State revenue update: timing quirks in Tax Department’s 'Mint' system and baccarat wins complicate fiscal picture

Fiscal staff reported to the Interim Finance Committee on the Economic Forum’s December meeting, comparing FY25 actuals and FY26 year‑to‑date collections against the May forecast and highlighting a mix of technical timing effects and volatile gaming receipts.

Michael Nakamoto (Fiscal Analysis Division) presented tables showing that, before tax credits, year‑to‑date general fund revenues appeared roughly $102.5 million (6.9%) above forecast. But three technical factors explain much of that edge: (1) the Department of Taxation’s Project Mint reporting cadence shifted collections postings (a mid‑month posting change created an estimated ~$27M timing bump to sales-and-use tax), (2) a legacy commerce‑tax payment processing issue tied to FY25 returns and a subsequent cyber incident delayed roughly $80M of expected commerce‑tax payments into FY26, and (3) gaming percentage fees have held stronger than forecast largely because baccarat wins — a high‑variance product — have been unusually favorable (and Formula 1 events further concentrate baccarat play).

Taken together, staff told the Economic Forum that raw totals look better than forecast but that much of the increase stems from bookkeeping/timing or concentrated gaming outcomes rather than broad‑based, sustained growth. Nakamoto said that after adjusting for the Mint timing effect, sales tax would be roughly 1% below forecast on a like‑for‑like basis. The commerce tax shortfall reported for FY25 (about $82.8M) is being recovered into FY26 as collections are reconciled.

Forum staff recommended continued monitoring of the gaming makeup (baccarat sensitivity), Mint reporting timing, and the commerce tax reconciliations; committee members asked follow‑up questions on the data sources and timing assumptions. The forum emphasized that formal target forecast revisions occur only before and during session.