FRANKFORT, Ky. — The Office of State Budget Director reported Wednesday that May’s General Fund receipts fell 8.1 percent compared to May of last year, a decrease of $69 million.
Total revenues for the month were $781.0 million, compared to $850.0 million during May 2019. Receipts have now fallen 1.8 percent for the first eleven months of FY20. The revised official estimate for FY20 rendered by the Consensus Forecasting Group (CFG) on May 22, 2020, calls for 3.5 percent revenue decline for the entire fiscal year. To meet the estimate with one month remaining, receipts must decline by 20.6 percent.
State Budget Director John Hicks noted that General Fund revenues were better than expected due to an unanticipated 12.4 percent increase in the individual income tax. “Income tax withholding receipts were buttressed by unemployment insurance payments, defying economic expectations by increasing 8.0 percent following a 7.5 percent decline in April. Many of the beneficiaries of unemployment insurance elect to have withholding deducted from their weekly payments. A lower level of income tax refunds also contributed to the increase from last May, likely a result of the change in the filing deadline from April 15 to July 15. Sales tax receipts were down by 10.9 percent which was better than the CFG expected in their recent revenue estimate which predicted a 26 percent decline for May and June combined. Business taxes declined significantly, continuing a trend seen throughout the fiscal year.”
Among the major accounts:
- Sales and use tax receipts decreased 10.9 percent for the month, following a 6.4 percent decline in April. Receipts have grown 3.7 percent year-to-date. Kentucky taxes all transactions that flow through online marketplace providers which partially compensates for the reduction of taxable sales at traditional brick and mortar store locations.
- In May, corporation income tax revenue was down $27.1 million while limited liability entity tax receipts grew by $13.4 million. Collections in these accounts have declined 32.9 percent for the year.
- Individual income tax collections were surprisingly higher, increasing 12.4 percent in May. Withholding receipts, supported by unemployment insurance benefit payments, and net returns both increased relative to last May while declarations were essentially unchanged. Receipts have now fallen 1.5 percent though the first eleven months of FY20.
- Property tax collections decreased 42.6 percent in May and are down 0.4 percent year-to-date. All of the major components of this tax experienced declines for the month.
- Cigarette tax receipts rose 0.6 percent in May and are up 0.3 percent year-to-date.
- Coal severance tax receipts fell 52.5 percent in May to $4.2 million. Collections have declined 32.5 percent through the first eleven months of the fiscal year.
Road Fund receipts fell 33.4 percent in May 2020 with collections of $95.8 million with declines in every major tax account. This follows a decline of 30.1 percent in April. Year-to-date collections are lower by 4.6 percent. Among the accounts, motor fuels fell 27.7 percent and are down 2.7 percent for the year. Motor vehicle usage revenue declined 30.1 percent following a 60.1 percent decline in April, while license and privilege receipts fell 41.9 percent. Hicks observed that “even with the large reductions to the motor fuels and motor vehicle usage accounts in May, collections were still ahead of expectations set by the CFG revision to the FY20 Road Fund estimates”. Based on year-to-date tax collections, revenues must decline 81.1 percent in June to meet the estimate.
Additional information is available here https://osbd.ky.gov/Pages/default.aspx