Providence, R.I. -- The Rhode Island Department of Revenue (DOR) today released its FY 2019 Revenue Assessment Report for May 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 May 2019 Revenue Estimating Conference (REC). The methodology underlying the Office of Revenue Analysis' (ORA) estimates is contained in the report. The principals of the May 2019 REC revised the estimate for FY 2019 total general revenues up by $24.8 million from the revenue estimates adopted at the November 2018 REC.
May Year-To-Date Performance. On a fiscal year-to-date basis, the May 2019 report shows that adjusted total general revenues are higher than expected, based on the revised revenue estimates adopted at the May 2019 Revenue Estimating Conference (REC) and the Office of Revenue Analysis' estimation methodology, with adjusted total general revenues 0.6 percent, or $19.5 million, above expectations. The primary sources of the outperformance are: • Business corporation tax adjusted revenues which are up $15.3 million, or 11.4 percent from the year-to-date FY 2019 estimate. The principals at the May 2019 REC increased the estimate for business corporation tax revenues by $9.8 million, yet adjusted revenues were still able to exceed the estimate by a sizable amount; • Public utilities gross earnings tax adjusted revenues which are $3.1 million, or 4.0 percent, more than the fiscal year-to-date through May revised estimate. The estimate for public utilities gross earnings tax revenues was revised up by $2.1 million at the May 2019 REC; • Adjusted financial institutions tax revenues through May which are $2.3 million more than expected, or 18.7 percent, on a fiscal year-to-date basis. The financial institutions tax revenue estimate was left unchanged by the May 2019 REC conferees from the estimate adopted at the November 2018 REC; • Insurance company gross premiums tax adjusted revenues are $2.2 million more than the expected revenues for the fiscal year-to-date period through May, based on the estimates adopted at the May 2019 REC, a variance of 2.6 percent. The estimates adopted at the May 2019 REC were $15.3 million less than the estimates adopted at the November 2018 REC; • Departmental receipts revenues continue to exceed estimated year-to-date departmental receipts revenues through May and are up $1.4 million or 0.7 percent from expectations even though the FY 2019 estimate for departmental receipts revenues was increased by $16.0 million at the May 2019 REC; and • Adjusted sales and use tax revenues are slightly ahead of the revised FY 2019 year-to-date estimate adopted at the May 2019 REC, exceeding the estimate by $1.2 million or 0.1 percent. The sales and use tax estimate for FY 2019 was revised up by $6.6 million by the principals of the May 2019 REC.
Only two general revenue sources had FY 2019 adjusted revenues through May that lagged expectations based on the revised estimates adopted at the May 2019 REC. These revenue items are: • Personal income tax revenues which are $3.3 million, or 0.3 percent, below revised expectations with this underperformance being driven by personal income tax withholding revenues at $7.7 million, or 0.7 percent, below the revised estimate. The May 2019 estimate for FY 2019 personal income tax withholding revenues was revised down by $15.1 million from the estimate adopted at the November 2018 REC; and • Lottery transfer revenues for the year-to-date through May period are $2.3 million less than the fiscal year-to-date through May estimate, a variance of 0.7 percent. The principals of the May 2019 REC increased the estimate for the lottery transfer in FY 2019 by $0.5 million over the estimate adopted at the November 2018 REC. This total change in the lottery transfer consisted of increased transfer revenues of $12.3 million from video lottery terminals and table games and decreased transfer revenues of $11.8 million from traditional lottery games and sports betting operations.
Regarding the May year-to-date performance, Director of Revenue Mark A. Furcolo noted that "fiscal year-to-date adjusted total general revenues through May are above revised expectations even after the principals of the May 2019 Revenue Estimating Conference revised the estimate up by $24.8 million. It is hard not to interpret this as a good sign." Director Furcolo went on to say that "although adjusted personal income tax revenues trail expectations on a year-to-date basis, the variance is small, and it is easily offset by the strong fiscal year-to-date performance of most general business taxes but particularly the business corporation tax." "Sales and use tax and departmental receipts continue to maintain their outperformance as they have for most of the fiscal year," said Furcolo.
May Monthly Performance. For the month of May, the report indicates that adjusted total general revenues are $9.0 million above the revised estimate adopted at the May 2019 REC or a variance of 3.5 percent. The primary drivers of this surplus are: • Adjusted insurance company gross premiums tax revenues which are $8.2 million, or 1,392.8 percent, more than the expected monthly revenues based on the estimate adopted at the May 2019 REC. This excess of adjusted revenues over expected revenues for May is attributable to the receipt of $7.0 million of historic structures tax credit certificates from HMO gross premiums taxpayers in May rather than April; • Monthly adjusted financial institutions tax revenues which are $4.8 million, or 99.9 percent, ahead of the revised monthly estimate for May based on the estimate adopted at the May 2019 REC; • Adjusted business corporation tax revenues which are $3.4 million, or 181.4 percent more than the revised May estimate based on the revised estimate adopted at the May 2019 REC; and • Monthly adjusted sales and use tax revenues leading revised expectations for the month by $1.8 million or 2.0 percent.
The main underperformers for the month of May, based on the revised estimates adopted at the May 2019 REC, are: • Adjusted personal income tax revenues for May which are $6.9 million less than the estimate for May, down 7.2 percent and due to waek performance in personal income tax withholding payments, $7.7 million, or 7.6 percent, less than expected and personal income tax final payments, $2.2 million or 22.7 percent below the estimate. These shortfalls were offset by personal income tax refunds and adjustments which are $2.0 million less than the estimate for May, or 9.8 percent, and estimated payments revenues, $1.1 million, or 30.6 percent, more than expected for the month; and • Lottery transfer revenues for May lagged the monthly estimate based on the May 2019 REC by $2.6 million or 7.4 percent as adjusted transfer revenues from table games and video lottery terminals fell short of revised expectations.
Regarding the month of May performance, Director of Revenue Mark A. Furcolo stated that "adjusted total general revenues remain above the estimate for the month at $9.0 million or 3.5 percent, with strong performance in most general business taxes but especially in insurance company gross premiums tax and financial institutions 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.