The monthly revenue assessment report compares adjusted revenues, on a monthly and fiscal year-to-date basis, to the Office of Revenue Analysis' monthly and fiscal year-to-date estimate of expected revenues based on the current fiscal year revenue estimate. It should be noted that the fiscal year revenue estimate will vary over the course of the fiscal year as the Revenue Estimating Conference (REC) (see Rhode Island General Laws § 35-16-1 et seq.) convenes and modifies the fiscal year revenue estimates as enacted by the General Assembly.
The purpose of the Revenue Assessment Report is to give readers a sense of how the state's general revenues compare to those that might be expected if the official revenue estimates were being met in a predictable way. Caution should be exercised when interpreting this report as actual revenues may vary significantly from historical patterns. In addition, it is important for the reader to understand that enacted and adopted revenue estimates are made on an accrual basis, not a cash basis. Revenue accruals are not determined until at least one month after the fiscal year-end in June. Thus, even if the assessment of actual fiscal year-to-date revenues trails the fiscal year-to-date revenue estimates, it is possible for the fiscal year-end accrual to make up any shortfall.
Changes to the Structure of the Revenue Assessment Report
In an effort to make the Revenue Assessment Report more accessible to readers, the Office of Revenue Analysis has restructured the report so that the fiscal year-to-date and monthly tables that display adjusted revenues vs. expected revenues appear immediately following this page. Details on the report's methodology and revenue adjustments are contained in the text that follows the tables. This monthly revenue assessment report compares adjusted revenues to expected revenues based on the revenue estimates adopted at the November 2016 Revenue Estimating Conference.
Law Changes Enacted in the 2016 Session That Impact General Revenues
In the 2016 session, and earlier sessions, the General Assembly enacted several changes to the state's general laws that impact general revenues. These changes can be categorized as follows: (1) changes that reclassify revenues that were previously considered to be general revenues to other funds; (2) changes that impact FY 2017 general revenues that will be realized through monthly revenue flows; and (3) changes that impact FY 2017 general revenues that will be realized through fiscal year-end accruals. Those changes in state law that impact monthly revenue flows will generally exhibit seasonality in the receipt of the revenue. ORA attempts to model the seasonality in such revenue flows in order to better align the expected receipt of revenues with the actual receipt of revenues. A more specific discussion of these items is provided in the appendix to this report.
Estimate of Revised FY 2017 Revenues Adopted at the November 2016 REC
In order to determine the expected monthly and fiscal year-to-date revenue estimates based on the revised revenue estimates adopted at the November 2016 Revenue Estimating Conference (REC), the Office of Revenue Analysis (ORA) first calculates the average percentage of total adjusted revenues that occurred in a given month over the previous five fiscal years for each revenue item. For estate and transfer taxes, the previous ten fiscal years are used. For monthly estimates, these percentages are applied to the revised FY 2017 revenue estimate for each revenue item. For the fiscal year-to-date estimates, the monthly percentages are summed and then applied to the revised FY 2017 revenue estimate for each revenue item. This methodology is used for all revenue items except personal income tax final payments revenues, personal income tax refunds and adjustments revenues, and business corporations tax revenues. For these three revenue items, the monthly percentage, or the sum of the monthly percentages, will be applied to the revised FY 2017 modified revenue flows as estimated by ORA. In the case of other miscellaneous revenues, the actual fiscal year-to-date revenues are used in place of an estimate due to the discrete and unpredictable nature in the timing of these receipts.
In the 2016 session, the General Assembly enacted a statute that conformed Rhode Island's tax filing deadlines for C-corporations to the change in federal law that shifted the due date of C-corporations' final tax returns from the 15th day of the third month after the close of the corporation's tax year, March 15 for calendar year corporations, to the 15th day of the fourth month after the close of the corporation's tax year, April 15 for calendar year corporations. To accommodate for this change in the due date of C-corporations' final tax returns, ORA took the expected amount of business corporations tax revenues for March and April and reallocated them between the two months. To wit, under the average percentage over the previous five fiscal years methodology, ORA expected to receive 37.9 percent of total adjusted business corporations tax revenues in March, or $59,047,910, and 9.0 percent in April, or $15,394,981 but these percentages were based on a tax regime in which calendar year C-corporations were required to file their final tax returns by March 15th. ORA took the aggregate amount of business corporations tax revenues expected to be received in March and April 2017, of $74,442,891 and applied a reallocation methodology such that $42,352,088 was to be expected in March 2017 and $32,090,803 was to be expected in April 2017. To yield these amounts, ORA adjusted the average percentages over the previous five fiscal years to 27.2 percent for March 2017 and 19.7 percent for April 2017. These are the percentage figures that appear in Table A below.
