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Kentucky’s General Fund collects largest February receipt total on record, increasing 11.4 percent

The Office of State Budget Director reported on Friday that February’s General Fund receipts rose 11.4 percent compared to February of last year. Collections for the month were $1,078.1 million, the largest February receipt total on record.

Receipts have now grown 6.4 percent in the first eight months of FY23. Among the major accounts, all had increases over last February except for the individual income tax, which had a small decline due to earlier tax refund processing. Sales tax receipts led the way with the largest increase.

The official General Fund revenue estimate, which was revised upward by $1.4 billion, calls for 3.4 percent revenue growth in FY23. To meet the official revenue estimate, receipts can fall 1.7 percent over the last four months of the fiscal year.

State Budget Director John Hicks noted that the $110.6 million of General Fund revenue growth from February points to the strong financial condition of the Commonwealth.

“Despite the 10 percent reduction to the rate of income tax withholding that began on January 1, state revenues grew by $185.7 million during the previous two months,” said Hicks. “Sales and use tax receipts grew by 18.4 percent, reflecting $59 million of the February increase, income tax withholding receipts grew by over $13 million, and income on investments grew by over $16 million. Broadly-based revenue growth is indicative of an economy with a vibrant business community, strong wage gains for Kentucky households, and a confident consumer economy.”

Among the major accounts:

• Individual income tax collections fell 1.7 percent, or $8.6 million, in February due primarily to earlier processing of refunds compared to the previous tax year. Withholding grew by 2.4 percent despite the 10 percent decline in the tax rate as of January 1. Total income tax collections have grown 6.3 percent though the first eight months of the year.

• Sales and use tax receipts increased 18.4 percent for the month and have grown 10.7 percent year-to-date. February receipts included the first month of collections with the 34 new services added to the sales tax in January.

• Combined corporation income and limited liability entity tax (LLET) tax receipts increased $5.7 million compared to February 2022 with collections of $8.4 million. LLET receipts declined by $3.0 to $3.6 million while corporation income tax collections improved by $8.7 million with revenues of $4.8 million. For the year, combined revenues have increased 5.4 percent.

• Property tax collections grew 11.7 percent for the month and have increased 7.7 percent year-to-date.

• Cigarette tax receipts fell 11.1 percent for the month and have decreased 6.0 percent year-to-date.

• Coal severance tax receipts rose 60.8 percent, or $3.7 million, in February and have increased 57.4 percent through the first eight months of the fiscal year.

• Income on investments contributed $16.4 million in General Fund receipts due to higher interest rates and investable balances.

Road Fund receipts grew 1.3 percent in February as collections totaled $133.1 million. Total revenue has grown 3.8 percent through the first eight months of FY23. Motor fuels collections grew 2.7 percent while motor vehicle usage tax receipts rose 2.0 percent. License and privilege collections fell 7.3 percent due to fluctuations in the other fees account. The official Road Fund revenue estimate calls for revenues to increase 2.7 percent for the fiscal year. Based on year-to-date tax collections, revenues must increase 0.8 percent for the remainder of the year to meet the official estimate.

Review receipts report at www.osbd.ky.gov.

Office of State Budget Director

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