Providence, R.I. -- The Rhode Island Department of Revenue (DOR) today released its FY 2018 Revenue Assessment Report for March 2018. 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. March Year-To-Date Performance. On a fiscal year-to-date basis, the March 2018 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' (ORA) estimation methodology, with adjusted total general revenues $46.5 million more than expected total general revenues, a variance of 2.0 percent vs. the 1.4 percent variance that was recorded in February. The major contributors to this surplus are personal income tax revenues, $43.6 million more than expected; estate and transfer tax revenues, $5.3 million above expectations; departmental receipts revenues, $4.5 million more than expected; and public utilities gross earnings tax revenues, $5.4 million ahead of estimates. It should be noted that it appears that some public utilities taxpayers made final payments on their TY 2017 liability in March vs. April as was expected by the ORA. FY 2018 year-to-date business corporation tax revenues are $6.0 million less than estimated; sales and use tax revenues are $3.3 million below expectations; the lottery transfer trails the estimate by $1.6 million; and insurance company gross premiums tax revenues are $978,881 below expectations. A total of seven individual revenue items exceeded their estimated values on a year-to-date basis through March.
2. March Monthly Performance. For the month of March, 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 $16.1 million more than expected total general revenues, a variance of 7.1 percent, well above the 4.2 percent growth rate reported in February. The major contributors to this surplus are personal income tax revenues, $19.9 million more than expected; public utilities gross earnings tax revenues, $5.3 million ahead of estimates; and financial institutions tax revenues, $1.6 million above expectations. It should be noted that it appears that some public utilities taxpayers made final payments on their TY 2017 liability in March vs. April as was expected by the ORA. These monthly revenue gains are offset by business corporation tax revenues, $5.0 million less than expected for March; sales and use tax revenues, $3.4 million below expectations in March; estate and transfer tax revenues, $1.6 million behind the March estimate; and cigarette and other tobacco products tax revenues, $1.4 million less than expected in March. A total of seven revenue items exceeded estimates for the month of March.
Regarding March year-to-date performance, Director of Revenue Mark Furcolo made the following observations: • Fiscal year-to-date revenues through March surged ahead of expectations at $46.5 million, or 2.0 percent, an increase of 0.6 percentage points from the percentage variance recorded in fiscal year-to-date through February. Most of this increase, however, is concentrated in personal income tax revenues. • Adjusted personal income tax revenues were $43.6 million above expectations, a variance of 4.9 percent. o Adjusted personal income tax withholding payments through March are $2.3 million less than estimated, or 0.3 percent, below the 0.4 percent positive variance recorded in FY 2018 through February. o FY 2018 through March adjusted personal income tax refunds and adjustments are $12.3 million less than expectations, a variance of 5.6 percent, a reversal from the 3.7 percent increase in refunds and adjustments recorded on a fiscal year-to-date basis last month. o Fiscal year-to-date through March adjusted personal income tax estimated payments revenues are $22.3 million above expectations, a variance of 14.0 percent. The increase in estimated payments are likely due to the combination of the recently passed Tax Cuts and Jobs Act of 2017 which caps the state and local tax deduction at $10,000 for tax years beginning after December 31, 2017 and the strong stock market performance experienced in 2017. o FY 2018 through March personal income tax final payments are $11.2 million more than expected, a variance of 21.5 percent with 2017 Tax Amnesty revenues accounting for approximately one-quarter of this difference. • Fiscal year-to-date adjusted public utilities gross earnings tax revenues through March are $5.4 million more than expected or 109.5 percent, likely reflecting the month earlier receipt of TY 2017 final payments than was expected. • Adjusted estate and transfer tax revenues through March were $5.3 million more than expected or 19.0 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. • Fiscal year-to-date adjusted departmental receipts revenues were $4.5 million above expectations, a variance of 3.2 percent. The departmental receipts estimate was reduced by $6.2 million at the November 2017 REC. • Adjusted lottery transfer revenues were 0.7 percent less than expected for the FY 2018 through March period. Some of this shortfall may be due to weather related events that occurred in January.
Regarding the March monthly performance, Director of Revenue Mark Furcolo made the following observations: • March adjusted revenues exceeded expectations by $16.1 million, or 7.1 percent with revenue strong performance in personal income tax revenues, particularly in refunds and adjustments. • Adjusted personal income tax revenues for March were $19.9 million above expectations, a variance of 37.8 percent. o March adjusted personal income tax estimated payments are $1.1million more than expected, a variance of 21.0 percent. Given the low levels of expected revenues from personal income tax estimated payments, this variance is likely attributable to a timing issue. o Month of March adjusted personal income tax refunds and adjustments are $17.4 million less than expected, a significant variance of 20.6 percent. o Personal income tax withholding payments adjusted revenues for March are 4.4 percent below estimates while personal income tax final payments are 40.3 percent above estimates, in spite of 2017 Tax Amnesty revenues falling below the estimate by $1.1 million. • March adjusted public utilities gross earnings tax revenues led the estimate by $5.3 million, a variance of 779.0 percent. This sizable increase may reflect the unexpected receipt of TY 2017 final payments in March rather than April. • Adjusted financial institutions tax revenues are $1.6 million more than expected, a variance of 279.6 percent and may also reflect the earlier receipt of TY 2017 final payments than was expected. • March adjusted business corporation tax revenues are below expectations by $5.0 million, or 17.4 percent. • Adjusted sales and use tax revenues for March are $3.4 million less than expected, a variance of 4.4 percent. • Estate and transfer tax adjusted revenues for March lagged expectations by $1.6 million, or 41.3 percent, with this variance likely reflective of the inherent volatility in this revenue source. • March adjusted cigarette and other tobacco products tax revenues were $1.4 million less than expected or 12.5 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.