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Ways and Means hears fiscal outlook as corporate receipts lag and out‑year gaps widen
Summary
Committee staff told the House Ways and Means Committee that fiscal year projections show growing out‑year gaps driven by lower corporate and mineral receipts and by scheduled reversion of temporarily diverted transportation revenues; revenue staff said corporate collections stood at about $323 million against a REC forecast of $900 million.
The House Ways and Means Committee heard a briefing March 10 on how the state’s revenues are tracking after the 2025 tax reforms and on the budget baseline that underpins the governor’s executive budget.
Allison Prior, deputy director of the House Fiscal Division, told members the REC (Revenue Estimating Conference) forecast adopted in December underlies the FY27 budget and that, on current paths, the state faces growing out‑year shortfalls: "we are projected to have a $325,000,000 deficit for fiscal year 28, a $614,000,000 deficit for fiscal year 29," she said. The presentation attributed part of the projected gap to already‑enacted, time‑limited changes that will revert (for example, temporary diversions from the Transportation Trust Fund).
Revenue Secretary Jared Coniglia said corporate collections were lagging the REC forecast: "$323,000,000 right now is where we're at, but the best months are yet to come," he told the committee, while noting the REC forecast for corporate income is $900 million and that $600 million is the threshold that would keep the state general fund whole. Department of Revenue staff also flagged a recent rise in refund claims and refunds issued compared with prior filing cycles.
Members asked several technical questions about where collections for new digital sales taxes appear in the data and when the committee can expect clearer signals about the revenue effects of tax reform. Fiscal staff and legislative economists repeatedly told the committee they expect the spring tax‑return cycle and the May REC process to provide earlier indicators, but that the long‑term effects — particularly on corporate collections and credits — may take two to three years to fully settle.
Appropriations Chair McFarland told the committee that if corporate collections fall below the $600 million mark, that will require program cuts or offsets in appropriations: he urged Ways and Means members to coordinate with Appropriations before advancing bills that carry fiscal notes.
The committee did not vote on any budget measures in the briefing session. Staff emphasized members can consult the tax exemption budget and the annual net receipts reports for line‑by‑line details on exemptions, collections and fiscal cost estimates.
