FY 2016 Ends with Revenue at a Six-Year Low
FY 2016 officially came to an end on June 30th, bringing to a close one of the most difficult budget years the state has faced in years. The final revenue report for the fiscal year showed revenue totaling $4.10 billion for the fiscal year, $203 million below the estimate. However, that number was inflated by actions taken during the 2016 legislative session, which included transferring funds that would have gone to pay down the workers compensation debt fund. Those transfers totaled $128 million. Without that additional revenue, general revenue would have fallen below $4.0 billion, putting revenue at its lowest point since the depths of the recession.
Adjusting for inflation, revenue has declined $368 million, or 8.5% in the past 10 years.
The General Revenue Fund has not kept pace with growth in the economy, shrinking as a share of personal income. General Revenue as a share of personal income has fallen from 7.3% in FY 2006 to just 5.8% in FY 2016.
FY 2016's poor revenue performance was due in large part to the severance tax. Severance tax collections were harmed by a rapid decline in natural gas prices, which fell 60%, and the continued struggles of the coal industry, with revenue for FY 2016 $195 million below estimates. Also missing revenue estimates were the sales tax ($39 million below), income tax ($57 million below), and the corporate net income/business franchise tax ($30 million below).
Of the state's major tax revenue sources, only the sales tax was above its FY 2015 collection levels for FY 2016, with an increase of $3 million. The personal income tax was down $38 million, corporate net income/business franchise tax was down $42 million, and the severance tax was down $137 million from FY 2015.