Table A provides the rounded five-year, or ten-year in the case of estate and transfer tax revenues, average percentages used to determine expected monthly and fiscal year-to-date revenues for March. It should be noted that ORA has made adjustments to these percentages based on the estimated flow of revenues that result from the changes in law enacted by the 2016 General Assembly and included as part of the revised FY 2017 revenue estimates adopted at the November 2016 REC.
The health care provider assessment consists only of an assessment on nursing homes. Motor vehicle fees are comprised only of fees paid for operators' licenses and motor vehicle registrations. Racing and athletics taxes consist of a tax on wagers placed on out-of-state greyhound and horse races that are broadcast to Rhode Island via closed circuit television. The "Percent Received" for monthly and year-to-date departmental receipts is calculated excluding hospital licensing fee revenues, which are large, generally made only once in the fiscal year, and not always at the same time each fiscal year. Finally, the lottery transfer does not begin in a given fiscal year until August, while the unclaimed property transfer occurs only in June of each fiscal year.
In May 2016, the Streamline Sales Tax Governing Board approved an amendment to the Streamlined Sales and Use Tax Agreement (SSUTA) that put Rhode Island back in compliance with the SSUTA. The State will continue to receive voluntary remittances of sales and use tax revenues from remote sellers that are parties to the SSUTA. The FY 2017 revised sales and use tax estimate includes these voluntary receipts.
In the 2016 session, the General Assembly enacted changes to personal income tax final payments, personal income tax refunds and adjustments and business corporations tax revenues that had effective dates of January 1, 2017. In general, such law changes impact the underlying revenue stream through the accrual process rather than through the monthly revenue flows. At the November 2016 Revenue Estimating Conference, the principals explicitly estimated the impact of allowing a deduction of up to $15,000 for taxable pensions and annuities from federal Adjusted Gross Income (AGI) for certain taxpayers and increasing the state allowance for the federal earned income credit (EIC) from 12.5 percent to 15.0 percent as part of the personal income tax net accrual. In the case of previously enacted law changes, however, such as the exemption of taxable Social Security benefits for certain taxpayers which passed in the 2015 session, these law changes will flow through as revenue impacts later in FY 2017. As a result, ORA will still adjust the revenue flows for personal income tax final payments and personal income tax refunds and adjustments but only to account for law changes that went into effect on January 1, 2016 or earlier.
This is not the case with the business corporations tax. For the business corporations tax, ORA will continue to adjust business corporations tax revenues to reflect the revenue impacts of both law changes with effective dates of January 1, 2017 and later and January 1, 2016 and earlier in the same manner as in previous monthly revenue assessment reports. The footnotes to Table B detail the breakdown of modified revenue flows and accruals for each of these revenue items.
The revised FY 2017 estimates by revenue item as adopted at the November 2016 Revenue Estimating Conference are as follows:
Notes: A Personal income tax final payments revenues estimate includes an estimated revenue impact of $(18,331,957) from the exemption of taxable Social Security benefits for eligible taxpayers. The realization of this law change is expected in FY 2017 revenue flows during the March 2017 through June 2017 period. For the period from July 2016 through February 2017, adjusted FY 2017 personal income tax final payments revenues were assessed against a "base" FY 2017 revenue estimate of $202,331,957. For the period from March 2017 through June 2017, adjusted FY 2017 personal income tax final payments revenues will be assessed against the November 2016 REC adopted FY 2017 estimate of $184,000,000. b Personal income tax refunds and adjustments revenues estimate includes an estimated revenue impact of $(6,009,225) from the enhanced Rhode Island earned income tax credit (EIC) at 12.5 percent. The realization of this revenue change is expected in FY 2017 revenue flows during the February 2017 through June 2017 period. As a result, ORA assessed adjusted FY 2017 personal income tax refunds and adjustments revenues against a "base" FY 2017 revenue estimate of $(292,290,775) for the period of July 2016 through January 2017. For the period from February 2017 through June 2017, adjusted FY 2017 personal income tax refunds and adjustments revenues will be assessed against the November 2016 REC FY 2017 estimate of $(298,300,000). c Business corporations tax revenues estimate includes an estimated revenue impact of $6,696,000 of revenues from the transfer pricing audit project that is not estimated to be realized until April 2017 through June 2017. As a result, for the period of July 2016 through March 2017 ORA will assess adjusted FY 2017 revenues against a "base" FY 2017 revenue estimate of $160,804,000. Additionally, the November 2016 REC FY 2017 estimate includes $(3,240,000) from the reduction of the business corporations minimum tax to $450 effective January 1, 2016. The realization of this revenue change is expected in FY 2017 revenue flows during the March through June 2017 period. The business corporations tax revised estimate does include $(1,579,348) from the reduction of the business corporations minimum tax to $400 on January 1, 2017. The realization of this revenue accrual will not occur until after the end of the fiscal year. As a result, from the period of March 2017 through June 2017 ORA will assess adjusted FY 2017 revenues against a "base" FY 2017 revenue estimate of $162,680,652.
