General Fund receipts up for second year in a row
FRANKFORT, Ky. (July 10, 2012) — Kentucky’s General Fund receipts rose for the second consecutive year, following two years of decline because of the national recession, State Budget Director Mary Lassiter reported today. For the fiscal year that ended June 30, 2012 (FY12), Lassiter said General Fund receipts totaled $9,091 million, or 3.8 percent higher than FY11 collections. Final FY12 General Fund revenues were $83.3 million, or 0.9 percent, more than the official revenue estimate which projected 2.8 percent growth.
“FY12 was a pivotal year for receipts following the rebound year of 6.5 percent growth in FY11 after two declining years during the depths of the recession,” she said. “The Consensus Forecasting Group (CFG) correctly predicted a slowdown in growth after the correction year in FY11 and accurately projected revenues within 0.9 percent of actual collections,” Lassiter 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 quarters of the fiscal year. Strong June receipts of 9.6 percent growth offset declines in April and May to close the final quarter of the fiscal year with a 2.3 percent increase. Growth rates for the four quarters were 4.9 percent, 1.4 percent, 7.2 percent and 2.3 percent.
A detailed look
Individual Income Tax:
Individual income tax receipts increased $94.3 million, or 2.8 percent, from last year as strong withholding receipts offset reductions in fiduciary and declaration collections as well as net payments and refunds with returns.
Sales and Use Taxes:
Sales and use tax receipts rose 5.4 percent, or $156.0 million, as consumer spending continued to rebound from recessionary lows. Pent-up demand from the recession and slight economic improvements have helped buoy the sales and use tax receipts.
Tobacco and Alcohol Taxes:
Cigarette tax receipts decreased $7.4 million, or 2.8 percent, in FY12 due to reduced sales and the transition by some smokers to roll-your-own cigarettes. Wholesale taxes on beer, wine, and distilled spirits partially offset the nominal decline in tobacco taxes. Wholesale alcohol taxes were $97.9 million in FY12 compared to $93.8 million last year, posting 4.4 percent combined growth.
Corporation income tax collections rose $73.6 million, or 24.5 percent. The limited liability entity tax decreased 7.0 percent from last year, or $15.0 million. Combined, these business taxes increased 11.4 percent for the year, reflecting increased profitability of businesses operating in the state.
Coal Severance Taxes:
Coal severance taxes increased 0.8 percent in FY12. Total collections for the fiscal year were $298.3 million. Collections in coal severance fell by 19.0 percent in the fourth quarter of FY12 due to reduced sales resulting from unseasonable temperatures, high inventories, and substitution to natural gas in the production of electricity.
Property tax receipts increased 2.9 percent or $14.8 million from FY11. Tax on real property grew 1.7 percent as the state slowly claws back from the national housing recession. All of the major accounts increased with the exception of omitted and delinquent collections.
Lottery and Other Revenues:
Receipts from the Kentucky Lottery Corporation rose 5.1 percent, or $10.3 million, to post a dividend to the Commonwealth of $210.8 million. The “other” category, which includes multiple other taxes and fees such as investment income, bank franchise taxes, and insurance premium taxes increased 0.4 percent or $2.6 million.
Sales and Use Taxes:
Sales and use tax receipts exceeded the estimate by 1.5 percent, due in large part to the 13.4 percent increase in June. The individual income tax exceeded the forecasted level by $27.9 million, also aided by 12.4 percent growth in the final month of the fiscal year. Corporation income tax receipts exceeded expectations by $40.9 million. Limited liability entity tax receipts were below the forecasted level by $17.6 million. Cigarette taxes were above the estimate by 0.5 percent. The coal severance tax was $28.4 million below the official estimate while property taxes were 2.1 percent higher than forecasted. The coal severance tax will be a concern going into FY13 as the final quarter of FY12 dipped dramatically. Lottery receipts were below the official forecast by 0.1 percent while all other taxes were 0.6 percent above the official estimate.
Road Fund revenues for FY12 were $1,443.8 million, an increase of 7.8 percent from the previous fiscal year. Receipts for June grew 19.7 percent. Total receipts rose $105.0 million from FY11 as motor fuels and motor vehicle usage tax receipts outpaced small increases in virtually every other category. Road Fund receipts have now grown for three straight fiscal years. Growth in fuels and motor vehicle usage taxes provided for a robust rebound in the Road Fund.
Among the major accounts, motor fuels and motor vehicle usage taxes exceeded the estimates by more than $24.9 million. All other accounts, taken together, were within $6.3 million of the forecasted levels. As with the General Fund, the Road Fund ending balance for FY12 will be determined later in July. Pursuant to the enacted budget, any surplus funds in the Road Fund are appropriated to the State Construction Account.