reserve increased 57.2% over the fiscal year, from nearly $2 billion to $3.1 billion. These savings will help the state weather the coming economic recession that could cause revenues to plunge.
- The state expected to collect $28.4 billion in revenue, but actually brought in $33.2 billion in revenue, leaving a $4.8 billion dollar surplus available for FY2022-23.
- In FY2021-22, tax revenues were up 11.7% from the year prior, not surprising considering the slowdown in revenue caused by the Covid lockdowns of 2020.
- Revenue from the personal income tax increased 11.0%, while corporate and sales revenues were up 7.6% and 13.0% respectively.
High revenues are not a bad problem to have – but they are no excuse for a spending bonanza. In fact, high revenues are partially the result of our conservative leadership’s great work to rein in spending and keep taxes low.
The latest state budget adjustments proposed a 7.6% year-over-year increase in spending for our current fiscal year of 2022-23. This is the largest such annual increase in more than a decade. Even so, legislators aggressively set aside funds for an economic downturn. Moreover, the current inflationary environment certainly puts upward pressure on the state budget.
The overall, uncertain economic situation warrants caution against significant increases in recurring spending commitments. As I wrote earlier this year, the current revenue surplus does bolster the case for a Taxpayer Bill of Rights that limits government spending and protects taxpayer dollars. If such surpluses occurred under a progressive legislature, there’s little doubt it would be spent on pet projects, bloating the budget and overextending future taxpayer obligations. A TABOR would prevent shortsighted spending sprees, regardless of who is in charge.