Results for FY 2017 through March
The table, Year-to-Date Estimate to Actual, gives the results for FY 2017 through March. As is apparent from the table, the Department of Revenue finds that FY 2017 through March adjusted total general revenues trailed the revised FY 2017 adopted total general revenues estimate through March by $43.0 million, a variance of 1.8 percent. In total taxes, FY 2017 year-to-date adjusted revenues were less than the revised FY 2017 year-to-date adopted revenue estimate by $46.1 million, a variance of 2.3 percent. For departmental receipts, FY 2017 through March adjusted revenues led the revised FY 2017 adopted year-to-date revenues estimate by $3.7 million or 2.8 percent. For other general revenue sources, adjusted fiscal year-to-date revenues trailed revised FY 2017 adopted revenues through March by $603,702, a variance of 0.3 percent.
Two revenue items had adjusted revenues in FY 2017 through March that exceeded expected FY 2017 revenue estimates, based on the revenue estimates adopted at the November 2016 Revenue Estimating Conference, by $1.0 million or more. ? Departmental receipts adjusted revenues for year-to-date FY 2017 were $3.7 million, or 2.8 percent, more than the expected year-to-date revised FY 2017 adopted departmental receipts revenues estimate of $133.6 million. Part of this variance can be attributed to adjusted FY 2017 through March revenues for penalties on overdue taxes being ahead of expected year-to-date revenues. ? Cigarettes tax adjusted revenues for FY 2017 through March were $1.3 million, or 1.3 percent, more than the expected year-to-date revised FY 2017 adopted cigarettes tax revenues estimate of $103.2 million.
Fiscal year-to-date through March adjusted revenues for the realty transfer tax, the bank deposits tax, the healthcare provider assessment, and the racing and athletics tax were greater than the expected FY 2017 through March adopted revenue estimates but by less than $1.0 million each.
Six revenue items had adjusted revenues in FY 2017 through March that trailed the expected FY 2017 revised revenue estimate by more than $1.0 million each. ? FY 2017 through March adjusted sales and use tax revenues were $12.9 million behind the expected FY 2017 revised sales and use tax revenues through March, a variance of 1.7 percent. FY 2017 through March adjusted sales and use tax revenues include $2.3 million from an audit recovery of prior year sales and use tax owed that was received in August 2016. Adjusted sales and use tax revenues include sales and use taxes collected in February 2017 and remitted by Amazon in March 2017. ? Insurance companies gross premiums tax adjusted revenues for FY 2017 through March were $9.7 million below expected fiscal year-to-date insurance companies gross premiums tax revenues based on the FY 2017 revised estimate, a variance of 16.1 percent. ? FY 2017 through March adjusted estate and transfer tax revenues were $6.8 million behind the expected FY 2017 revised sales and use tax revenues through March, a variance of 27.6 percent. ? Public utilities gross earnings tax adjusted revenues for FY 2017 through March were $6.6 million below expected FY 2017 revised public earnings gross premiums tax revenues through March of $46.2 million, a variance of 14.2 percent. ? Financial institutions tax adjusted revenues for FY 2017 through March were $6.0 million below expected FY 2017 revised financial institutions tax revenues through March, a variance of 51.1 percent ? Personal income tax adjusted revenues for the fiscal year-to-date through March period were $5.1 million less than expected FY 2017 revised personal income tax revenues through March, a variance of 0.6 percent. o Adjusted FY 2017 personal income tax withholding payments through March were $15.7 million less than expected fiscal year-to-date personal income