FRANKFORT, Ky. (March 10, 2020) – The Office of State Budget Director reported Friday that March’s General Fund receipts rose 6.8% compared to March of last year, an increase of $56.0 million. Total revenues for the month were $876.1 million, compared to $820.1 million during March 2019. Receipts have now grown 3.9% for the first nine months of FY20.
The revenue estimate for FY20 approved by the Consensus Forecasting Group in December 2019, called for 1.6% revenue growth for the fiscal year. The official revenue estimate enacted by the 2020 Session of the General Assembly reduced that General Fund revenue estimate by $128 million and the Road Fund revenue estimate by $21 million in House Bill 352, which is pending action by Governor Beshear.
March General Fund collections reflect predominately February economic activity.
“The COVID-19 virus will have a profound impact on the economy and tax collections, and its effects on tax receipts will begin to be seen in April,” according to the Office of the State Budget Director. “The temporary suspension of most retail activity and many other sectors of the economy has led to a dramatic increase in claims for unemployment insurance, which will lead to lower income tax withholding in the coming months. These business suspensions will also profoundly affect sales tax revenues as well. Individual income and sales taxes comprise about 77% of General Fund revenues. Essentially the well-being of the state’s economy and tax revenue is intertwined with the course of the COVID-19 pandemic, so the upcoming downturn in revenue collections will not abate until the public health crisis improves.”
Among the major accounts:
• Sales and use tax receipts increased 5.0% for the month and have grown 6.7% year-to-date.
• Corporation income tax receipts fell 65.4% as both estimated tax payments and payments with returns fell. For the year, collections have decreased 28.8%.
• Individual income tax collections rose 25.8% in March. The increase is primarily due to a lower number of refunds issued and a smaller average refund amount. The number of filings processed through March was similar to last year. Withholding collections increased by 3.1% in March. Total individual income tax collections have grown 5.2% through the first nine months of FY20.
• Property tax collections rose 32.2% for the month and have grown 3.5% year-to-date. The surge in March receipts was largely due to public service payments.
• Cigarette tax receipts grew 52.5%, due to several wholesalers increasing their stamp purchase quantities in reaction to immediate demand and to prepare for potential supply contingencies, and have increased 2.8% year-to-date.
• Coal severance tax collections fell sharply again in March with collections of $4.7 million. Collections have decreased 27.0 through the first nine months of the fiscal year.
• Road Fund receipts grew 6.0% in March 2020. Receipts for the month were $127.3 million, $7.2 million more than last March. Through the first nine months of FY20, receipts have increased 2.2%. The Road Fund receipts for March also do not yet reflect the impact of lower economic activity related to the COVID-19 virus. April receipts will begin to reflect its impact. Among the accounts, motor fuels rose 3.4%, motor vehicle usage revenue increased 7.9%, and license and privilege receipts grew 13.4%.