Home » Kentucky General Fund tax receipts for FY13 top estimates by $40.5 million

Kentucky General Fund tax receipts for FY13 top estimates by $40.5 million

Road Fund receipts below estimates by $8 million for FY 2013

FRANKFORT, Ky. (July 11, 2013) — Kentucky General Fund tax receipts rose for the third consecutive year, following two years of decline because of  the national recession, state Budget Director Jane Driskell reported Wednesday.

budgetFor the fiscal year that ended June 30, Driskell reported that General Fund receipts totaled $9.35 billion or 2.8 percent more than FY12 collections.

Final FY13 General Fund revenues were $40.5 million, or 0.4 percentage points, more than the official revenue estimate that projected 2.4 percent growth.

“The consensus Forecasting Group (CFG) accurately projected revenues within 0.4 percent of actual collections,” Driskell said. “We have now closed the books on revenues and will close the books on the expenditure side later this month. The determination of a budget surplus will be made at that time. The enacted budget directs that any General Fund Surplus can only be used to pay Necessary Government Expenses and to make deposits to the Budget Reserve Trust Fund.”

Revenue collections showed positive growth in each of the four quarter of the fiscal year. Growth was strongest in the second and fourth quarters while the third quarter was only slightly positive. Growth rates for the four quarters were 2.1 percent, 5.4 percent, 0.2 percent and 3.4 percent, respectively.

Individual income tax receipts increased $210.9 million, or 6.0 percent, compared to FY12. By comparison, aggregate growth for all General Fund revenue was $257.3 million. Therefore, the individual income tax receipts accounted for 82.1 percent of the total nominal growth in General Fund revenue.

Sales and use tax receipts declined 1 percent, or $30.4 million, as consumer spending on taxable goods slowed. The sales tax is the second largest source of General Fund receipts, accounting for 32.4 percent of total collections. It is noteworthy that the sales tax revenue has fallen only three times since 1980 – those years were FY09, FY10 and FY13. This pattern of recent declines warrants further examination. A contributing factor is that Kentucky’s sales tax base is very narrow.

Cigarette tax receipts decreased $16.1 million, or 6.3 percent, in FY13 due to reduced sales and the transition by some smokers to other substitute products. Taxes on beer, wine and distilled spirits partially offset the decline in tobacco taxes. As a group, alcohol taxes increased $3.5 million in FY13 with only beer wholesale receipts declining.

Corporate income tax collections rose $26.4 million, or 7.0 percent, in FY13. The limited liability entity tax increase 22.6 percent from last year, or $45.4 million. These increases reflect the increased profitability of businesses operate in in the commonwealth. Enhanced compliance and tax amnesty efforts by the Kentucky Department of Revenue contributed to collections also.

Coal severance taxes fell 22.7 percent, or $67.8 million, in FY13. Total collections for  the fiscal year were $230.5 million compared to $298.3 million in FY12. Weak coal prices, as well as a reduction in severed tons and demand are the primary reasons for the decline.

Property tax receipts increased 5.4 percent to $28.8 million from FY12. Tax on real property grew 2.7 percent as the state slowly claws back from the national housing recession. All of the major accounts increase for the year.

Receipts from the Kentucky Lottery Corporation rose 2.1 percent, or $4.5 million, to post a dividend to the commonwealth of $215.3 million. The “other” category, which includes multiple other taxes and fees such as investment income, bank franchise taxes, and insurance premium taxes increased 8.5 percent or $55.6 million.

While bottom line General Fund collections were very close to the forecast level, several of the major accounts showed significant variation. Sales and use tax receipts were under the estimate by 2.2 percent. The individual income tax exceeded the forecast level by $135.3 million, or 3.8 percent. Corporation income tax receipts exceeded expectations by $30.5 million, or 8.2 percent.  Limited liability entity tax receipts exceeded the forecast level by $23.2 million.  Cigarette taxes were below the estimate by 5.4 percent. The coal severance tax was 31.6 percent below the official estimate while property taxes were 3.7 percent higher than forecast. Lottery receipts were above the official forecast by 0.6 percent while all other taxes were 2.5 percent above the official estimate.

Road Fund revenues for FY13 were $1,491.6 million, an increase of 3.3 percent from the previous fiscal year. Receipts for June fell 0.8 percent. Total receipts exceeded the FY12 level by $47.8 million as increases in motor fuels and motor vehicle usage tax receipts made up for declines in four of the five remaining accounts. Road Fund receipts have now grown for four consecutive fiscal years. However, like the General Fund, the rate of growth has declined in each of the past three years.

Motor fuels tax receipts rose by $48.1 million or 6.1 percent in FY13 and continues to be the engine of growth for Road Fund revenues. The increase resulted from the automatic statutory increase in the variable tax rate due to increased wholesale prices and helped counteract a decline in taxable gallons of fuel sold. Motor vehicle usage taxes rose $10.0 million, or 2.4 percent, as motor vehicle sales remained relatively strong. Motor vehicle license receipts decreased $5.6 million while motor vehicle operators’ receipts grew by approximately $300,000. Investment income fell $3.5 million and “other” income declined $1.3 million.

Among the two largest accounts, motor fuels and motor vehicle usage taxes, revenue collections exceeded the estimates by $3.9 million. All other accounts, taken together, were $12.0 million below forecast levels. As with the General Fund, the Road Fund ending balance for FY13 will be determined later in July.

 

 

Popular Stories