Legislative Budget Office of the Legislative Service Commission
tax were $38.4 million and $3.2 million, respectively, below their FY 2020 estimates. Most of
the remaining GRF taxes also experienced negative variances through November, including the
financial institutions tax (FIT, $7.6 million), the alcoholic beverage tax ($2.7 million), and the
three utility-related taxes (the kilowatt-hour excise tax, the public utility tax, and the natural
gas consumption tax) which were collectively $9.6 million below projections. All other taxes had
smaller variances at the end of November.
For the month of November 2019, GRF sources of $2.61 billion were $224.9 million below
estimates, due to shortfalls of $223.7 million for federal grants and $2.0 million for tax sources.
However, nontax revenue was above estimate by $0.9 million; and no GRF transfers in occurred
or were anticipated. The poor performance of GRF tax sources was the result of negative
variances of $36.6 million from the PIT, $5.3 million from the public utility tax, and $4.6 million
from the CAT. Those negative variances were partially offset by gains of $31.9 million for the sales
tax, $8.4 million for the foreign insurance tax, and $4.7 million for the FIT.
As shown in Table 2, FY 2020 GRF sources through November were just $15.0 million
(0.1%) above sources in the corresponding period in FY 2019. Receipts from tax sources and
nontax revenue were $247.3 million and $35.8 million above such revenues in FY 2019 through
November. On the other hand, federal grants and transfers in were below their FY 2019 levels
by $267.5 million and $0.6 million, respectively. Growth in GRF tax revenue was due to the
sales tax ($252.9 million) and the CAT ($40.3 million). Revenue from the PIT for the first five
months of FY 2020 fell slightly ($9.8 million); this was due in part to a reduction in withholding
rates, the role of which is explained below.
Sales and Use Tax
The sales and use tax has been healthy throughout FY 2020. Through November, GRF
receipts of $4.63 billion from this tax were $114.2 million (2.5%) above estimate, with both the
nonauto and the auto portions of the tax above projections. Total sales tax revenue was also
252.9 million (5.8%) above receipts in FY 2019 through November. For the latest month, GRF
receipts were $941.9 million, $31.9 million (3.5%) above estimate, powered by strong results
from the auto sales tax. Compared to the same month last year, November receipts from this tax
increased $44.1 million (4.9%). For analysis and forecasting, revenue from the sales and use tax is
separated into two parts: auto and nonauto. Auto sales and use tax collections generally arise
from the sale of motor vehicles, but auto taxes arising from leases are paid at the lease signing
and are mostly recorded under the nonauto tax instead of the auto tax.
Nonauto Sales and Use Tax
November receipts from the nonauto sales and use tax totaling $823.4 million exceeded
estimate by $19.3 million (2.4%). This performance increased the cumulative YTD positive
variance of this GRF source to $74.8 million (1.9%), up from a positive variance of $55.5 million in
the first four months of FY 2020. Compared to revenue in the same month in 2018, November
3 A negative variance in FIT collections through the first half of the year is not uncommon. The
OBM estimate always assumes refunds outweigh FIT collections during this period. Refunds typically
occur during the first half of a fiscal year as taxpayers make adjustments to previous tax filings, which is
inherently difficult to predict. Receipts of the FIT are typically expected in January, March, and May.
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