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August 2018 Revenue Assessment Report now available

(Providence, R.I.), The Rhode Island Department of Revenue (DOR) today released its FY 2019 Revenue Assessment Report for August 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 DOR's Office of Revenue Analysis from the revenue estimates enacted in the FY 2019 budget. The methodology underlying the Office of Revenue Analysis' estimates is contained in the report.

1. August Year-To-Date Performance. On a fiscal year-to-date basis, the August 2018 report shows that adjusted total general revenues slightly lagged expected total general revenues, based on the revenue estimates enacted in the FY 2019 budget and the Office of Revenue Analysis' estimation methodology, with adjusted total general revenues $1.2 million less than expected total general revenues, a variance of 0.2 percent. The primary sources of the variance are personal income tax withholding payments revenues which are down $5.4 million, or 2.8 percent, from expectations; business corporation tax revenues which trail expectations by $4.7 million or 33.9 percent; and estate and transfer tax revenues which are $1.3 million, or 23.0 percent, below the fiscal year-to-date through August estimate. Offsetting these shortfalls are sales and use tax revenues which are $4.1 million more than expected, a variance of 2.1 percent; cigarette and other tobacco products tax revenues, which are 9.2 percent above the estimate, a difference of $2.2 million; departmental receipts which are $2.5 million above expectations, a variance of 9.4 percent; and realty transfer tax revenues which are $1.1 million above the estimate, or 38.9 percent, due to the receipt of large payment(s) of $1.2 million in August.

2. August Monthly Performance. For the month of August, the report indicates that adjusted total general revenues are $8.2 million below expectations or a variance of 3.0 percent. The primary driver of this shortfall is personal income tax revenues which are $12.2 million, or 11.7 percent, below expectations. Within personal income tax revenues, personal income tax withholding payments revenues are $13.5 million less than the estimate for August, a variance of 13.1 percent. Substantive positive variances were reported in cigarette and other tobacco products tax revenues, $1.5 million or 12.4 percent; sales and use tax revenues, $1.4 million or 1.4 percent; and realty transfer tax revenues, $940,131 or 61.5 percent due in large part to the receipt of large payment(s) of $1.2 million in the month. Departmental receipts revenues fell short of the estimate for August.

Regarding the August year-to-date performance, Director of Revenue Mark A. Furcolo made the following observations: Fiscal year-to-date adjusted total general revenues through August are slightly behind expectations by $1.1 million, or 0.2 percent; Adjusted personal income tax revenues are $5.2 million below expectations, a variance of 2.7 percent, due to lower than expected personal income tax withholding payment revenues; Adjusted sales and use tax revenues through August are ahead of expectations by $4.1 million, or 2.1 percent, reflective of a continued resurgence in consumer spending that began in the spring of 2018; Adjusted departmental receipts revenues are $2.5 million above the estimate, a variance of 9.4 percent; and Adjusted business corporation tax revenues are $4.7 million below expectations, a variance of 33.9 percent. This variance may be driven in part by the timing of the receipt of revenues from the mandatory repatriation of foreign earnings under the Tax Cuts and Jobs Act.

Regarding the month of August performance, Director of Revenue Mark A. Furcolo made the following observations: August total general revenues fell short of expectations by $8.2 million, or 3.0 percent, with nearly all of the shortfall attributable to a single revenue item, the personal income tax; Adjusted personal income tax revenues are $12.2 million below the estimate for August, a variance of 11.7 percent, due to significantly below estimate personal income tax withholding payment revenues; Adjusted sales and use tax revenues for August exceeded expectations by $1.4 million, or 1.4 percent, marking the second month in a row that this has occurred and the first time this has happened since FY 2016; and August cigarette and other tobacco products tax adjusted revenues are $1.5 million more than the estimate, a variance of 12.4 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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