FRANKFORT, Ky. — Affected by state tax rate reductions, both General Fund and Road Fund receipts declined in August compared to last year, the Office of State Budget Director reported today. Total General Fund collections equaled $1.03 billion, a decline of 4.5%. However, through the first two months of fiscal year 2025 (FY25), General Fund receipts have increased 4.2%.
The official revenue estimate for FY25 calls for General Fund revenues to essentially equal FY24 actual receipts, or no growth. Based on Augusts’ results, receipts can decline 0.7% for the remainder of the fiscal year and still meet the official estimate.
State Budget Director John Hicks remarked, “The combination of large business tax refunds and the lower income tax rate resulted in a decline in total receipts. The 4.6% growth in sales tax and the growth in underlying salaries and wages reflect continued growth in the Kentucky economy.”
Among the major accounts:
- Individual income tax collections declined 12.8%. Withholding declined 7.4% due to an 11.1% in the individual income tax rate, from 4.5% to 4.0%. Net returns and the pass-through entity tax payments were down compared to last August.
- Sales tax revenues grew 4.6% in August, which is on par with the growth expected.
- Corporation income tax and Limited Liability Entity tax receipts both had significant refunds processed, yielding negative revenues collections totaling -$8.2 million compared to last August. Year-to-date receipts are much higher due to the large corporate income tax collection in July.
- Cigarette taxes declined by 17.3% and have declined 8.7% for the year.
- Property taxes increased by 68.3% in August and have increased by 15.7% for the fiscal year. Large swings in the timing of receipts are not unusual early in a fiscal year for this account.
- Coal severance tax collections in August declined 11.6% to $5.9 million and are down 17.9% through the first two months of the fiscal year.
- Lottery revenues rose 3.9% to $26.5 million in August and are up 4.0% through the first two months of FY25.
- Income from investments grew $10.2 million in August with total receipts of $33.3 million.
Road Fund receipts for August totaled $164.4 million, a decline of 2.1% from August 2023 levels. Through the first two months of the fiscal year, total collections in this fund have grown 5.6%. The official Road Fund revenue estimate calls for a 2.6% decline in receipts for FY25. The expected decline is due to a statutory reduction in the motor fuels tax rate. The tax rate was reduced by 2.1 cents per gallon, a 7.6% decline for FY25. The August receipts are the first month of collections with the new tax rate. Based on year-to-date collections, revenues can fall 4.3% for the remainder of the fiscal year and still meet the official estimate.
Road Fund receipts for August totaled $164.4 million, a decline of 2.1% from August 2023 levels. Through the first two months of the fiscal year, collections in this fund have grown 5.6%. The official Road Fund revenue estimate calls for a 2.6% decline in receipts for FY25. The expected decline is due to a statutory reduction in the motor fuels tax rate. The tax rate was reduced by 2.1 cents per gallon, a 7.6% decline for FY25. The August receipts are the first month of collections with the new tax rate. Based on year-to-date collections, revenues can fall 4.3% for the remainder of the fiscal year and still meet the official estimate.
Among the accounts:
- Motor fuels tax receipts fell 8.3% in August due to the reduction in the tax rate and have fallen 0.4% for the year.
- Motor vehicle usage collections grew 2.3% for the month and have grown 12.0% for the first two months of the fiscal year.
- License and privilege tax declined 1.4% in August and have declined 1.4% year-to-date.