tax withholding payments based on the FY 2017 revised estimate, a variance of 1.8 percent. Adjusted FY 2017 personal income tax withholding payments through March include a large, infrequently occurring payment of $3.3 million processed in August 2016. o Adjusted FY 2017 personal income tax final payments through March were $8.7 million, or 17.9 percent, more than expected fiscal year-to-date personal income tax final payments based on the FY 2017 revised estimate. Adjusted personal income tax final payments through March include $7.2 million of reimbursed Historic Structures Tax Credit redemptions. o Adjusted FY 2017 personal income tax estimated payments through March were $1.2 million, or 0.8 percent, more than expected FY 2017 personal income tax estimated payments revenues based on the revised estimate adopted at the November 2016 Revenue Estimating Conference. o Adjusted FY 2017 personal income tax refunds and adjustments were $706,044 less than the $(195.7 million) of expected FY 2017 personal income tax refunds and adjustments revenues based on the revised estimate adopted at the November 2016 Revenue Estimating Conference, a variance of 0.4 percent.
FY 2017 through March adjusted revenues for business corporations tax, the lottery transfer, motor vehicle license and registration fees, and the alcohol excise tax were below the expected FY 2017 through March revised revenues estimates but by less than $1.0 million each.
Results for the Month of March 2017
The second table, Monthly Estimate to Actual, gives the results for March 2017. As is apparent from the table, the Department of Revenue finds that March adjusted total general revenues trailed the expected FY 2017 revised total general revenues estimate for March by $15.9 million, a variance of 4.7 percent. In total taxes, March adjusted revenues were less than the expected FY 2017 revised monthly revenue estimate by $16.4 million, a variance of 5.6 percent. For departmental receipts, March adjusted revenues trailed the expected FY 2017 revised monthly revenues estimate by $154,889, a variance of 1.1 percent. For other general revenue sources, adjusted FY 2017 monthly revenues for March were $709,075 more than the expected FY 2017 revised monthly revenues estimate, a variance of 2.4 percent.
Two revenue items had adjusted revenues in March that exceeded the expected FY 2017 revised monthly estimate by $1.0 million or more. ? Personal income tax adjusted revenues for March 2017 were $7.8 million more than the expected FY 2017 revised monthly revenue estimate of $56.9 million, a variance of 13.7 percent. o Adjusted personal income tax refunds and adjustments for March 2017 were $12.9 million less than the expected FY 2017 revised monthly revenue estimate of $(74.9 million), a variance of 17.2 percent. o Adjusted personal income tax final payments for March 2017 led expected monthly personal income tax final payments revenues by $2.7 million, a variance of 18.3 percent. o Adjusted personal income tax estimated payments for March 2017 were $345,671 more than the expected FY 2017 revised monthly revenue estimate of $4.9 million, a variance of 7.0 percent. o March 2017 adjusted personal income tax withholding payments lagged monthly expected personal income tax withholding revenues by $8.1 million, a variance of 7.2 percent. ? The health care provider assessment adjusted revenues for March 2017 were $1.0 million, or 30.4 percent more, than the expected FY 2017 revised monthly revenue estimate of $3.4 million.
March adjusted revenues for the lottery transfer, the realty transfer tax, the cigarettes tax, the bank deposits tax, motor vehicle license and registration fees, the racing and athletics tax, and the alcohol excise tax were greater than the expected FY 2017 revised monthly revenue estimates for March, but by less than $1.0 million each.
