FRANKFORT, Ky. — The Office of State Budget Director reported that April’s General Fund receipts were the second highest monthly amount ever. They were slightly lower than last April due to the individual income tax rate reduction but remained on target to meet the official revenue estimate. Collections for April were $1,788.7 million. Receipts have now grown 4.5 percent for the first ten months of FY23.
The official revenue estimate, modified by legislative actions of the 2023 General Assembly, calls for revenue growth of 3.3 percent for the current fiscal year. To meet the official revenue estimate, receipts can decline by 2.1 percent over the last two months of the fiscal year.
State Budget Director John Hicks remarked that April’s revenue collections put Kentucky squarely on pace to hit the official revenue estimate for FY23. “The estimate calls for a $1.4 billion revenue surplus this year and we are on track to meet it. Despite the small decline of 2.7 percent, sales and business tax receipts were markedly higher. Excluding the individual income tax, the remaining revenue categories increased 10.9 percent. April’s decline in the individual income tax was impacted by the recent 10 percent tax rate reduction from 5 to 4.5 percent and came on the heels of an 80.7 percent increase last April, so a pullback was expected.”
Among the major accounts:
- Sales and use tax receipts grew 8.3 percent to $517.2 million. April was the second-highest month of sales tax ever recorded and only the third month to exceed half a billion dollars in collections. Year-to-date collections have grown 10.4 percent.
- Corporation income and Limited Liability Entity Tax (LLET) receipts grew 16.4 percent to $288.0 million. Revenues through the first ten months have grown 6.6 percent.
- Individual income tax collections fell 15.0 percent in April as the tax rate reduction also impacted declaration payments and net returns. Despite the 10 percent rate reduction, wages subject to withholding rose over last April. Through 10 months, collections have increased by 0.6 percent.
- Property tax collections have exceeded expectations as revenues grew 11.9 percent for the month. The gains were concentrated in the general tangible and motor vehicle accounts. Receipts are up 7.4 percent year-to-date.
- Cigarette tax receipts fell 35.3 percent, or $9.7 million, in April and have fallen 10.1 percent year-to-date.
- Coal severance tax receipts increased 35.2 percent to $7.7 million, the ninth time this year in which monthly collections have exceeded 30 percent. Revenues have grown 48.6 percent year-to-date.
- Income on investments grew $18.7 million in April, with year-to-date revenues of $106.7 million.
Road Fund receipts grew 3.3 percent, or $4.8 million, in April as motor fuels collections were one of the few accounts to increase. Collections for the month were $153.3 million. The year-to-date collection now stands at 4.0 percent. The official Road Fund revenue estimate calls for revenues to increase by 2.7 percent for the fiscal year. Based on year-to-date tax collections, revenues can decline by 3.2 percent for the remainder of the year and still meet the estimate.
Among the accounts, motor fuel revenue rose 7.7 percent in April. Collections from motor fuels have been limited in FY23 due to an emergency regulation filed last summer by Governor Beshear that froze the gasoline and special fuels tax rates to fight the effects of inflation and surging gasoline prices. The emergency regulation expired in late February, giving way to a statutorily-driven tax rate increase of two cents per gallon in March that will positively impact motor fuels tax receipts going forward. Motor vehicle usage tax collections fell 0.7 percent and license and privilege receipts were down 8.7 percent.
