After Cuts, AZ Finishes FY2024 in the Black
Members-only Legislative Recap Coming Soon
June Revenue Shows Shortfall Resolved for Now
The state ended the fiscal year on June 30 with $412M more than expected, according to the Legislature’s Joint Legislative Budget Committee (JLBC), which could help to bolster an ending balance expected to dwindle by FY2027.
JLBC noted in its monthly fiscal highlights for July that number could change somewhat as the last expenditures for FY2024 are finalized in July, and that a significant portion of the overage is considered one-time, as total FY2024 revenue collections were 0.1% lower than the prior year.
As we close the books on this fiscal year, some interesting things to note about the year’s revenue patterns:
Sales tax revenue overall grew by 3.3% in FY2024, producing $49M more than forecast. The highest growth was in the contracting category.
Individual income tax posted an overall decline of 7.5% from FY23 to FY24, due to final phase-in of the income tax cut enacted in 2021. Initially, the state had assumed an even larger decline of over 10%. Therefore, collections were $156M higher than expected. This was mostly due to issuing fewer refunds than anticipated.
Corporate income tax also declined by 3.4%, which is less of a decline than expected. The reasons for this are not entirely clear, because Arizona does not aggregate corporate tax filing data by industry categories. JLBC notes that many other states also experienced a decline this year.
While an unexpected gain of $412M sounds good, and it is welcome, it’s still a very small percentage of the $15.8B collected in FY2024, meaning that keeping the budget balanced moving forward will require both expenditures and revenue to hit currently projected targets.
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