State Budget Director John Chilton announced today Kentucky’s General Fund receipts for July, the first month of Fiscal Year 2020 (FY20), totaled $845.7 million, a 1.9 percent increase compared to July 2018 receipts. Increases in the sales and use tax and cigarette taxes out-paced declines in the income, natural resources and property taxes as the impacts of tax law changes continue to influence monthly receipts.
The official revenue estimate for FY20 calls for revenue to grow 0.6 percent compared to FY19 actual receipts. Based on July’s receipts, General Fund revenues need to increase 0.5 percent for the remainder of the fiscal year to meet the official estimate. The FY20 official estimate consists of the December 2017 revenue estimate rendered by the Consensus Forecasting Group (CFG) adjusted for subsequently enacted legislation. The CFG met on August 9 to begin the process of revising the FY20 revenue estimate as well as preparing estimates for FY21 and FY22. The CFG will meet again in October before rendering final revenue estimates in December.
State Budget Director Chilton emphasized that economic growth continues in the Commonwealth but until full implementation, tax law changes will dominate the flow of monthly receipts. “Clearly the impacts of legislation are continuing to enhance several of our revenue accounts and that will continue for many more months. Fiscal Year 2020 has started much like FY19 ended, with strong growth in sales and excise taxes coupled with declines in the income-related revenue sources. Due to the effective dates of the tax law changes and taxpayer responses to the changes, it may be well into the fiscal year until tax policy impacts are more clearly discernible in actual receipts. Additionally, it is common to see large fluctuations in growth rates early in the fiscal year until receipts begin to stabilize; typically, after three or four months. As always, we will closely monitor receipts as well as the economic conditions of the Commonwealth.”
Among the major accounts:
- Individual income tax receipts fell 0.5 percent as withholding collections fell 0.4 percent.
- Sales tax revenues grew 10.7 percent.
- Corporation and LLET receipts declined a combined 13.3 percent.
- Total cigarette tax collections fell 24.0 percent in July because the floor stocks tax yielded $13.1 million in July 2018 and that revenue was nonrecurring. The cigarette excise and surtax grew 13.9 percent in July 2019 when the effects of the floor stocks tax are eliminated.
- Property tax receipts fell 22.0 percent on a very small base of collections.
- Coal severance tax revenues fell 1.1 percent to $5.1 million.
- Lottery revenues increased by $1 million to $19.0 million.
Road Fund revenues for July totaled $128.2 million, a 0.4 percent increase compared to last July. The official Road Fund revenue estimate for FY20 calls for revenue to decline 3.7 percent compared to FY19 actual receipts. Based on the first month’s receipts, revenues can fall 4.0 percent for the rest of the fiscal year and still meet budgeted levels. Like the General Fund, new official Road Fund revenue estimates for the current year and the next two fiscal years will be established by the CFG in December.
Among the major Road Fund categories:
- Motor fuels tax receipts fell 2.4 percent.
- Motor vehicle usage tax grew 10.7 percent.
- License and privilege taxes fell 9.7 percent.
Additional information is available here https://osbd.ky.gov/Pages/default.aspx