FRANKFORT, Ky. — General Fund receipts rose 3.3 percent in December compared to last year. Total revenues for the month were $1,435.7 million. Receipts have risen 5.8 percent for the first half of the fiscal year. When adjusting for the one-time legal settlement received in September of FY22, General Fund receipts have risen 9.2 percent through the first six months of FY23.
The state’s revenue forecasting entity, the Consensus Forecasting Group, increased the official General Fund estimates by $1,442.9 million in FY23 and $1,314.8 million in FY24. Revenue growth needed in the final six months of FY23 to hit the revised FY23 official estimate is 1.2 percent.
Road Fund receipts for November totaled $136.7 million, a 9.0 percent increase from December 2021. Year-to-date Road Fund receipts have increased by 3.4 percent. Based on collections through the first six months, Road Fund receipts must grow 2.1 percent over the balance of the fiscal year to meet the official FY23 estimate of $1,721.0 million.
Hicks noted that revenue receipts remained very positive in December, posting the fourth-highest monthly total ever recorded in the General Fund. Sales tax receipts in December were $461.7 million, the fifth-highest monthly total. General Fund revenue growth in the past two Decembers was 16.1 percent in FY21 and 10.4 percent in FY22, so the revenue generated from 3.3 percent total revenue growth was formidable due to the high prior-year levels of revenue. As we transition to the second half of the fiscal year, revenues will start to be affected by the many tax law changes from the 2022 Legislative Session that becomes effective in January 2023, particularly the 10 percent reduction in the individual income tax and applying the sales tax to 35 additional services.
Among the major accounts:
- Sales and use tax receipts rose 6.4 percent in December and have increased 10.5 percent for the year.
- Business tax receipts declined 5.7 percent for the month but have risen 3.5 percent for the year. Both corporation income and limited liability entity tax (LLET) collections were lower in December than the very high receipts in the prior year.
- Individual income tax collections grew 2.2 percent in December due to a 4.5 percent increase in withholding combined with an increase in tax return refunds and a decline in declarations. Year-to-date collections in this account have increased by 8.6 percent.
- Property tax collections rose 8.4 percent in December and are up 7.9 percent for the year.
- Cigarette tax receipts decreased by 13.5 percent in December. For the first six months of the year, collections have fallen 6.4 percent in this account.
- Coal severance tax receipts rose 39.6 percent in December and have risen 54.3 percent for the year.
- Earnings on investments were over $10 million more than last December.
- Lottery revenues grew 7.7 percent in December and have increased 6.8 percent for the year.
Road Fund receipts for December totaled $136.7 million, a 9.0 percent increase from December 2021. The Road Fund’s collection accelerated in the second quarter after being flat in the first three months of FY23. Growth rates for the two quarters have been -0.3 percent and 7.3 percent, respectively. December’s motor fuels tax receipts were the highest in over three years, growing 6.0 percent for the month and are up 1.8 percent for the year. Year-to-date increases in motor fuel are strictly due to increased gallons sold, which are aided by lower motor fuel prices and the current freeze on motor fuel tax rates. Motor vehicle usage tax collections rose 3.9 percent in December and have grown 3.8 percent through the first six months of the fiscal year. License and privilege receipts grew 52.7 percent for the month, largely due to a timing issue in collecting some fees. For the year, license and privilege revenues have increased 6.0 percent.
Click here for more Kentucky business news.