State Budget Director John Hicks announced Wednesday that Kentucky’s General Fund receipts for July, the first month of Fiscal Year 2023 (FY23), totaled $1,077.1 million, a 9.7 percent increase compared to July 2021 receipts.
This is the fifth consecutive month, and tenth out of the last 11 months, in which collections have exceeded $1 billion. The $95.6 million increase in revenues was concentrated in the sales and gross receipts and the individual income tax. The major business taxes and miscellaneous taxes both declined compared to last July.
Due to the revenue surplus in FY22, the official revenue estimate for FY23 is 6.4 percent lower than the FY22 actual receipts. Receipts can decline 7.6 percent over the rest of the fiscal year and still meet the revenue estimate.
Hicks said the largest two taxes continue to dictate the performance of Kentucky’s General Fund revenues as the new fiscal year begins.
“The individual income tax and sales tax continue to be the engine of General Fund growth to start FY23. Combined receipts in the two accounts grew $99.1 million in July while all the remaining accounts fell a collective $3.5 million,” Hicks said. “Strength in these two accounts demonstrates that the Kentucky economy remains strong with payrolls increasing and consumers continuing to make purchases that elevate the sales tax. July was the second highest month on record for the sales and use tax with collections of $496.2 million.
“Increasing payrolls and slightly lower gasoline prices at the pump have contributed to the higher discretionary income used for spending by Kentucky consumersJuly’s receipts from individual income and sales taxes continue the recent trend of double-digit percentage growth seen in FY22. Kentucky is extremely well-positioned to exceed the enacted estimate from the 2022 Regular Session of the General Assembly.”
Among the major accounts:
• Individual income tax receipts grew 12.2 percent as withholding collections rose 11.5 percent. Withholding growth in FY22 was 11.1 percent.
• Sales tax revenues grew 12.3 percent while posting the second highest level of collections ever received during a single month. The sales and use tax grew 11.0 percent in FY22.
• Major business tax receipts fell 30.4 percent as the corporation income tax declined while LLET collections increased. July is not typically a large month for business tax collections, so it is not unusual to see big swings in percentage terms during smaller months.
• Cigarette tax collections rose 11.1 percent for the month.
• Property tax receipts rose 20.8 percent primarily on the strength of motor vehicle and public service collections. Like the business taxes, July is a relatively minor month for property tax collections.
• Coal severance tax revenues grew 55.8 percent to $7.8 million.
• Lottery revenues increased by $1.5 million to $23.5 million.
Road Fund revenues for July totaled $137.7 million, a 0.2 percent decrease compared to last July. The official Road Fund revenue estimate for FY23 calls for revenue to increase 2.7 percent compared to FY22 actual receipts. Based on the first month’s receipts, revenues must grow 3.0 percent for the rest of the fiscal year to meet budgeted levels.
Among the major Road Fund categories:
• Motor fuels tax receipts grew 0.8 percent.
• Motor vehicle usage tax collections fell 6.8 percent.
• License and privilege tax receipts rose 14.4 percent.
To access receipts report, visit www.osbd.ky.gov
Office of the State Budget Director
