Providence, R.I. -- The Rhode Island Department of Revenue (DOR) today released its FY 2019 Revenue Assessment Report for April 2019. 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 DOR's Office of Revenue Analysis from the FY 2019 revenue estimates adopted at the November 2018 Revenue Estimating Conference (REC). The methodology underlying the Office of Revenue Analysis' (ORA) estimates is contained in the report. The principals of the November 2018 REC revised the estimate for FY 2019 total general revenues down by $5.4 million from the enacted budget.
April Year-To-Date Performance: On a fiscal year-to-date basis, the April 2019 report shows that adjusted total general revenues are more than expected total general revenues, based on the revised revenue estimates adopted at the November 2018 Revenue Estimating Conference (REC) and the Office of Revenue Analysis' estimation methodology, with adjusted total general revenues 1.2 percent, or $35.3 million, above expectations.
The primary sources of the out-performance are: • Business corporation tax revenues, which are up $17.9 million, or 14.2 percent from the year-to-date FY 2019 estimate – a sharp reversal from the March report when the comparable figures were $(6.4 million) and 5.4 percent; • Personal income tax revenues, which are up $13.8 million, or 1.2 percent, from revised expectations – a strong improvement from the March report when the comparable figures were $(20.4 million) and 2.2 percent respectively; • Departmental receipts revenues, which continued to exceed estimated year-to-date departmental receipts revenues and are up $12.6 million or 7.3 percent from expectations; • Adjusted estate and transfer tax revenues, which are more than the revised estimate by $8.5 million or 30.3 percent down slightly from the March report; • Sales and use tax revenues, which are $4.9 million above the revised estimate for FY 2019 through April, or 0.5 percent; • Public utilities gross earnings tax revenues, which are $4.5 million, or 6.0 percent, more than the fiscal year-to-date through April revised estimate – a meaningful improvement from the March report; • Lottery transfer revenues for the year-to-date through April period are $1.3 million more than the fiscal year-to-date through April estimate, a variance of 0.4 percent as casino gaming revenues, especially from the Tiverton Casino Hotel, continue to outpace estimates; and • Cigarette and other tobacco products tax revenues, which are $1.2 million, or 1.1 percent, more than expected through April due to cigarette excise tax revenues ahead of the estimate by $1.6 million.
The improvement in personal income tax revenues relative to the March report is due entirely to final payments revenues which are $55.9 million above the estimate or 27.5 percent. The surplus in business corporation and public utilities gross earnings tax revenues likely reflect the change to a quarterly estimated payments schedule in tax year 2018 that was not adequately captured in ORA's methodology for determining expected revenues.
Offsetting these overages are: • Insurance company gross premiums tax adjusted revenues, which trail revised expectations by $18.0 million or 18.1 percent – a trend that has persisted for the past several months and a deterioration from the March report; • Adjusted health care provider assessment revenues, which trail the revised estimate by $6.0 million, a variance of 14.1 percent – a further decline from the March report where the same figures were $(5.2 million) and 13.7 percent; • Financial institutions tax revenues, which lag the estimate by $2.4 million, or 13.8 percent – an improvement from the March report; • Realty transfer tax adjusted revenues, which are $1.8 million less than expected, a variance of 12.3 percent; and • Adjusted year-to-date motor vehicle license and registration fee revenues, which are $1.5 million, or 63.8 percent below the estimate as the anticipated take up in Real ID transactions has been less than expected through April. April Monthly Performance. For the month of April, the report indicates that adjusted total general revenues are $62.8 million above the revised estimate adopted at the November 2018 REC or a variance of 14.2 percent. The primary drivers of this surplus are: • Adjusted personal income tax revenues, which are $34.2 million more than the estimate for April, up 17.6 percent due overwhelmingly to strong performance in personal income tax final payments, $36.6 million or 25.0 percent above expectations and withholding tax revenues, $1.2 million, or 1.2 percent, more than expected for the month; • Monthly adjusted business corporation tax revenues, which are $24.1 million or 287.8 percent more than the revised monthly estimate with this excess likely attributable to the new estimated payments schedule being adhered to by business corporation taxpayers; • Public utilities gross earning tax revenues for April exceeding expectations by $6.3 million or 32.8 percent as estimated payments were made in accordance with the new estimated payments schedule at levels higher than anticipated; • Adjusted financial institutions tax revenues for April, which are $4.1 million above expectations, or 64.0 percent, again likely attributable to adherence to the new estimated payments schedule put in place for TY 2018; • Monthly adjusted sales and use tax revenues leading expectations for the month by $2.4 million or 2.6 percent; and • Departmental receipts revenues for April topping the monthly estimate by $1.4 million or 6.2 percent as interest and penalty on overdue taxes accounts continue to exceed estimates by substantive margins.
The main under-performer for the month of April was insurance company gross premiums tax revenues which are $8.9 million below the monthly estimate, or 22.8 percent, due entirely to HMO gross premiums tax revenues falling short for the month by $9.4 million.
Regarding the April year-to-date performance, Director of Revenue Mark A. Furcolo noted that "fiscal year-to-date adjusted total general revenues through April are above revised expectations. This is the first time in FY 2019 year-to-date that each of the major components of total general revenues has been positive." • Adjusted personal income tax revenues are above expectations, due to an exceptional performance in personal income tax final payments revenues, which were $55.9 million more than estimated, a variance of 27.5 percent. o FY 2019 year-to-date adjusted personal income tax revenues are $36.7 million, or 3.3 percent, higher than FY 2018 year-to-date adjusted personal income tax revenues were last year through April due to much stronger final and withholding tax revenues in adjusted FY 2019 year-to-date. • Adjusted sales and use tax revenues through April are $4.9 million above revised expectations, or 0.5 percent; o FY 2019 year-to-date adjusted sales and use tax revenues are $55.6 million, or 6.4 percent, more than FY 2018 year-to-date adjusted sales and use tax revenues were last year. • Adjusted departmental receipts revenues are $12.6 million above the revised estimate, a variance of 7.3 percent, continuing a trend that began in July of the fiscal year; and • Adjusted general business tax revenues are a combined $3.9 million below revised expectations, a variance of 1.1 percent; o The shortfall in general business tax revenues is down significantly from the March report due to strong gains in business corporation tax revenues.
Regarding the month of April performance, Director of Revenue Mark A. Furcolo stated that "total general revenues were significantly greater than estimated at $62.8 million or 14.2 percent but the reality is that April was all about the personal income and business corporation tax revenues, both of which exceeded expectations by substantial percentages."
Other strong performers for the month include adjusted public utilities gross earnings tax revenues, +$6.3 million or 32.8 percent above the estimate; adjusted financial institutions tax revenues, +$4.1 million or 64.0 percent more than expected; adjusted sales and use tax revenues, +$2.4 million or 2.6 percent more than expected; and adjusted departmental receipts revenues, +$1.4 million or 6.2 percent more than expected.
The month's only significant laggard is insurance company gross premiums tax revenues, which are $8.9 million below the revised monthly estimate, concentrated in HMO insurance gross premiums tax revenues.
The entire report can be found on the Department of Revenue's web site at: http://www.dor.ri.gov/revenue-analysis/2019.php.
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.