The September revenue forecast predicts a nearly $500 million drop in revenue for the next biennium. The forecast showed a modest $43 million increase for the current 2021-2023 biennium.

The decrease in the revenue forecast for 2023-2025 is due to some of the following factors: slowing growth in GDP, high inflation, higher interest rates, supply chain issues, the Russian war in Ukraine, and slowing real estate excise tax (REET) collections. Additionally, $117 million of the nearly $500 million decrease was due to a technical change based on a ruling by the Board of Tax Appeals that allows the machinery and equipment sales tax exemption to be applied to certain research and development equipment.

One of the largest areas of impact is the forecasted decrease in REET revenue collections. REET collections have been at record levels; however, slowing home sales are expected to have an impact with REET revenue expected to decrease in 2023-2025 by 35% or about $135 million.

The next revenue forecast update will be released on November 18, 2022.