DOR: Personal income tax revenue in May 11.5% short of revised budget

PERSONAL INCOME TAX REVENUE IN MAY missed revised projections by $9.6 million, causing the state to fall behind its year-to-date personal income tax revenue projections by $7.6 million. / R.I. DEPARTMENT OF REVENUE
PERSONAL INCOME TAX REVENUE IN MAY missed revised projections by $9.6 million, causing the state to fall behind its year-to-date personal income tax revenue projections by $7.6 million. / R.I. DEPARTMENT OF REVENUE

PROVIDENCE – Personal income tax revenue in Rhode Island missed revised estimates by $9.6 million in May, coming in at $73.6 million, according to a revenue analysis released Tuesday by the R.I. Department of Revenue. The shortage represented an 11.5 percent decline from estimates that had been revised at the May 2017 Revenue Estimating Conference, following significant revenue under-performance from the November 2016 revenue estimates.

The decline in personal income tax receipts play a strong role in the state falling 0.4 percent short of expected revenue for the month, collecting $241.6 million versus the budgeted $242.5 million. In addition to the personal income tax shortfall, sales tax revenue also lagged expectations in May, coming up 0.5 percent short, with collections of $80.7 million.

The DOR noted that an unexpected uptick in corporate revenue taxes helped prevent overall tax revenue from falling well short of expectations. In May, business corporations tax revenues exceeded revised expectations by $3.4 million, compared with expectations of a net loss of $361,726 for the month. Overall, the big gainers were departmental receipts (10.9 percent over budget at $16.3 million), and other general revenue sources (22.1 percent above budget at $39.2 percent).

Through May, the first 11 months of fiscal 2017, state general revenue, at $2.95 billion, came in 0.1 percent short of the revised expectations. The largest shortfall came with personal income tax (0.7 percent below budget at a total of $1.1 billion), although sales and use tax (-0.5 percent at $907.9 million), and departmental receipts (-0.4 percent, $171.9 million) both contributed to the overall decline against expectations. Other general revenue sources (+2.3 percent, $457.6 million) and lottery transfer (+0.1 percent, $300.6 million) both exceeded the budget.

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Year to date, business corporations tax revenue is $18.8 million above the revised estimates at $110.1 million, a 20.6 percent variance, although nearly all the other business taxes – public utilities gross earnings, financial institutions, insurance companies and health care provider assessment – all came up short of expectations. Only bank deposit tax revenue saw an increase against budget, although it is the smallest collection of any of the business taxes.

Chris Bergenheim is the PBN web editor.

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