Six revenue items had adjusted revenues in March that trailed the expected FY 2017 revised monthly estimate by $1.0 million or more. ? Insurance companies gross premiums tax adjusted revenues for March 2017 were $9.6 million less than the expected FY 2017 revised monthly revenues estimate of $52.8 million, a variance of 18.2 percent. ? Monthly adjusted public utilities gross earnings tax revenues were $5.2 million behind the expected FY 2017 revised monthly revenues estimate of $41.6 million, a variance of 12.5 percent. ? Financial institutions tax adjusted revenues for March 2017 were $3.8 million less than expected monthly financial institutions tax revenues based on the revised FY 2017 estimate, a variance of 54.3 percent. ? Monthly adjusted sales and use tax revenues were $3.6 million less than expected monthly sales and use tax revenues based on the revised FY 2017 estimate, a variance of 4.9 percent. ? Business corporations tax adjusted revenues for March 2017 were also 3.6 million less than expected monthly business corporations tax revenues based on the revised FY 2017 estimate, a variance of 8.4 percent. ? Estate and transfer tax adjusted revenues for March 2017 were $1.0 million less than the expected FY 2017 revised monthly revenues estimate of $3.2 million, a variance of 31.4 percent.
March adjusted revenues for departmental receipts were below the expected FY 2017 revised revenue estimates for March but by less than $1.0 million.
Robert S. Hull Director, Department of Revenue April 17, 2017? Appendix: Law Changes Enacted in the 2016 Session of the General Assembly
Revenue Changes That Reclassify General Revenues
In the 2014 session, the General Assembly passed legislation that reclassified 75.0 percent of all motor vehicle operator license and vehicle registration fees from general revenues to other funds effective July 1, 2016. The reclassification of these general revenue flows does not have any impact on revised FY 2017 adopted general revenues as these revenues are not included in either the adjusted revenue calculations contained in this report or the revised FY 2017 general revenue estimates.
In the 2016 session, the General Assembly passed legislation that reclassified all of the motor carrier fuel use tax revenues from general revenues to other funds effective July 1, 2016. As motor carrier fuel use tax revenues are no longer classified as general revenues, they will no longer be included in this report.
Also in the 2016 session, the General Assembly transferred from general revenues to restricted receipts the registration fees of medical marijuana patients and medical marijuana caregivers effective July 1, 2016. The estimated revenues to be reclassified total $901,647. The reclassification of these general revenue flows does not have any impact on revised FY 2017 adopted general revenues as these revenues are not included in either the adjusted revenue calculations contained in this report or the revised FY 2017 general revenue estimates.
Revenue Changes That Will Be Realized Through Monthly Revenue Flows
In the 2015 session, the General Assembly enacted legislation that restructured the state's earned income credit (EIC). For tax years beginning on or after January 1, 2016, the state EIC is equal to 12.5 percent of the federal EIC claimed by a taxpayer with the amount of the state EIC greater than the taxpayer's state personal income tax liability fully refundable. Since TY 2016 personal income tax returns will not be filed until after January 1, 2017, most of the $(6.0 million) impact from this law change is expected to be reflected in FY 2017 personal income tax refund revenue flows beginning in February. As a result, personal income tax refund revenue flows will be higher than the enacted (or revised) personal income tax refund estimate for the period of July 2016 through January 2017. ORA has adjusted the July 2016 through January 2017 personal income tax refunds and adjustments revenue flows to reflect the higher expected revenues for this period.
Further, the 2015 General Assembly enacted legislation that exempts from state personal income taxes taxable Social Security benefits for taxpayers with federal adjusted gross income of $80,000 or less if filing as an individual or $100,000 or less if filing a joint return. This exemption is provided only to those taxpayers that have reached full Social Security retirement age. Since TY 2016 personal income tax returns will not be filed until after January 1, 2017, most of the $(18.3 million) impact from this law change is expected to be reflected in FY 2017 personal income tax final payments. As a result, personal income tax final payments revenue flows will be higher than FY 2017 estimated personal income tax final payments revenues for the period July 2016 through February 2017. ORA has adjusted the July 2016 through February 2017 personal income tax final payments revenue flows to reflect the higher expected revenues for this period.
With respect to business corporations tax, the 2015 General Assembly enacted legislation that reduced the annual corporate minimum tax by 10.0 percent to $450 for tax years beginning on or after January 1, 2016. Business entities that pay the minimum corporate tax include all for-profit enterprises except for sole proprietorships and general partnerships. Minimum corporate tax filers that have January to December taxable years are required to pay the minimum tax by March 15th of the following calendar year. For calendar year minimum corporate tax filers, final TY 2016 returns are due March 15, 2017. Thus, most of this $(3.2 million) revenue change is expected to be realized in FY 2017 revenue flows, but not until March. ORA has adjusted the July 2016 through February 2017 business corporations tax revenue flows to reflect the higher expected revenues for this period. Further, the deadline for calendar year C-corporations tax returns and final payments shifted from March 15 to April 15, 2017 for TY 2016 returns. ORA attempted to model this law change, however it is unclear how this time shift will impact filing behavior.
