FRANKFORT, Ky. — Kentucky’s February’s General Fund receipts fell 6.5% compared to February of last year, The Office of State Budget Director reported today. Collections for the month were $1.007 billion. February saw small gains in sales and gross receipts, property and miscellaneous taxes and large drops in individual and business taxes.
Receipts have now grown 3.0% through the first eight months of FY24. The official General Fund revenue estimate calls for revenues to increase 2.7% for the fiscal year. Based on year-to-date tax collections, revenues must increase 2.1% for the remainder of the year to meet the official estimate.
“February’s year-over-year decline was concentrated in the individual income tax due to a lower tax rate and some timing issues,” State Budget Director John Hicks said. “The income tax rate in February 2024 was 4.0% compared to a 4.5% in February 2023. The other part of the decline was due to some receipts that were normally received in February but were received in late January in FY24. Withholding in January and February combined fell 9.0%, but the individual income tax rate fell 11.1%. Wage and salary incomes continue to grow in Kentucky as the pace of wage expansion has persistently outpaced the rate reductions to the individual income tax.”
Among the major accounts:
- Sales and use tax receipts grew by 2.0%. Year-to-date growth in this account now stands at 5.4%. Sales and use tax collections have now risen for 22 consecutive months.
- Combined corporation income and LLET tax receipts declined $7.8 million compared to February 2023. LLET receipts grew by $8.3 million to $11.8 million, but the corporation income tax collections posted a decline of $16.0 million in revenues due to higher refunds. For the year, combined revenues have decreased 8.9%.
- Individual income tax collections fell 18.1%, or $87.2 million, in February. Among the major components of the tax, estimated payments increased, withholding receipts fell 16.9%, net returns declined by $19.7 million, and fiduciary fell by $0.7 million. The tax rate was reduced from 4.5% to 4.0% effective January 1, 2024. Collections have grown 0.1% though the first eight months of the fiscal year.
- Property tax collections rose 21.2% for the month on the strength of the omitted and delinquent accounts, as well as the public service property tax receipts. For the year, total property tax revenues have increased 2.7%.
- Cigarette tax receipts fell 6.3 percent for the month and have decreased 9.8% year-to-date.
- Coal severance tax receipts declined 13.7% in February and have decreased 21.4% through the first eight months of the fiscal year.
- Interest on investments grew 32.4% while posting $21.7 million in revenues.
Road Fund receipts grew 5.2% in February as collections totaled $140.0 million. Total revenue has grown 6.5% through the first eight months of FY24. Motor fuels collections grew 14.4% while motor vehicle usage tax receipts rose 13.0%. License and registration collections were somewhat depressed because of delays in deposits as Kentucky’s vehicle information system is being updated.
The official Road Fund revenue estimate calls for revenues to increase 7.3% for the fiscal year. Based on year-to-date tax collections, revenues must increase 8.8% for the remainder of the year to meet the official estimate.
To review the report: http://www.osbd.ky.gov
