State Road Fund expects $11M shortfall

June 10, 2015 | | Comments 0

By Jack Brammer

FRANKFORT – The state Road Fund, which pays for highway projects, may come up $11 million less than expected for the year.

State budget director Jane Driskell reported Wednesday in a release that Road Fund receipts fell 4.1 percent last month compared to May 2014 with collections of $126 million. Year-to-date collections have fallen 1.5 percent.

The official Road Fund revenue estimate calls for a decrease in revenues of 0.9 percent for fiscal year 2015, which ends June 30.

Based on year-to-date tax collections, revenues must grow 5.6 percent in June to meet the estimate.

The most recent internal revenue estimate predicted a Road Fund revenue shortfall of $11 million for the fiscal year, Driskell said.

State Transportation Cabinet spokesman Chuck Wolfe said, “Anytime there is a budget shortfall,something has to give.”

But Wolfe said it would not be possible to say at this time what might be affected in the cabinet with a budget shortfall.

“It could mean a delay in some kind of activity or project,” he said, adding that the cabinet’s expected budget for this fiscal year is about $1.5 billion.

Among the accounts in the Road Fund, motor fuels receipts in May fell 16.8 percent. Motor vehicle usage revenue increased 2.6 percent, and license and privilege receipts grew 14.6 percent.

Meanwhile, collections for the Kentucky’s General Fund, which pays for most state programs, also took a dip last month.

Driskell said May’s General Fund receipts fell 1.8 percent compared to May of last year, a decrease of $14.2 million, but the fund is still expected to meet budget for this fiscal year.

Total revenues for the month were $763.1 million, compared to $777.3 million received during May 2014.

Receipts for the General Fund have now grown 5.4 percent for the first 11 months of fiscal year 2015.
The enacted budget calls for 3.6 percent revenue growth for the entire fiscal year.

With receipts through May, June collections can fall $121.9 million or 12.5 percent from June 2014 receipts to meet budgeted levels.

Driskell noted that a small decline in May receipts was expected.

She also emphasized that the last three months of almost every fiscal year typically contains some timing issues, especially in the income taxes, that create variability in monthly growth rates.

“In April we reported General Fund revenue growth of $193.4 million. We recognized that a portion of the April increase was probably due to an acceleration of monthly collections, so a slow-down in May was likely — especially in the individual income tax.”

The individual income tax fell by 5.7 percent in May, but in a combined April and May increased 17.8 percent.

For the year, individual income tax receipts have grown by 9.6 percent.

The strength of Kentucky’s economy was demonstrated in growth of withholding, or payroll, receipts, the largest component of the individual income tax receipts.

April’s growth of 12.3 percent was followed by May’s growth of 14.2 percent.

“Payroll taxes are a very good proxy for the underlying economy, so we remain confident that we will exceed the fiscal year 2015 official estimate and begin fiscal year 2016 with continued positive momentum,” Driskell said.

Among the major accounts in the General Fund:

• Individual income tax collections fell 5.7 percent in May due to the timing issue.
Receipts have grown 9.6 percent though the first 11 months of this fiscal year.

• Sales and use tax receipts increased 2.6 percent for the month and have grown 4.2 percent so far this year.

• Corporation income tax receipts grew by $6.3 million and have grown 3.6 percent for the year.

• Property tax collections decreased 10.0 percent in May but have grown 0.4 percent year-to-date.

• Cigarette tax receipts declined 3.3 percent in May and have fallen 2.4 percent year-to date.

• Coal severance tax receipts fell 17.2 percent in May and have fallen 8.2 percent through the first 11 months of the fiscal year.

Filed Under: State BudgetState Government

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