General Fund receipts down 3.4%, Road Fund up 2.5% in January 2019

FRANKFORT, Ky. — State Budget Director John Chilton reported today that General Fund receipts fell 3.4 percent in January with revenues of $924.6 million.  January’s receipts declined modestly compared to the $956.8 million collected in January 2018.  Through the first half of FY19, the General Fund has grown 2.6 percent.

The official General Fund revenue estimate for FY19 calls for revenue to grow 3.3 percent compared to FY18 actual receipts.  After January’s results are considered, General Fund revenues must increase 4.4 percent for the remainder of the fiscal year to meet the official estimate.

While a January reduction in the General Fund was not unexpected, Chilton noted that the income-based taxes were particularly weak.  “January’s decline in General Fund receipts is primarily due to broadly-based weakness in the individual income tax.  The monthly setback was anticipated in part due to a spike in estimated tax payments made in January of 2018, where taxpayers were adjusting estimated taxes in response to the state and local provisions of the Federal tax reform act in December 2017.  However, withholding payments fell 8.7 percent as well, pushing the individual income tax down 19.3 percent for the month.   Corporation income taxes fell by a larger percentage, 60.7 percent, but the nominal loss was only $8.0 million compared to a $82.5 million decrease in the individual income tax collections. The sales and use tax grew by 9.8 percent in January, partially offsetting the income tax losses.  This surge in consumption taxes is directly attributable to the expansion of the sales tax base and our ongoing efforts to capture a higher percentage of online sales.  December and January losses in the General Fund have created a more formidable challenge to hitting the official revenue estimate, but our latest internal estimates for FY19 still project receipts somewhat less than the budgeted levels.”

Among the major General Fund accounts:

  • Individual income taxes fell 19.3 percent in January. Year-to-date collections are down 5.0 percent. In 2018, the top corporate and individual income tax rates were decreased from 6.0 percent to 5.0 percent.
  • Sales tax revenues grew 9.8 percent in January following double-digit growth in November and December. The surge in the sales tax is partially attributable to the October 1 implementation of sales tax collections on internet sales made possible by the U.S. Supreme Court’s Wayfair decision.  Sales tax collections have increased 8.8 percent through the first seven months of FY19, roughly congruous with the projections.
  • Corporation income tax receipts fell $8.0 million in January but have risen 1.9 percent so far in FY19.
  • The Limited Liability Entity Tax (LLET) declined 6.6 percent and has now dropped 24.7 percent thus far in FY19.
  • Cigarette taxes were up 105.0 percent for the month and have grown 71.4 percent for the first seven months of the fiscal year. The revenue increase coincides with the 83.3 percent increase in the cigarette tax from $0.60 per pack to $1.10 per HB 487.
  • Property taxes grew 6.3 percent in January and are up 4.0 percent for the year.
  • Coal severance tax receipts fell 16.4 percent for the month. Year-to-date collections are down 15.0 percent.
  • Lottery revenues were equal to last year’s dividend payment but are up 4.5 percent for the year.

Road Fund receipts grew 2.5 percent in January with collections of $126.3 million.  Year-to-date collections have grown 4.0 percent compared to last year’s total.   Despite declines in Road Fund revenue in FY15 and FY16, followed by anemic growth in FY17 and FY18, receipts have now risen in nine of the past eleven months. The official Road Fund revenue estimate calls for a 0.3 percent decrease in receipts for the entire FY19.  Based on year-to-date collections, revenues can fall 6.1 percent for the remainder of the fiscal year to meet that estimate.

Among the Road Fund accounts:

  • Motor fuels receipts fell 2.7 percent in January but have grown 1.2 percent thus far in FY19.
  • Motor vehicle usage collections increased 3.2 percent for the month. Year-to-date collections are up 5.3 percent.
  • License and privilege rose 15.6 percent in January following December’s setback. For the first half of the fiscal year, receipts are up 7.4 percent.
  • Nontax receipts climbed sharply in January and have grown 39.6 percent for the year.
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