In the 2016 session, the General Assembly enacted legislation that added three revenue officers to the Division of Taxation in FY 2017. The enacted FY 2017 personal income tax final payments revenue impact of this law change is $788,468; the enacted FY 2017 business corporations tax revenue impact is $205,005; the enacted FY 2017 sales and use tax revenue impact is $784,639; and the enacted FY 2017 departmental receipts fines and penalties revenue impact is $645,110. For each of these revenue items, the revenue flows from the addition of three revenue officers are expected to be realized completely during FY 2017 and in accordance to the general flow of revenues for each of these revenue items.
Furthermore, the 2016 General Assembly approved the Governor's proposal to reinstate the nexus program in the Division of Taxation's Field Audit Section. This reinstatement is expected to increase business corporations tax revenues by $750,000 and sales and use tax revenues by $250,000. The revenue flows from the reinstituted nexus program are expected to be realized completely in FY 2017 and in accordance with the general flow of revenues for these two revenue items.
The 2016 General Assembly approved the Governor's proposal to have the Division of Taxation undertake a transfer pricing audit project which is expected to increase business corporations tax revenues by $6,696,000 in FY 2017. This revenue change is not expected to be realized in the business corporations monthly revenue flows until the last quarter of FY 2017, and thus business corporations revenue flows will be lower than the enacted (or revised) estimate until that time. ORA has adjusted the July 2016 through March 2017 business corporations tax revenue flows to reflect the higher expected revenues for this period.
With respect to the insurance companies gross premiums tax, the 2016 General Assembly enacted a program to increase retaliatory actions against foreign insurance companies to ensure that these companies pay the gross premiums tax assessed in their home states on insurance contracts written in Rhode Island if that tax rate is greater than Rhode Island's 2.0 percent gross premiums tax rate. This enacted change is expected to increase insurance companies gross premiums tax revenues by $1,074,000 in FY 2017. In addition, FY 2017 insurance companies gross premiums tax revenues are estimated to be $209,191 less due to lower Medicaid insurance premiums written as a result of the implementation of the Unified Health Infrastructure Project. The impact of these revenue changes is expected to be realized primarily in March and June of 2017, which is typical for insurance companies gross premiums taxes in general.
With respect to sales and use tax, the 2016 General Assembly approved the Governor's proposal to add two revenue agents to the Division of Taxation. This proposal is expected to increase FY 2017 sales and use tax revenues by $1,009,167. The monthly distribution of the impact of this revenue change is expected to be similar to that of sales and use tax revenues in general.
The 2016 General Assembly enacted legislation that will eliminate fees for veteran plates, as well as create a Gold Star Parent plate. These law changes are expected to have a revenue impact of $(35,000) in the motor vehicle license and registration fees revenue item in FY 2017. The monthly distribution of the impact of this revenue change is expected to be similar to that of motor vehicle license and registration fees in general.
In the 2016 session, the General Assembly also enacted legislation that created a two-tiered annual license fee for distilleries based on the volume of production and exempted the first 50,000 gallons manufactured by Rhode Island distilleries from the alcohol excise tax. The monthly distribution of the $(30,000) impact of this revenue change is expected to be similar to that of alcohol excise tax revenues in general.
Also, the 2016 General Assembly passed legislation that impacted the FY 2017 revenue flows for a number of departmental receipts items. Parking fees at state beaches were reduced by 50 percent yielding a decrease in departmental receipts revenues of $1,284,000; the debt instruments upon which the Public Finance Management Board can assess a fee was expanded raising $295,000; cost recovery fees paid by banks and insurance companies for examinations are expected to generate $400,000; the restructuring of the fees paid by limited liability partnerships should reduce revenues by $30,000; the delay in the reissuance of motor vehicle license plates is projected to lower revenues by $2.0 million; revenues are expected to increase by $108,864 based on payments to the state in exchange for state office facilities potentially being "browned out" during periods of excess demand for electricity; and indirect cost recovery fees of $195,467 from medical marijuana plant tag fees and patient and caregiver registration fees are forecast. The monthly distribution of all of these revenue flows are expected to be the same as departmental receipts revenues in general.
