Earned Interest Saves Day for State Revenue Picture

CONCORD — By the grace of interest earned on federal and state money, state revenues ended the second month of the 2025 fiscal year with a surplus.

While not a large revenue month, August saw $144.7 million flow into the state’s coffers, which is $3.6 million more than estimates, but $1.4 million less than a year ago.

For the first two months of the new fiscal year, revenues for the general and education trust funds totaled $271.5 million, which is $7.8 million over estimates, and $7.2 million more than a year ago.

However, all but four of the 14 tallied revenue sources were below estimates for the month, but the four above estimates more than made up the difference.

Business taxes, which combine the business profits and business enterprise taxes, were slightly ahead of estimates returning $12.7 million, above estimates by $1.4 million, and $3.6 million more than a year ago.

But for the year to date, business taxes returned $55.2 million which is $2.7 million below the prior year, and $2.5 million less than estimates.

According to the Department of Revenue Administration, the year to date decrease from the prior year was due to lower corporation returns, extensions, and estimates. And the agency noted refunds were $14 million compared to $7.9 million for last fiscal year to date.

The state’s second single biggest source of revenue, the rooms and meals tax, returned $34.1 million in August, which is $1.7 million below estimates, and $800,000 less than what was collected a year ago.

For the year to date, the levy has produced $66.6 million, which is $900,000 more than estimates and $1.1 million more than a year ago.

According to the DRA, the gross tax collected from meals was up .6 percent, while room rentals were down 2.8 percent from a year ago.

The tobacco tax continued to underperform estimates returning $16.4 million for the month, which is $4.2 million below estimates and $1.9 million less than a year ago.

For the year to date, the tobacco tax has returned $32.7 million, which is $1.2 million less than estimates and $7.2 million less than a year ago.

The “other” category has performed well above estimates for the biennium mostly due to interest earned on federal relief and recovery funds allocated by not spent, and state surpluses. August was no exception.

The category returned $15.4 million for August, which was $12.3 million more than estimates, and $2.5 million more than a year ago.

For the year to date, the category returned $28.3 million, which is $14.5 million more than estimates and $22.3 million more than a year ago.

Last fiscal year, the Lottery Commission returned a record amount of money for public education, but so far this year, the large lottery prizes that fueled revenues last fiscal year have been slower coming.

For August the Lottery Commission returned $12.4 million, which is $4 million below estimates and $1.1 million less than a year ago.

Another large revenue producer that has performed below estimates for the biennium has been the real estate transfer tax, as the white hot market of several years ago has slowed due to small inventories and increasing prices.

The levy produced $19.8 million in August, which is $3.1 million less than estimates and $1.3 million less than a year ago.

For the year to date, the real estate transfer tax has produced $39.3 million, which is $2 million below estimates and $5.3 million less than a year ago.

According to the DRA, the figures represent an increase of 8.8 percent increase in the number of transactions during the same month a year ago, and a 11.2 percent increase in values.

Other taxes performing below estimates for August include transfers from the Liquor Commission, the communications, beer and utility property taxes, while the interest and dividends tax, which is repealed at the end of the calendar year, produced more than estimates as did the insurance tax and court fines and fees.

The Highway Fund, supported largely by auto registrations and the gas tax, produced $24.6 million in August, which is $2.3 million ahead of estimates and $4.1 million more than a year ago.

The Fish and Game Fund mostly collected from fish and hunting licenses collected $4.2 million for the year to date, which is $200,000 less than estimates and the same as last year.

September is a much larger revenue producing month largely due to quarterly business tax payments, which is also a good indicator of economic activity.

Garry Rayno may be reached at garry.rayno@yahoo.com.