The Office of State Budget Director reported that December’s General Fund receipts totaled $1,390.2 million, the fourth consecutive month in which collections have exceeded $1 billion. Receipts have increased 15.9 percent for the first six months of the fiscal year that ends June 30, 2022.
The official FY22 revenue forecast, which was revised by the Consensus Forecasting Group (CFG) on December 17, 2021, calls for 7.5 percent revenue growth. Revenues can remain flat for the last six months of the fiscal year and still meet the estimate.
State Budget Director John Hicks noted that the 10.4 percent increase follows the recent trend of strong revenue performance that corresponds to the solid economy in Kentucky.
John Hicks
“December’s growth rate marks the fifth straight month of double-digit percentage growth. During that span, the three major revenue sources have all reflected the favorable underlying economic conditions. Sales tax receipts were up 19.9 percent in December and 13.3 percent year-to-date, highlighting continued strength in consumer spending. The withholding component of the individual income tax came in 6.7 percent more than December 2020 with year-to-date growth of 7.7 percent, reflecting growth in Kentucky wages. Major business taxes grew 23.2 percent in December and stand 44.9 percent higher through the first half of the fiscal year, a demonstration that Kentucky’s corporate sector is strong. Based on the robust revenue growth and projected favorable economic conditions ahead, the CFG raised the official FY22 estimate for the Kentucky General Fund from $11,849.8 million to $13,791.9 million, an increase of $1,942.1 million.”
Among the major accounts:
• Sales and use tax receipts continued to show strength with a 19.9 percent increase in December. Collections in December were primarily based on November retail sales, which were strong due to early holiday shopping.
• Business tax receipts rose 23.2 percent for the month as both corporation income and the limited liability entity taxes were up. Receipts have risen 44.9 percent for the year. Estimated payments for the corporate income tax were up 21.1 percent in December.
• Individual income tax collections grew 7.4 percent in December due mostly to a 6.7 percent increase in withholding. Year-to-date collections in this account have increased 8.7 percent.
• Property tax collections fell 7.4 percent in December but are up 6.7 percent for the year. Due to the influence of real property payment schedules, total property tax collections are volatile and subject to timing differences each year in the period between November and February.
• Cigarette tax receipts decreased 14.8 percent in December. For the first six months of the year collections have fallen 8.2 percent.
• Coal severance tax receipts rose 18.3 percent in December and have risen 5.2 percent for the year.
Road Fund receipts for December totaled $125.4 million, a 3.6 percent increase from December 2020 levels. Year-to-date receipts have increased 3.2 percent. Road Fund revenue growth has been consistent through the first half of the fiscal year, increasing 3.5 percent in the first quarter and 2.8 percent in the second. The official revised revenue estimate calls for a 2.3 percent increase for the fiscal year so receipts must increase 1.5 percent over the remainder of the fiscal year to meet the official revenue estimate.
Among the accounts, motor fuels receipts grew 11.4 percent in December, and are up 4.8 percent for the first six months. Motor vehicle usage revenue rose 3.1 percent in December and has increased 3.1 percent year-to-date. License and privilege receipts fell 37.5 percent for the month and are down 0.7 percent for the year.
