Below is the letter and accompanying presentation our office sent to the D.C. Mayor and Council, outlining our latest quarterly revenue estimate for September 2024. You can find the full letter with data appendices here. The presentation in powerpoint format is here.
Revenue Letter
This letter certifies the revenue estimate for the FY 2024 – 2028 District of Columbia Budget and Financial Plan. FY 2024 local source revenue has been revised upward by $72.7 million based on modest improvement in the near-term economic outlook for the District and the latest revenue collections data, which show higher than expected receipts from sales, real property, and unincorporated business taxes, as well as nontax sources. The forecast for FY 2025 – FY 2028 has also been revised upward by approximately $160 million. The table below compares the September 2024 estimate with the February 2024 estimate and shows the revenue impact of legislative changes included in the FY 2025 Budget Support Act.
Bulleted Summary of Economic Outlook and Revenue Trends (view in Powerpoint)
DC economic and job growth is weaker than US, but population, income, and wages are growing
- DC economic and job growth is weaker than the US, but DC is stronger on income and wage growth.
- For Q2 2024, job growth in the District was approximately 0.4% compared to the same quarter of the previous year, 0.8% for the metro area, and 1.7% for the US
- Jobs in DC for July remain below pre-pandemic levels across nearly all sectors, except for professional and business services.
- Growth in the District’s population, household size, resident employment, and civilian labor force are stronger relative to the last forecast. The forecast for personal consumption expenditure also improved for the near-term outlook.
- The District’s unemployment rate has increased from its lowest point of 4 percent in November 2022, to an average of 5.1 percent for the first quarter of 2024, but remains historically low.
- No significant improvement on the commercial property market office occupancy levels.
FY 2024 Revenue
- General fund YTD revenue collections proved resilient growing 3.4%, despite a slowing labor market and an expected slowdown in consumer spending.
- Overall YTD gross tax revenue is up 2.6%, mainly due to stronger sales, income, and property tax collection.
- Nearly all the YTD growth in non-tax revenue comes from increased photo traffic fine collection, following the expanded automated camera units from FY2024 BSA.
- Decline in YTD other taxes is mainly the result of lower estate and deed taxes collected this year relative to last year.
- Growth in gross receipts is mainly a result of stronger public utility taxes and ballpark fee collection.
Risks to our outlook
National:
- Federal government shutdown and decisions over Federal Spending levels
- Policy uncertainty related to the US national elections
- Inflation resurfaces
- Geopolitical turmoil: escalation of the war in Ukraine and the Middle East
- Risk of U.S. recession
District:
- Remote work expands beyond current levels
- Federal employment declines
- Population recovery stalls
- Potential reduction in Metro service
- Public safety concerns