FRANKFORT, Ky. (KT) -- With just one more month to go in the state’s fiscal year, there is an excellent chance revenue will exceed the projection made when it began July 1, 2018, as both the General Fund and the Road Fund greatly exceeded year ago totals.
State Budget Director John Chilton reported on Monday that General Fund receipts jumped 20.9 percent in May with revenues of $850.0 million, compared to the $703.1 million collected in May 2018.
Through the first 11 months of FY19, the General Fund has grown 6.0 percent. The official General Fund revenue estimate called for revenue to grow 3.3 percent over last year, so General Fund revenues could fall 20.6 percent in June and still meet the official estimate for the entire year.
Chilton attributes the jump in revenue to the 2018 tax reforms passed by the General Assembly.
“The sales and cigarette taxes produced large increases, 16.8 percent and 67.9 percent, respectively, due to the 83.3 percent increase in the cigarette tax rate and the extension of sales taxes to selected services,” he said.
Aside from growth in those consumption taxes, total income taxes grew 17.1 percent, largely due to a timing issue that overstated the net returns portion of the individual income tax in April 2018 and understated May 2018, by $41.2 million.
He also cites a continuing trend with state income tax returns. “The large swing in net amount paid on individual income tax returns, and smaller refunds, is attributable to the income tax changes that eliminated certain deductions, thereby increasing the amount of individual income subject to the tax -- albeit at the reduced income tax rate.”
Chilton’s bottom line: “The growth in tax revenues has put the General Fund in excellent position to exceed the official budgeted estimate of fiscal year revenue of $11,198.2 million. Kentucky is not alone among states that are also well poised to exceed their FY19 estimates, due in large part to a continued strong economy.”
The news continues to be good for the Road Fund as well, as receipts rose 6.1 percent in May with collections of $143.8 million. Year-to-date collections have grown 3.7 percent compared to last year’s total. The official Road Fund revenue estimate calls for a 0.3 percent decrease in receipts for the entire FY19. Based on year-to-date collections, revenues can fall 42.0 percent in June and still meet that estimate.