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Kentucky’s General Fund receipts for July up 7.0 percent from a year ago; totaled $905.1 million


State Budget Director John Hicks announced Monday that Kentucky’s General Fund receipts for July, the first month of Fiscal Year 2021 (FY21), totaled $905.1 million, a 7.0 percent increase compared to July 2019 receipts.

Collections for the month were surprisingly strong given the general slowdown in consumer spending arising from the uncertainty of the novel coronavirus.

The official revenue estimate for FY21 calls for revenue to grow 0.3 percent compared to FY20 actual receipts. Based on July’s receipts, General Fund revenues can fall 0.2 percent for the remainder of the fiscal year to meet the enacted budget estimate.

Hicks was pleased with July revenue collections, but noted that there is tremendous uncertainty going forward.

John Hicks

“The two largest revenue sources in July, the sales tax and individual income tax, were both aided by the $600 per week enhanced unemployment insurance benefits and the paycheck protection program,” Hick said. “Both of those programs have now expired. The sustainability of these revenue increases in future months are very uncertain, depending on Congressional action to continue. As Kentucky continues the measured reopening of various sectors of the economy, the revenue pattern emerging from the July tax receipts report is seemingly a step ahead of progress on the economic front.

“We will continue to monitor the revenue patterns and economic trends, culminating in a report later this month that will contain the first updated view of the revenue projections for FY21.”

Among the major accounts:

• Individual income tax receipts rose 6.2 percent due to higher withholding and estimated, tax payments. The withholding component of the individual income tax was aided by nearly $20.4 million attributable to withholding from unemployment insurance benefits. Excluding that $20.4 million, withholding declined by 1.9 percent. During the last four months, from April through July, withholding has dropped by 4.6 percent when excluding unemployment insurance benefits.

• Sales tax revenues grew 12.3 percent in July. Increases in disposable income from transfer payments, along with the taxation of internet transaction, helped buoy the sales tax collections. In the April through June quarter, sales tax revenues declined by 5.9 percent.

• Corporation and LLET receipts declined a combined 41.2 percent. July is traditionally a low month of collections for business taxes, so large percentage changes on a low base of activity are common.

• Cigarette tax collections rose 2.1 percent in July.

• Property tax receipts grew 41.1 percent due to increases in tangible property receipts, particularly on motor vehicles.

• Coal severance tax revenues fell 37.1 percent to $3.2 million.

• Lottery revenues were unchanged at $19.0 million.

Road Fund revenues for July totaled $137.5 million, a 7.2 percent increase compared to last July. The increase was led by an all-time high monthly collection level for motor vehicle usage taxes after recent heavy declines. The official Road Fund revenue estimate for FY21 calls for revenue to increase 3.5 percent compared to FY20 actual receipts. Based on the first month’s receipts, revenues must grow 3.1 percent for the rest of the fiscal year and still meet budgeted levels.

Among the major Road Fund categories:

• Motor fuels tax receipts fell 1.1 percent, after a 19 percent drop in the April through June quarter.

• Motor vehicle usage tax grew 11.8 percent, following a 28 percent decline in the April through June quarter.

• License and privilege taxes rose 29.0 percent, reflecting a pick-up in vehicle registrations and driver license renewals.

From Office of State Budget Director

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