FRANKFORT, Ky. (KT) - For the second month in a row, state revenues saw huge growth over last year, but state officials express caution about whether it will last.
The Office of State Budget Director reported Friday that January’s General Fund receipts grew 8.2 percent compared to January of last year, an increase of $72.2 million. Total revenues for the month were $956.8 million, compared to $884.6 million during January 2017. December saw 11.2 percent growth over a year ago.
Receipts have now grown 3.8 percent for the first seven months of Fiscal Year 2018. The official FY18 revenue estimate calls for 2.3 percent growth in revenues and requires 0.2 percent growth for the last five months of the fiscal year to meet the official estimate.
A breakdown of major accounts shows individual income tax withholding collections grew 4.1 percent for the month and are up 3.6 percent through the first seven months of FY18. Estimated tax payments were up 35.9 percent, mostly in early January, which the state says could be in response to changes in the Federal tax rules that eliminate the deductibility of state income taxes in 2018.
Sales and use tax receipts increased 3.8 percent for the month and are up 2.9 percent year-to-date. However, January’s growth was attributable to one-time refund in FY17 that lowered the base of comparison for FY18. Eliminating the effect of the refund, receipts were down 0.5 percent for the month and 2.2 percent year-to-date. The official estimate predicts growth of 3.6 percent for the full fiscal year.
Corporation income tax receipts rose $4.0 million for the month and have increased 2.7 percent in the first seven months of the fiscal year.
Property tax collections declined 3.5 percent in January but have increased 3.9 percent year-to-date.
Cigarette tax receipts decreased 3.3 percent for the month and have fallen 4.8 percent year-to-date.
Coal severance tax receipts fell 16.2 percent in January. Collections are down 8.2 percent through the first seven months of the fiscal year.
State Budget Director John Chilton was pleased with the monthly total but cautioned against drawing conclusions about the remainder of the fiscal year based on the last two months of strong growth.
“December and January saw a significant increase in individual income tax estimated payments and it is our belief that this is in response to recently enacted Federal tax legislation,” he said.
“To the extent that this is the case, January’s increase in receipts may simply be an acceleration of income tax payments rather than an actual increase in FY18 revenue. Despite this acceleration in receipts, most revenue sources remain on track to meet the official revenue estimates.”