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State revenues increase sharply in October; General Fund revenues up 11.5% over last year

By Tom Latek
Kentucky Today

There was some excellent news for state finances on Tuesday as Kentucky’s General Fund saw a huge reversal from a decline in September, to a sharp increase in October.

The State Budget Director’s office reported October’s General Fund receipts rose 11.5 percent, or $94.7 million, over last year’s total. Revenues for the month were $920.7 million compared to $826.0 million collected in October 2018. Receipts have increased 3.6 percent for the first four months of the fiscal year and can decline 0.7 percent over the final eight months of FY20 to achieve the official revenue estimate of $11,462.0 million.

Budget Director John Chilton notes the gains were largely concentrated in three areas: sales and gross receipts, individual income taxes and the lottery dividend payment.

“Consumption-based tax revenues continue to perform well as nearly all gross receipts and excise accounts were up sharply,” he said. “The sales and use tax rose by 9.2 percent in October and 8.1 percent thus far in FY20. The sales tax continues to show strength, aided greatly by recent legislation that expanded the base of the sales tax to include additional services as well as extending the imposition of sales tax to an increasing number of online retailers and facilitators. In addition, the individual income tax rose 4.9 percent on the strength of higher withholding collections.”
Chilton says the combination of these factors was welcome news coming off the heels of a September decline in General Fund revenues of 1.2 percent over a year ago.

Detailing results in the major accounts:

• Combined corporation income and LLET tax receipts rose 28.5 percent. Year-to-date, these receipts have decreased 5.9 percent.

• Individual income tax collections rose 4.9 percent on the strength of withholding receipts. Receipts are up 2.4 percent for the first four months of FY20.

• Sales and use tax receipts grew 9.2 percent in October and are up 8.1 percent for the year.

• Property tax collections rose 4.2 percent in October but are down 5.5 percent year-to-date.

• Cigarette tax receipts grew 14.0 percent in October and are up 3.3 percent for the first four months of the fiscal year.

• Coal severance tax receipts fell 26.8 percent to $5.1 million in October. Year-to-date receipts are down 15.8 percent.

• Lottery revenues grew 77.4 percent in October due to an unusually large dividend payment that included some residual retained earnings from last fiscal year.

It was a similar story for the Road Fund, where receipts grew 6.9 percent in October as all major categories increased. Year-to-date collections have risen 2.5 percent compared to the previous year.

Motor fuels taxes rose 6.4 percent in October and are up 2.1 percent for the year. Motor vehicle usage tax collections grew 2.2 percent and have increased 4.9 percent through the first four months of the year. License and privilege revenue rose 24.6 percent in October but are down 3.8 percent for the year. Nontax receipts grew 8.2 percent for the month and are up 9.3 percent for the year.

Chilton adds: “The Consensus Forecasting Group met in August and October and will convene again in December to deliver official revenue estimates for Fiscal Years 2020, 2021, and 2022. The current official estimate calls for General Fund growth of 0.6 percent for FY20. Their official revenue estimate will provide the base for the new budget for FY 2021 and 2022.”

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