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

Providence, R.I. -- The Rhode Island Department of Revenue (DOR) today released its FY 2018 Revenue Assessment Report for November 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 2017 Revenue Estimating Conference (REC). The methodology underlying the Office of Revenue Analysis' estimates is contained in the report.

1. November Year-To-Date Performance. On a fiscal year-to-date basis, the November 2017 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 $8.0 million more than expected total general revenues, a variance of 0.6 percent, the mirror opposite of the percentage variance that was recorded in October. The major contributors to this surplus are estate and transfer tax revenues, $7.3 million more than expected; cigarette and other tobacco products tax revenues $2.1 million above expectations; lottery transfer revenues $1.5 million more than expected; departmental receipts revenues above expectations by $1.5 million; personal income tax revenues ahead of expectations by $1.3 million; and public utilities gross earnings tax revenues leading expected revenues by $1.1 million. FY 2018 year-to-date business corporation tax revenues are $6.9 million less than expected, the only revenue item more than $1.0 million below expectations. A total of nine individual revenue items exceeded their estimated values on a year-to-date basis through November.

2. November Monthly Performance. For the month of November, the 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 $12.0 million more than expected total general revenues, a variance of 4.9 percent, a strong increase from the 1.1 percent reported in October. The major contributors to this overage are personal income tax revenues which are $6.4 million more than expected; estate and transfer tax revenues which are $3.7 million above expectations; cigarette and other tobacco product tax revenues leading expectations by $3.5 million; and departmental receipts revenues $1.6 million more than anticipated. Business corporation tax revenues lagged expectations by $3.0 million in November. A total of nine revenue items exceeded estimates for November while seven revenue sources were behind expectations for November.

Regarding November year-to-date performance, Director of Revenue Mark Furcolo made the following observations: Fiscal year-to-date revenues through November were ahead of expectations by $8.0 million, or 0.6 percent, an improvement of 1.2 percentage points from the percentage variance recorded in October. Adjusted personal income tax revenues were $1.3 million above expectations, a variance of 0.2 percent. o Adjusted personal income tax withholding payments through November were $4.5 million more than estimated, or 1.0 percent. It should be noted that the revenue estimate for personal income tax withholding payments was revised upward by $13.2 million at the November 2017 REC. o FY 2018 through November adjusted personal income tax refunds and adjustments were $2.8 million more than expected, a variance of 7.5 percent, down significantly from the 62.5 percent variance recorded in October. o Fiscal year-to-date through November adjusted personal income tax estimated payments revenues were $3.5 million below expectations, in spite of a $2.0 million downward revision in the estimate at the November 2017 REC, while FY 2018 through November personal income tax final payments were $3.2 million more than expected. Fiscal year-to-date adjusted business corporation tax revenues through November were short of expectations by $6.9 million, or 20.6 percent. Some of this shortfall may be due to the change in the due date of final returns for tax years beginning on or after January 1, 2016. Adjusted departmental receipts revenues were $1.5 million above expectations, a variance of 2.1 percent. The departmental receipts estimate was reduced by $6.2 million at the November 2017 REC. Fiscal year-to-date through November cigarette and other tobacco products tax revenues were $2.1 million more than expected, a variance of 3.4 percent. Fiscal year-to-date adjusted estate and transfer tax revenues through November were $7.3 million more than expected or 47.1 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 lottery transfer revenues were $1.5 million above the estimate, a variance of 1.2 percent and attributable to outperformance of traditional lottery products and the table games operated at Twin River-Lincoln.

Regarding November monthly performance, Director of Revenue Mark Furcolo made the following observations: November adjusted revenues led expectations by $12.0 million, or 4.9 percent with strong revenue performance in the personal income tax, the estate and transfer tax and the cigarettes tax. Adjusted personal income tax revenues for November were $6.4 million above expectations, a variance of 7.0 percent. o November adjusted personal income tax estimated payments and final payments were in line with expectations at a combined $386,970 more than estimated. o Month of November adjusted personal income tax refunds and adjustments were $9.1 million less than expected, a variance of 62.4 percent. o Personal income tax withholding payments adjusted revenues for November were $3.1 million below monthly expectations, a variance of 3.1 percent. November adjusted business corporation tax revenues were below expectations by $3.0 million, or 78.0 percent, continuing a trend seen in July, August, and October. The estimate for business corporation tax revenue was revised downward by $5.7 million at the November 2017 REC. Adjusted sales and use tax revenues for November were slightly below estimates. November adjusted cigarette and other tobacco products tax revenues were $3.5 million more than expected or 31.6 percent. Estate and transfer tax revenues for November exceeded expectations by $3.7 million, or 114.8 percent, continuing the strong outperformance this revenue source has exhibited throughout the fiscal year.

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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