Finally, in the 2016 Session, the General Assembly increased FY 2017 other miscellaneous revenues by $6.0 million. This increased revenue is from the implementation of the Office of Management and Budget's fraud initiative and the anticipated sale of state fleet vehicles as part of a cost saving measure in the provision of motor vehicles for use by employees in the performance of their duties. The monthly distribution of these revenue flows will be recorded as they are received.
Revenue Changes That Will Be Realized Through Fiscal Year-End Accruals
The 2016 General Assembly enacted legislation that impacts FY 2017 general revenues primarily through the fiscal year-end accrual process. The legislation enacted during the 2016 session impacts the personal income tax and the business corporations tax. The effective date of the legislation is January 1, 2017.
With respect to personal income tax, the 2016 General Assembly enacted legislation that increased the percentage of the federal EIC that could be claimed by the taxpayer from 12.5 percent to 15.0 percent, effective for tax years beginning on or after January 1, 2017. This change in the state EIC is expected to increase TY 2017 personal income tax refunds paid out by $5.3 million. Since TY 2017 personal income tax returns will not be filed until after January 1, 2018, which is in FY 2018, little or no impact on FY 2017 personal income tax refund revenue flows is expected. There is, however, an expected increase in the payable portion of the FY 2017 personal income tax accrual to align increased future refunds with the time period in which the income was earned that generated these refunds. The increase in the payable portion of the FY 2017 personal income tax accrual is estimated at $2.7 million. This amount was included in the enacted (or revised) FY 2017 estimate of personal income tax refunds and adjustments and, as a result, actual personal income tax refund revenue flows will be higher, all else equal, than expected (or adopted) personal income tax refund revenues for the July 2016 through January 2017 period. ORA has adjusted personal income tax refunds and adjustments revenue flows to reflect the higher expected revenues for this period.
Additionally, the 2016 General Assembly enacted legislation that exempts from state personal income taxes up to $15,000 of taxable pensions, annuities, and certain other retirement income for taxpayers that have reached full Social Security retirement age. Taxpayers must have federal adjusted gross income (AGI) of $80,000 or less for individuals or federal AGI of $100,000 or less for married couples. The exemption of the first $15,000 of taxable pensions, annuities, etc. is expected to decrease TY 2017 personal income tax final payments by $12.7 million. Since TY 2017 personal income tax returns will not be filed until after January 1, 2017, which is in FY 2018, little or no impact on FY 2017 personal income tax final payments is expected. There is, however, an expected decrease in the receivable portion of the FY 2017 personal income tax accrual to align anticipated reduced personal income tax final payments with the time period in which the exempted income was generated. The decrease in the receivable portion of the FY 2017 personal income tax accrual is $6.3 million. This amount was included in the enacted (or revised) FY 2017 estimate of personal income tax final payments and, as a result, personal income tax final payments revenue flows will be higher, all else equal, than expected (or adopted) personal income tax final payments revenues for at least the July 2016 through February 2017 period. ORA has adjusted personal income tax final payments revenue flows to reflect the higher expected revenues for at least this period.
With respect to business corporations tax revenues, the 2016 General Assembly passed legislation that further reduces corporate minimum tax paid by all for profit business entities other than sole proprietorships and general partnerships to $400 effective for tax years beginning on or after January 1, 2017. This change is expected to decrease TY 2017 business corporation tax revenues by $3.2 million. For calendar year minimum corporate tax filers, final TY 2017 returns are due on March 15, 2018, which is in FY 2018. To align the tax paid by corporate minimum filers to the business activity that generated the tax liability, 50.0 percent of minimum corporate tax payments expected to be received for TY 2017 will be accrued back to FY 2017. Since the minimum corporate tax in TY 2017 is less than for TY 2016, a reduction of $1.6 million in FY 2017 business corporations tax revenues will result on a net accrual basis.
Due to these revenue changes, the methodology used in the Revenue Assessment Report for FY 2017 will be similar to that used in the FY 2015 and FY 2016 reports. For most revenue items, the assessment of FY 2017 adjusted revenues will be made vis-à-vis the FY 2017 enacted (or revised) revenue estimates. For some revenue items, however, the assessment of FY 2017 adjusted revenues will be made vis-à-vis FY 2017 enacted (or revised) revenue flows as estimated by ORA.