Ky. Begins Fiscal Year On Sound Financial Footing
FRANKFORT, Ky. -- State government started a new fiscal year on sound financial footing despite drops in collections from the sales and property taxes.
Budget Director Jane Driskell said Friday that General Fund tax collections rose 2 percent overall in July, the first month of Kentucky's fiscal year. Corporate income tax revenue was up 156 percent over July 2012 levels. Collections from the cigarette tax rose 13.8 percent. And individual income tax receipts increased 1.3 percent.
Collections from the sales tax, Kentucky's second largest revenue producer behind the income tax, were down 1.4 percent. Property tax receipts fell 3.8 percent. And coal severance tax revenue, which has been in a free fall for months because of a slowdown in the mining industry, declined another 21.1 percent.
Driskell said she's "comfortable" that General Fund revenues will see modest overall gains this fiscal year despite what she called "continued weakness" in collections from sales and coal taxes. She had warned last month that the fiscal year is stacking up to be an austere one because revenue growth isn't keeping pace with the rising costs of operating state government.
State agencies have dealt with seven consecutive years of budget cuts, and most were ordered to trim their budgets by another 8.4 percent last fiscal year. Driskell said with those cuts remaining in place, the outlook for the current fiscal year is an austere one.
The eye-catching percentage increase in corporate income tax collections in July generated only a modest $20 million over July 2012. Revenue from the individual income tax edged up by some $3.6 million for the month.
A $2.3 million increase in cigarette tax collections in July bucked a long trend in Kentucky. Budget office staffers said the increase is an anomaly that likely won't show back up any time soon.
Kentucky lawmakers doubled the state's cigarette tax to 60 cents per pack four years ago in hopes of deterring smoking in a state where 25 percent of residents light up. The declining revenue suggests the strategy has worked.