The first quarter of the state’s fiscal year, which started July 1, continues to show growth in both General Fund and Road Fund revenue.
State Budget Director John Hicks reported Friday that General Fund receipts rose 4.8 percent in September with revenues of $1,115.4 million. This compares to $1,064.5 million collected in September 2019.
So far in fiscal year 2021, the General Fund has grown 5.8 percent. September closes out the first quarter of the fiscal year, and collections have rebounded from the fourth quarter of FY20, in which collections fell 4.5 percent due to the effects of COVID-19.
The official General Fund revenue estimate for FY21 calls for revenue to grow 0.3 percent compared to FY20 actual receipts. Based on September’s results, General Fund revenues can decline 1.4 percent for the remainder of the fiscal year and still meet the official estimate.
Hicks noted that September’s General Fund revenue growth was broadly based, led by strength in sales taxes. “The sales tax grew each month of the first quarter of FY21 after three months of declines as consumption-based taxes continue to outperform expectations. Withholding collections were 2.2 percent higher in September, up 5.6 percent in the first quarter, and were just 1.9 percent higher in the quarter when excluding the impact of unemployment insurance benefits.”
September revenues also include quarterly estimated tax payments, where individuals and corporations make their third of four advanced payments on expected tax year 2020 income tax liabilities that will come due next spring.
The individual income tax component of the estimated payments totaled $95.3 million in September, 1.4 percent lower than September 2019. Estimated payments are down 6.4 percent for the three estimated payments for tax year 2020 to-date. Corporate estimated payments were 4.9 percent lower with collections of $105.4 million.
Hicks said, “Both sources of revenue, while falling, exceeded earlier expectations given the presence of COVID-19. As always, we will continue to monitor the economic and revenue conditions, both nationally and here in the Commonwealth, culminating in a quarterly report that will be released at the end of October.”
Road Fund receipts were flat in September with collections of $131.1 million while year-to-date collections have grown 1.9 percent. The official Road Fund revenue estimate calls for a 3.5 percent decrease in receipts for FY21. Based on year-to-date collections, revenues may fall 4.0 percent for the remainder of the fiscal year and still meet the estimate.
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Written by Tom Latek. Cross-posted from Kentucky Today.