New Fiscal Year Kicks Off with a Surprising $400 Million Boost

The state ended the 2024 fiscal year with an unexpected revenue surplus, accumulating nearly $600 million more than January’s budget forecast. This figure also surpasses lawmakers’ mid-June predictions by over $400 million, legislative staffers confirmed on Tuesday.

The final month of the fiscal year, June, played a significant role in this positive outcome, with revenue collections exceeding forecasts by $248 million, according to the Joint Legislative Budget Committee’s monthly fiscal report. This closing performance elevated the total revenue to $563 million above the January forecast, crucial for determining the subsequent fiscal year’s budget.

As a result, the 2024 fiscal year concludes with $412 million more than anticipated in the mid-June approved spending plan. However, the ultimate impact on the state budget remains uncertain until final spending for June is accounted for next month. Despite this, the surplus could be a critical advantage given that the fiscal year 2025 budget’s three-year projection predicts a narrow $8 million surplus by 2027.

The surplus was primarily driven by Medicaid refunds, totaling $160 million, due to lower-than-expected spending on developmental disabilities and higher managed care program profits. Individual income taxes also contributed significantly, beating projections by $156 million as fewer tax refunds were issued. Corporate income taxes added another $92 million, declining less over the previous year than expected.

Additionally, insurance taxes and sales taxes exceeded expectations by $51 million and $49 million, respectively. The state also saw record proceeds from unclaimed property, amounting to $211 million, which yielded a $41 million boost in miscellaneous revenue.