State Budget Director John Chilton reported today that General Fund receipts increased 4.3 percent in August compared to last year. Total revenues for the month were $759.9 million, compared to $728.3 million during August 2017. So far this fiscal year (FY19), General Fund receipts have increased 4.5 percent.
The official revenue estimate for FY19 calls for revenue to increase 3.3 percent compared to FY18 actual receipts. Based on August’s results, General Fund revenues need to grow 3.1 percent for the remainder of the fiscal year to meet the official estimate.
Chilton noted that receipts through the first two months of FY19 were impacted by the effects of the tax package passed by the General Assembly in the 2018 Legislative Session. “The sales tax and cigarette taxes have increased sharply this fiscal year, as expected, due to the changes contained in HB 487. On the other hand, collections from the income taxes have predictably fallen off due to the rate reductions embodied in the tax plan. When the positive and negative impacts interact, the net effect has been robust growth in the General Fund of 4.5 percent. While it definitely takes more than two months of a fiscal year to define a trend, we are certainly pleased with the early accuracy of the estimates from tax reform. Going forward, we will attempt to further consider which parts of the monthly receipts are attributable to tax reform as opposed to general economic growth predicted by the Consensus Forecasting Group last December.”
Among the major accounts:
Individual income taxes fell 4.6 percent as both withholding and estimated payments declined compared to last year. This decrease was expected as the top rate was decreased from 6 percent to 5 percent.
Sales tax revenues grew 14.4 percent in August and are up 8.8 percent through the first two months of the fiscal year, largely in response to the 2018 changes
Corporation income tax collections increased $5.9 million as net returns rose. Year-to-date receipts in this account have increased 19.9 percent. The changes affecting corporation income taxation include a decrease in the top tax rate from 6 percent to 5 percent and changes to consolidation and apportionment requirements.
Cigarette taxes grew 49.1 percent for the month due largely to tax law changes and collections have increased 55.2 percent for the year.
Property taxes declined 32.1 percent in August and have fallen 24.9 percent for the fiscal year. Large swings in receipts are not unusual early in a fiscal year for this account.
Coal severance tax collections in August fell 5.4 percent and are down 22.8 percent through the first two months of the fiscal year.
Lottery revenues grew 2.7 percent in August and have increased 2.8 percent through the first two months of FY19.
Road Fund revenue fell 0.9 percent in August with revenues of $143.3 million but have increased 5.5 percent for the first two months of the fiscal year. Motor vehicle usage tax collections declined 8.2 percent due to a timing issue in a prior month, while motor fuels revenues increased slightly in August. The official Road Fund revenue estimate calls for an overall 0.3 percent decrease in receipts for the FY19. Based on year-to-date collections, revenues can decline 1.5 percent for the remainder of the fiscal year to meet the estimate.
Among the accounts:
Motor fuels rose 0.7 percent in August and have increased 0.8 percent for the year.
Motor vehicle usage collections fell 8.2 percent for the month but have grown 3.9 percent for the first two months of the fiscal year.
License and privilege tax rose 7.4 percent.