In a sign that hopefully indicates Kentucky’s economy is still on the road to recovery, the state budget office released a statement today showing tax receipts increased 17.8% in May over the previous year, marking the thirteenth consecutive monthly increase. State Budget Director Mary Lassiter acknowledged that Kentucky’s business community has contributed significantly to the larger-than-projected revenues, primarily through individual and corporate income taxes and the coal severance tax.
Individual income tax receipts accounted for the majority of May’s increase, exceeding the previous year’s total by $94.1 million, largely due to business activity from pass-through entities. All of the large taxes are performing well during the economic recovery. We are now more confident that we will end the fiscal year ahead of budgeted levels; June’s receipts will determine by how much.
Among the major accounts:
- Sales and use tax receipts increased 4.9% for the month and have grown 4.3% year-to-date.
- Corporation income tax receipts increased $7.7 million and have increased 27.7% for the year.
- Individual income tax collections rose 37.5% in May and have grown 9.3% though the first eleven months of Fiscal Year (FY) 2011.
- Property tax collections decreased 3.4% and are down 0.9%year-to-date.
- Cigarette tax receipts fell 12.5% and have now fallen 6.5% year-to-date.
- Coal severance tax receipts rose 37.1% due to timing issues and are up 10.9% through the first eleven months of the fiscal year.
In response to the May revenue report, Gov. Steve Beshear said that furloughs for state employees will not be on the table for FY 2012. However, as the Kentucky Chamber has stated in the past, the Commonwealth still has a lot of budgetary work left to do in order solve its half-a-billion dollar structural deficit and growing unfunded pension liability.