Despite the coronavirus pandemic, State Budget Director John Hicks reports General Fund receipts increased 5.9% in August compared to last year, although the Road Fund did see a drop.
General Fund revenue for the month was $833.8 million, compared to $787.2 million during August 2019. August receipts have reflected the smallest share of yearly amounts over the last five years. For the first two months of the 2021 fiscal year, General Fund receipts have increased 6.5 percent.
“Without another round of federal fiscal stimulus, it will be difficult to maintain the growth in collections we have seen thus far in FY21.”
After months of significantly lower tax collections due to the novel coronavirus, receipts have rebounded, according to Hicks.
“We saw the worst quarterly declines in General Fund receipts from April through June since the Great Recession,” he said. “Growth rates in July and August have ticked upward, supported by substantial federal relief payments to individuals and businesses. Sales and use, and the individual income taxes have been the main drivers of the improvement in collections.”
He notes General Fund collections have increased $106.1 million in July and August over the prior year with sales and individual income taxes accounting for all of the increase.
His primary revenue concern is keeping up the momentum in economic activity despite the expiration of much of the federal fiscal policies designed to help the economy.
“Without another round of federal fiscal stimulus, it will be difficult to maintain the growth in collections we have seen thus far in FY21,” he stated.
The official revenue estimate for FY21 calls for revenue to increase 0.3 percent compared to FY20 actual receipts. Based on the August results, General Fund revenues can decline by 0.7 percent for the remainder of the fiscal year and meet the official estimate.
Meanwhile, Road Fund revenue fell 1.0 percent in August with revenues of $140.8 million but have increased 2.9 percent for the first two months of the fiscal year.
Motor vehicle usage tax collections rose 10.8 percent while motor fuel revenues fell 4.5 percent.
The official Road Fund revenue estimate calls for a 3.5 percent increase in receipts for FY21. Based on year-to-date collections, revenues must increase 3.6 percent for the remainder of the fiscal year to meet the estimate.
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Written by Tom Latek. Cross-posted from Kentucky Today.