State revenues continue to hold their own but growth slowing
FRANKFORT, Ky. (WTVQ) – State revenues continue to hold their own, despite the ongoping COVID-19 outbreak.
State Budget Director John Hicks reported Tuesday that October’s General Fund receipts rose 3.0 percent, or $27.7 million, over last year’s total.
Almost half of the increase was due to early payments of tangible property tax.
Revenues for the month were $948.4 million compared to $920.7 million collected in October 2019. Receipts have increased 5.1 percent for the first four months of the fiscal year, and can decline 1.9 percent over the final eight months of FY21 to achieve the official revenue estimate of $11,603.1 million.
Road Fund receipts for October totaled $131.7 million, a 0.4 percent decline from October 2019 levels. Year-to-date Road Fund receipts have grown 1.4 percent. Based on year-to-date collections, Road Fund receipts must increase 4.7 percent to meet the official FY21 revenue estimate of $1,543.4 million.
Hicks noted the General Fund gains were largely concentrated in the major taxes and those increases offset declines among the smaller accounts.
Sales and income taxes continued to exceed expectations over the first four months of the fiscal year. Early in the fiscal year, sales taxes and income withholding dominate the share of aggregate collections, making up roughly 77 percent of total General Fund.
Sales taxes have grown 6.8 percent and withholding has risen 5.0 percent from July through October.
Excluding the impact of unemployment insurance benefits, withholding has grown 2.1 percent.
However, while General Fund collections have grown by an aggregate rate of 5.0 percent this year, the rate of growth has declined each month.
General Fund growth was 7.0 percent in July, 5.9 percent in August, 4.9 percent in September, and 3.0 percent in October (1.6 percent excluding the advanced receipt of telecommunications property taxes).
This four-month time period coincides with the expiration of federal fiscal stimulus to states, and more recently a surge in coronavirus cases.
In anticipation of the enactment of a new budget, the Consensus Forecasting Group will convene in early December to officially revise the revenue estimates for FY21 and FY22.
Among the major accounts,
- Sales and use tax receipts grew 6.3 percent in October and are up 6.8 percent for the year. The heaviest growth came from the big box retailers with online channels. Receipts in the online categories of marketplace sellers and remote retailers totaled $18.5 million compared to $13.1 million for the same period last year.
- Individual income tax collections rose 4.7 percent; only 2.6 percent when excluding unemployment insurance benefits. Receipts for the individual income tax are up 4.5 percent for the first four months of FY21; 1.6 percent when excluding unemployment benefits.
- Combined corporation income and LLET tax receipts rose 19.9 percent. Year-to-date, these receipts have decreased 1.1 percent.
- Property tax collections rose 59.8 percent in October due largely to an earlier issuance of tangible property tax bills related to the telecommunications industry.
- Cigarette tax receipts fell 3.0 percent in October and are down 3.2 percent for the first four months of the fiscal year.
- Coal severance tax receipts fell 9.9 percent to $4.6 million in October. Year-to-date receipts are down 26.3 percent.
- Lottery revenues fell 13.1 percent in October and have decreased 2.9 percent for the year. The large percentage decline for the month stems from a historically high payment received last year in October rather than any performance metric of Lottery play.
Road Fund receipts fell 0.4 percent in October as strong growth in the motor vehicle usage tax was offset by declines in motor fuels and license and privilege taxes.
Year-to-date collections have risen 1.4 percent compared to the previous year, almost entirely attributable to growth in the motor vehicle usage tax. Motor fuels taxes fell 3.0 percent in October and are down 4.8 percent for the year.
Motor vehicle usage tax collections grew 11.0 percent and have increased 11.8 percent through the first four months of the year. License and privilege revenue fell 23.4 percent in October and are down 0.5 percent for the year.
Nontax receipts grew 22.6 percent for the month but are down 11.2 percent for the year.