Staff warns statutory sales tax distributions reduce share available to state general fund; committee hears options

Legislative budget staff told the Joint Finance-Appropriations Committee that statutory sales tax distributions and recent earmarks have reduced the portion of gross sales tax collections that flows into the state general fund and cautioned that the change lowers the legislature’s flexibility in a future downturn.

Division Manager Keith Bybee led a walkthrough of the sales tax distribution table in the legislative budget book (pages 32–34). He showed that while gross sales tax collections have grown — from about $3.1 billion in 2024 to a projected $3.37 billion in 2025 and $3.5 billion in 2026 — statutory distributions and transfers reduce the percentage of those collections reaching the general fund. Staff presented that the general fund’s share of sales tax collections has fallen from roughly 85–86% before the Great Recession to about 65% in the FY2025 projection after recent statutory earmarks and the creation of a tax…