TRG | The Bottom Line – 12/3

While there has been so much focus on IIJA and a boost from the Federal government to the economy, state revenue collections remain a key indicator of overall economic health across the U.S., separating “haves” from “have nots.” TRG this week published our Q1’22 State Revenue Report, and Q1’22 tax collections were expectedly down YOY due to the delayed timing of Individual and Corporate collections from April to July in 2020.  Sales tax collections continue to see strength as noted by 6 consecutive months on significant double-digit increases. State contacts share that sales tax collections are still seeing the benefit of the most recent stimulus dollars distributed to households and are expected to begin rolling off in Q2. States budgets, however, are not calling for any slowdown in expenditures. California anticipates an increase in expenditures of $30.3B, or 18%, in FY’22 and Texas announced a ~15.0% increase in revenues available for spending over the next 2 years. As we have highlighted in our State Revenue reports over the past several years, the best indicator of future state revenue collections is employment data. Non-farm payrolls for our core 15 states continues to improve, now at a 19-month high.