Providence, R.I. -- The Rhode Island Department of Revenue (DOR) today released its FY 2018 Revenue Assessment Report for February 2018. The Revenue Assessment Report, which is issued on a monthly basis, compares the adjusted general revenues by revenue source on a fiscal year-to-date and monthly basis to expected general revenues by revenue source. Expected general revenues are estimated by the DOR's Office of Revenue Analysis from the revenue estimates adopted at the November 2017 Revenue Estimating Conference (REC). The methodology underlying the Office of Revenue Analysis' estimates is contained in the report.
1. February Year-To-Date Performance. On a fiscal year-to-date basis, the February 2018 report shows that adjusted total general revenues are ahead of expected total general revenues, based on the revenue estimates adopted at the November 2017 REC and the Office of Revenue Analysis' estimation methodology, with adjusted total general revenues $29.8 million more than expected total general revenues, a variance of 1.4 percent vs. the 1.9 percent variance that was recorded in January. The major contributors to this surplus are personal income tax revenues, $23.6 million more than expected; estate and transfer tax revenues, $6.9 million above expectations; departmental receipts revenues, $3.9 million more than expected; and cigarette and other tobacco products tax revenues, $1.4 million ahead of estimates. FY 2018 year-to-date lottery transfer is $2.0 million less than estimated; insurance company gross premiums tax revenues are $1.3 million below expectations; financial institutions tax revenues trail estimates by $1.0 million; and business corporation tax revenues are $995,172 below expectations. A total of six individual revenue items exceeded their estimated values on a year-to-date basis through February.
2. February Monthly Performance. For the month of February, the report shows that adjusted total general revenues lagged expected total general revenues, based on the revenue estimates adopted at the November 2017 REC and the Office of Revenue Analysis' estimation methodology, with adjusted total general revenues $7.7 million less than expected total general revenues, a variance of 4.2 percent, well below the 6.1 percent growth rate reported in January. The major contributors to this shortfall are personal income tax revenues, $6.6 million less than expected; insurance company gross premiums tax revenues, $2.4 million below expectations; public utilities gross earnings tax revenues, $1.5 million behind estimates; and lottery transfer revenues, $1.2 million below expectations. For the month of February sales and use tax revenues were ahead of expectations by $2.5 million and estate and transfer tax revenues exceeded estimates by $1.7 million, the only general revenue items that led expectations by more than $1.0 million. A total of six revenue items exceeded estimates for the month of February.
Regarding February year-to-date performance, Director of Revenue Mark Furcolo made the following observations: • Fiscal year-to-date revenues through February remained ahead of expectations at $29.8 million, or 1.4 percent, a decline of 0.5 percentage points from the percentage variance recorded in fiscal year-to-date through January. • Adjusted personal income tax revenues were $23.6 million above expectations, a variance of 2.8 percent. o Adjusted personal income tax withholding payments through February were $2.8 million more than estimated, or 0.4 percent, equal to the 0.4 percent variance recorded in FY 2018 through January. o FY 2018 through February adjusted personal income tax refunds and adjustments were $5.1 million more than expectations, a variance of 3.7 percent, a reversal from the 1.3 percent decrease in refunds and adjustments recorded on a fiscal year-to-date basis last month. o Fiscal year-to-date through February adjusted personal income tax estimated payments revenues were $21.3 million above expectations, a variance of 13.8 percent. The increase in estimated payments are likely due to the combination of the recently passed Tax Cuts and Jobs Act of 2017 which caps the state and local tax deduction at $10,000 for tax years beginning after December 31, 2017 and the strong stock market performance experienced in 2017. o FY 2018 through February personal income tax final payments were $4.7 million more than expected, a variance of 13.0 percent with 2017 Tax Amnesty revenues accounting for nearly two-thirds of this difference. • Fiscal year-to-date adjusted estate and transfer tax revenues through February were $6.9 million more than expected or 28.5 percent, after accounting for the accrual to FY 2017 of $58.0 million of payment(s) received in July. The estate and transfer tax revenue estimate was increased by $16.2 million at the November 2017 REC. • Adjusted departmental receipts revenues were $3.9 million above expectations, a variance of 3.1 percent. The departmental receipts estimate was reduced by $6.2 million at the November 2017 REC. • Adjusted lottery transfer revenues were 1.0 percent less than expected for the FY 2018 through February period. Some of this shortfall may be due to weather related events that occurred in January. • Fiscal year-to-date adjusted insurance company gross premiums tax revenues were $1.3 million less than expected or 18.4 percent while fiscal year-to-date financial institutions tax revenues were $1.0 million below estimates or 24.6 percent. Both of these revenue items have relatively low collection percentages through February of the fiscal year.
Regarding the February monthly performance, Director of Revenue Mark Furcolo made the following observations: • February adjusted revenues trailed expectations by $7.7 million, or 4.2 percent with revenue underperformance in the personal income tax exacerbated by lagging adjusted revenues in insurance company gross premiums taxes, public utilities gross earnings taxes, and the lottery transfer. • Adjusted personal income tax revenues for February were $6.6 million below expectations, a variance of 19.8 percent. o January adjusted personal income tax estimated payments were $1.1million less than expectations, a variance of 28.1 percent. The recent passage of the federal tax reform bill, which caps the state and local tax deduction at $10,000 for tax years beginning after December 31, 2017, may have caused taxpayers to shift estimated payments from January and February to December. o Month of February adjusted personal income tax refunds and adjustments were $5.8 million more than expected, a variance of 7.1 percent. o Personal income tax withholding payments adjusted revenues for February were 0.2 percent below estimates while personal income tax final payments were 9.5 percent above estimates, bolstered by $1.6 million of 2017 Tax Amnesty revenues above estimate. • February adjusted insurance company gross premiums tax revenues were below expectations by $2.4 million, or 55.4 percent. • Adjusted public utilities gross earnings tax revenues for February trailed the estimate by $1.5 million, a variance of 75.7 percent. • Lottery transfer adjusted revenues for February lagged expectations by $1.2 million, or 4.3 percent, marking the third consecutive month of underperformance for this revenue source. • February adjusted sales and use tax revenues were $2.5 million more than expected or 3.3 percent while adjusted estate and transfer tax revenues for February were $1.7 million above the estimate or 64.9 percent.
The entire report can be found on the Department of Revenue's web site, www.dor.ri,gov, under the Revenue Analysis header on the State Reports tab.
Questions or comments on the report should be directed to Paul Grimaldi, Chief of Information and Public Relations by e-mail at paul.grimaldi@revenue.ri.gov or by phone at (401) 574-8766