FRANKFORT, Ky. (KT) – There was more good news for state revenues in the first two months of the 2019 fiscal year.
Figures released by State Budget Director John Chilton on Monday show General Fund receipts increased 4.3 percent in August compared to last year. Total revenues for the month were $759.9 million, compared to $728.3 million during August 2017. So far in the fiscal year, General Fund receipts have increased 4.5 percent.
The official revenue estimate for FY19 calls for revenue to increase 3.3 percent compared to FY18 actual receipts. Based on August’s results, General Fund revenues need to grow 3.1 percent for the remainder of the fiscal year to meet the official estimate.
Chilton noted revenues were impacted by the tax package passed by the General Assembly in the 2018 session.
“The sales tax and cigarette taxes have increased sharply this fiscal year, as expected, due to the changes contained in HB 487. On the other hand, collections from the income taxes have predictably fallen off due to the rate reductions embodied in the tax plan. When the positive and negative impacts interact, the net effect has been robust growth in the General Fund of 4.5 percent.”
While admitting it takes more than two months to define a trend, Chilton added, “We are certainly pleased with the early accuracy of the estimates from tax reform. Going forward, we will attempt to further consider which parts of the monthly receipts are attributable to tax reform as opposed to general economic growth predicted by the Consensus Forecasting Group last December.”
The three tax categories showing the biggest rises include:
-Sales tax revenues grew 14.4 percent in August and are up 8.8 percent through the first two months of the fiscal year, largely in response to the 2018 changes
-Corporation income tax collections increased $5.9 million as net returns rose. Year-to-date receipts in this account have increased 19.9 percent. The changes affecting corporation income taxation include a decrease in the top tax rate from 6 percent to 5 percent and changes to consolidation and apportionment requirements.
-Cigarette taxes grew 49.1 percent for the month due largely to tax law changes and collections have increased 55.2 percent for the year.
As for the Road Fund, revenue fell 0.9 percent in August with revenues of $143.3 million but have increased 5.5 percent for the first two months of the fiscal year.
Motor vehicle usage tax collections declined 8.2 percent due to a timing issue in a prior month, while motor fuels revenues increased slightly in August.
The official Road Fund revenue estimate calls for an overall 0.3 percent decrease in receipts for the 2019 fiscal year. Based on year-to-date collections, revenues can decline 1.5 percent for the remainder of the fiscal year to meet the estimate.