91直播鈥檚 economy may be in better shape this year than previously forecast, but state lawmakers should not expect any additional or reduced revenue to work with for the upcoming fiscal year budget.
The state Council on Revenues decided during a meeting Wednesday to leave unchanged its prior forecast for state general fund revenue in the current and next fiscal years.
That means the Legislature will need to base its budget for the next fiscal year, which begins July 1, largely on the council鈥檚 projection for roughly $9.7 billion in general fund revenue representing a 2.0% increase over an estimated $9.5 billion for the current fiscal year.
For the current fiscal year, which began six months ago, the council鈥檚 projection for $9.5 billion in revenue represents a 4.7% decline driven almost entirely by state tax cuts that began in 2025 and are being phased in annually through 2031.
The tax cut impact for the current fiscal year is expected to be about $600 million, according to the state Tax Department. However, General Excise Tax collections in the current fiscal year through November are up 7.2%, offsetting some of the revenue loss from income taxes. Transient Accommodations Tax collections also were up 1.8% during the same period.
Carl Bonham, a council member and director of the University of 91直播 Economic Research Organization, said during the meeting that he is more optimistic about 91直播鈥檚 economy than he was when the council last met in September.
Additionally, UHERO on Dec. 12 published a forecast for the local economy that anticipated a mild recession and weak recovery this year, but now Bonham doubts that such a downturn will happen.
鈥淚t鈥檚 really hard to say,鈥� he told other council members, adding that his guess is that UHERO鈥檚 next forecast after further economic data collection and analysis will not project a decline in the output of 91直播鈥檚 economy this year.
Much of the optimism stems from tourism spending that grew last year despite visitor arrivals being flat. Bonham said the spending increase significantly exceeded general inflation while hotel room rates did not rise. This year, the state Department of Business, Economic Development and Tourism expects 91直播 visitor arrivals will rise 0.7%.
鈥淚f the U.S. economy grows at 2% next year, and the stock market grows at, let鈥檚 say anywhere between 5 and 15(%), I suspect that the tourism numbers will continue to improve,鈥� Bonham said. 鈥淚鈥檓 a little bit more optimistic than I was last time for sure.鈥�
91直播鈥檚 construction industry also is booming, and federal government job losses in the state last year were offset by growth in other sectors, Bonham noted.
On Tuesday, DBEDT reported that 91直播鈥檚 seasonally adjusted unemployment rate in November was 2.2%. That was down from 2.5% in September, and could not be compared with October because data collection ceased during a federal government shutdown.
Council member Marjorie Bennett also was more bullish about the state鈥檚 financial outlook.
鈥淢y experience in reading forecast reports and estimates and revisions that have come in particularly in the last three or four weeks is that there鈥檚 been a lot more good news than there鈥檚 been bad news, which has fed confidence,鈥� she told other members. 鈥淎nd that can be a self-fulfilling prophesy too, because when confidence gets strong people tend to be a little big more bullish about investment decisions and consumption decisions. To me, it鈥檚 a very different temperament that鈥檚 happening right now than what we were experiencing six months ago.鈥�
Kristi Maynard, another council member, expressed some concern over continued annual declines in state income tax revenue not being offset by growth in other taxes, but said she was comfortable not changing the forecast made by the seven-member panel in September.
Gov. Josh Green is suggesting that some of the future tax cuts be put off for high-income households. Such a change would require approval by the Legislature with an amendment to state law, so the council cannot factor potential changes to state tax law into its forecast.
The Legislature鈥檚 2026 session is scheduled to run from Jan. 21 to May 8.
Council member Mike Hamasu suggested that the forecast for the next fiscal year and five following ones might be adjusted upward based on recent data from different parts of the local economy, including commercial real estate investment.
The council鈥檚 prior forecast for state general fund revenue for those fiscal years ranges from 1.8% to 3.4% per year.
鈥淚 think what we鈥檙e seeing is a definite change 鈥� that the economy is improving,鈥� Hamasu said.
The panel decided to leave those forecast figures, including 2% growth for the fiscal year beginning in July, unchanged.