Kentucky’s General Fund receipts set an all-time high for a month in April, surpassing the $1 billion mark for the first time ever.
State Budget Director Jane C. Driskell reported that collections grew 23.3 percent compared to April of last year, an increase of $193.5 million. Total revenues for the month were $1,023.7 million, compared to $830.2 million received during April 2014. Receipts have now grown 6.2 percent for the first 10 months of FY15.
The enacted budget calls for 3.6 percent revenue growth for the entire fiscal year. With receipts through April, collections in May and June can decrease 7.8 percent from those months in 2014 to meet budgeted levels.
In a press release from her office, Driskell emphasized that the last quarter of almost every fiscal year typically contains some timing issues, especially in the income taxes, that create variability in monthly growth rates.
But, she said, “we are seeing strong signs of economic improvement. Strong growth in withholding and the sales tax are directly linked to the economy and have remained consistently strong year-to-date. Kentucky employment growth of 2.0 percent is expected in the fourth quarter of FY15, which translates into strong wage and salary growth of 6.5 percent. Personal income for many Kentuckians has grown as the unemployment rate has come down over the previous 12 months. Personal income is projected to grow 4.7 percent in the fourth quarter. Both employment growth and wage growth are near post-recession high marks.
“In addition, the outlook for consumer spending is positive due to higher levels of consumer confidence, increased purchasing power for imports due to the strong dollar, and continued low energy prices. We are confident that when we close the books on this fiscal year, revenue growth will exceed the budgeted amount. Our third quarter economic and revenue report projects that we will exceed the official estimate by $46.1 million. This will be a remarkable turnaround given that we ended last fiscal year with a $90 million revenue shortfall.”
Among the major accounts in April:
• Sales and use tax receipts increased 7.3 percent for the month and have grown 4.4 percent year-to-date.
• Individual income tax collections grew 39.5 percent in April. Growth in this account was broad-based and the withholding component posted a 12.3 percent increase in April indicating a strong labor market. Total individual income tax receipts have grown 11.4 percent though the first ten months of FY15.
• Business tax collections showed a solid pattern of growth in April. Corporation income tax receipts grew 4.4 percent and have increased 1.6 percent for the year. The limited liability entity tax, a backstop to the corporate income tax, grew 47.8 percent with nominal growth of $14.8 million.
• Property tax collections rose 0.6 percent and are up 0.9 percent year-to-date.
• Cigarette tax receipts grew 14.6 percent but are down 2.3 percent year-to-date.
• Coal severance tax receipts fell 7.5 percent for the month and are down 7.2 percent through the first ten months of the fiscal year.
Road Fund receipts declined 12.8 percent in April with collections of $115.1 million. The decline was generally across the board as most of the major accounts experienced declines. The official Road Fund revenue estimate call for revenues to decline 0.9 percent for the fiscal year.
Based on year-to-date tax collections, revenues must increase 0.8 percent for the remainder of the year to meet the estimate. Among the accounts, taxes on motor fuels fell 14.8 percent due to a lower tax rate.
Motor vehicle usage revenue decreased 2.9 percent as vehicle sales are not outpacing the new tax credit for trade-ins on new vehicles. License and privilege receipts decreased 16.0 percent.
The Office of State Budget Director’s third quarter economic and revenue report projects that the Road Fund will fall short of the official estimate by $11.1 million.