By Tom Latek
Kentucky Today
The Office of State Budget Director announced Thursday that Kentucky’s General Fund receipts for July, the first month of Fiscal Year 2024 (FY24), totaled $1.15 billion, a 7.1% increase over July 2022 receipts.
All the major taxes: individual income, sales, business, property, showed growth over last year, with a surprising rise in individual income tax collections, even with a 10% tax rate reduction.
State Budget Director John Hicks said, “July’s strong individual income tax revenue performance was 4.4 percent higher than last year, underpinned by 3.2% growth in the withholding component of the individual income tax. Withholding is a direct reflection of wages and salaries through payrolls – the tax is withheld at just under the tax rate. Growth in withholding, with the lower tax rate, means that there were more jobs in Kentucky, coupled with higher wages and salaries.”
In addition, Hicks noted, “July also experienced solid growth in the two other largest revenue sources, the sales tax and major business taxes, which increased by 5.3% and 23.8%, respectively.”
The revised official revenue estimate for FY24, which was increased by $967 million after the FY24 budget was originally enacted, calls for revenue to decline 0.2% compared to FY23 actual receipts. Therefore, receipts can drop 0.8% over the remaining eleven months of the fiscal year and still meet the revenue estimate.
Road Fund revenues for July totaled $142.9 million, a 3.8% increase compared to last July. The official Road Fund revenue estimate for FY24 calls for revenue to decline 4.1% compared to FY23 actual receipts. Based on the first month’s receipts, revenues can decline 4.8% for the rest of the fiscal year and still meet the official estimate.
Motor fuels tax receipts are expected to grow further starting with August receipts due to a 2.1 cents tax rate increase that went into effect July 1.
The official revenue estimates for both the General Fund and the Road Fund will be revised later this fall by the Consensus Forecasting Group, made up of economists, in anticipation of the 2024 Regular Session, which is when the 2024-2026 biennial budget is considered.