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R.I. Department of Revenue releases February 2017 revenue assessment report

Providence, R.I. -- The Rhode Island Department of Revenue (DOR) today released its FY 2017 Revenue Assessment Report for February 2017. 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 2016 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 2017 report shows that adjusted total general revenues are behind expected total general revenues, based on the revenue estimates adopted at the November 2016 REC and the Office of Revenue Analysis' estimation methodology, with adjusted total general revenues $27.3 million less than expected total general revenues, a variance of 1.3 percent. The primary sources of this shortfall are personal income tax revenues $10.8 million below the estimate, sales and use tax revenues $9.3 million behind expectations, estate and transfer tax revenues $5.8 million below the estimate and the lottery transfer $1.3 million less than expected. These shortfalls are offset in part by departmental receipts revenues $3.8 million ahead of expectations and business corporations tax revenues $2.9 million above the estimate.

2. February Monthly Performance. Adjusted FY 2017 February total general revenues trailed expected FY 2017 monthly total general revenues based on the revenue estimates adopted at the November 2016 REC and the Office of Revenue Analysis' estimation methodology, by $15.6 million or 8.6 percent. The primary sources of this underperformance are personal income tax revenues $4.8 million less than expected, sales and use tax revenues $2.8 million below the estimates, and estate and transfer tax revenues $2.0 million less than expected which are slightly offset by monthly business corporations tax revenues yielding $1.1 million more than expected in February.

Regarding February year-to-date performance, Director of Revenue Robert S. Hull made the following observations: Fiscal year-to-date growth in total general revenues through February dropped sharply and are now $27.3 million below expectations, or 1.3 percent vs. $12.3 million and 0.7 percent in January. The spread between adjusted and expected personal income tax revenues was negative $10.8 million and includes an adjustment that reduces refunds and adjustments by $9.3 million to account for July and August 2016 refunds that were accrued back to FY 2016. o Adjusted FY 2017 year-to-date personal income tax final payments are $6.1 million more than expected, a variance of 17.8 percent. o Adjusted FY 2017 through February personal income tax withholding payments trail expectations by $5.6 million, or 0.7 percent and include receipt of a large, infrequently occurring payment of $3.3 million in August 2016. o Adjusted personal income tax estimated payments for FY 2017 year-to-date modestly lead expectations at a variance of 0.6 percent. o Adjusted FY 2017 year-to-date refunds and adjustments exceed expectations through February by $12.2 million as TY 2015 refunds continue to be processed and TY 2016 refunds are being paid more rapidly. Adjusted sales and use tax revenues through February continued to deteriorate and now lag expectations by $9.3 million, or 1.4 percent. o Fiscal year-to-date through February adjusted sales and use tax revenues do not include sales taxes collected by Amazon on taxable remote sales into Rhode Island as the remittance of these revenues will not occur until March. Adjusted estate and transfer tax revenues are a combined $5.8 million below expectations for FY 2017 through February. Adjusted business corporations tax revenues are 6.6 percent more than expected FY 2017 through February business corporations tax revenues, a difference of $2.9 million. FY 2017 year-to-date adjusted departmental receipts revenues lead expected fiscal year-to-date departmental receipts revenues by $3.9 million or 3.3 percent. Adjusted public utilities gross earnings, financial institutions, and insurance companies gross premiums tax revenues through February are a combined $5.9 million behind expectations. FY 2017 year-to-date adjusted lottery transfer revenues trail expected lottery transfer revenues through January with a negative variance of $1.3 million or 0.6 percent.

Regarding February monthly performance, Director Hull made the following observations: February adjusted monthly revenues are $15.6 million, or 8.6 percent, less than expected monthly revenues, a sharp decrease from January monthly revenues. Monthly adjusted personal income tax revenues trail expected February personal income tax revenues by $4.8 million, a variance of 13.1 percent. o February adjusted personal income tax withholding payments trail expected monthly personal income tax withholding payments by $375,151 a variance of 0.4 percent. o Adjusted personal income tax final payments for February were nearly $1.0 million below expectations, a variance of 21.4 percent. o Adjusted personal income tax estimated payments for February were $718,532 ahead of expectations, a variance of 18.6 percent o February adjusted personal income tax refunds and adjustments were $4.2 million more than expected for the month a difference of 5.8 percent. Adjusted sales and use tax revenues for February trail expectations by $2.8 million, or 3.9 percent. February adjusted sales and use tax revenues do not include sales taxes collected by Amazon as those tax collections are not due to the state until March 20th. FY 2017 February adjusted estate and transfer tax revenues are $2.0 million below expectations for February, a variance of 83.3 percent. February adjusted departmental receipts revenues are $1.2 million less than expected, a variance of 8.0 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.

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