Half of US states to exceed revenue projections with COVID money, high wages, prices factors, report

State across the country are collecting so much revenue that about half of them are now projected to exceed projects this fiscal year, according to recently released National Conference of State Legislatures study.

The study attributes the robust revenue to higher wages and higher prices, which results on more taxes collected.

In addition, the study also that 17 states are on track to meet budget projections, in addition to the dozens that have exceeded projections. 

State also received millions in pandemic relief money and still have surplus funds that have helped their financial postions.

Close to 50% of states are projecting personal income taxes will exceed expectations this year, as will sales tax revenues.

The figures suggest residents are earning and spending, which has filled state coffers but has also helped spark record inflation.

Lucy Dadayan, a state budget expert at the Urban-Brookings Tax Policy Center, told The Hill newspaper the surplus news is not entirely good because of the growing disconnect between state economies and tax revenues, meaning state economies are growing far more slowly than state revenues. 

"Consumers will continue resuming their pre-pandemic activities, which means spending more on services than on goods, which will impact sales tax revenues," she told the outlet.

Some state leaders are considering how to spend their surplus funds. Democrats are thinking about possible one-time direct payments to taxpayers, while some Republicans hav already passed tax cuts.