The Office of State Budget Director on Tuesday reported February’s General Fund receipts fell 6.5 percent compared to February of last year.
Collections for the month were $1,007.6 million. February saw small gains in sales and gross receipts, property and miscellaneous taxes and large drops in individual and business taxes. Receipts have now grown 3.0 percent through the first eight months of fiscal year 2024.
The official General Fund revenue estimate calls for revenues to increase 2.7 percent for the fiscal year. Based on year-to-date tax collections, revenues must increase 2.1 percent for the remainder of the year to meet the official estimate.
“February’s year-over-year decline was concentrated in the individual income tax due to a lower tax rate and some timing issues,” said State Budget Director John Hicks. “The income tax rate in February 2024 was 4.0 percent compared to a 4.5 percent in February 2023. The other part of the decline was due to some receipts which were normally received in February but were received in late January in FY24.
“Withholding in January and February combined fell 9.0 percent but the individual income tax rate fell 11.1 percent. Wage and salary incomes continue to grow in Kentucky as the pace of wage expansion has persistently outpaced the rate reductions to the individual income tax.”
Among the major accounts:
• Sales and use tax receipts grew by 2.0 percent. Year-to-date growth in this account now stands at 5.4 percent. Sales and use tax collections have now risen for 22 consecutive months.
• Combined corporation income and LLET tax receipts declined $7.8 million compared to February 2023. LLET receipts grew by $8.3 million to $11.8 million, but the corporation income tax collections posted a decline of $16.0 million in revenues due to higher refunds. For the year, combined revenues have decreased 8.9 percent.
• Individual income tax collections fell 18.1 percent, or $87.2 million, in February. Among the major components of the tax, estimated payments increased, withholding receipts fell 16.9 percent, net returns declined by $19.7 million, and fiduciary fell by $0.7 million. The tax rate was reduced from 4.5 percent to 4.0 percent effective January 1, 2024. Collections have grown 0.1 percent though the first eight months of the fiscal year.
• Property tax collections rose 21.2 percent for the month on the strength of the omitted and delinquent accounts, as well as the public service property tax receipts. For the year, total property tax revenues have increased 2.7 percent.
• Cigarette tax receipts fell 6.3 percent for the month and have decreased 9.8 percent year-to-date.
• Coal severance tax receipts declined 13.7 percent in February and have decreased 21.4 percent through the first eight months of the fiscal year.
• Interest on investments grew 32.4 percent while posting $21.7 million in revenues.
Road Fund receipts grew 5.2 percent in February as collections totaled $140.0 million. Total revenue has grown 6.5 percent through the first eight months of FY24. Motor fuels collections grew 14.4 percent while motor vehicle usage tax receipts rose 13.0 percent.
License and registration collections were somewhat depressed because of delays in deposits as Kentucky’s vehicle information system is being updated. The official Road Fund revenue estimate calls for revenues to increase 7.3 percent for the fiscal year. Based on year-to-date tax collections, revenues must increase 8.8 percent for the remainder of the year to meet the official estimate.
Review the report at www.osbd.ky.gov.
Office of State Budget Director
