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May 2020 Revenue Assessment Report available

Providence, R.I. -- The Rhode Island Department of Revenue (DOR) today released its FY 2020 Revenue Assessment Report for May 2020. 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 (ORA) from the revised revenue estimates adopted at the May 2020 Revenue Estimating Conference (REC). The methodology underlying the Office of Revenue Analysis' estimates is contained in the report. The May 2020 Revenue Assessment Report reflects the full impact of the COVID-19 pandemic on state revenues, fully capturing April 2020 impacts and partially incorporating May 2020 effects.

The revised FY 2020 estimate for total general revenues adopted at the May 2020 REC was reduced by $280.9 million from the estimate adopted at the November 2019 REC. Although downward revisions were made to most general revenue items, substantial reductions were made to lottery transfer revenues, $(108.5 million); personal income tax revenues, $(82.9 million); sales and use tax revenues, $(63.1 million); and business corporation tax revenues, $(10.8 million).

May Year-To-Date Performance On a fiscal year-to-date basis, the May 2020 report shows that adjusted total general revenues lead expected total general revenues, based on the revised revenue estimates adopted at the May 2020 Revenue Estimating Conference (REC), with adjusted total general revenues $5.8 million more than ORA modified expected total general revenues, a variance of 0.2%. This excess was driven by personal income revenues, which were $6.1 million more than the revised estimate, a variance of 0.5% and excise tax revenues, including sales and use tax revenues, which were also $6.1 million above the estimate, a difference of 0.5%. These higher-than-expected revenues were offset by departmental receipts revenues, which were $2.4 million below expectations, a variance of 0.5%; general business tax revenues, which were $1.9 million behind the estimate, a variance of 0.5%; other tax revenues which also trailed the estimate by $1.9 million or 2.7%; and other general revenue sources, which were $174,850, a difference of 0.1%.

Regarding May year-to-date performance, Director of Revenue Mark A. Furcolo made the following observations: Fiscal year-to-date adjusted total general revenues through May were above expectations by $5.8 million, or 0.2%, essentially in line with the estimates adopted at the May 2020 REC. Adjusted personal income tax revenues through May were $6.1 million above expectations, a variance of 0.5%. This overage is due to estimated and final payments exceeding modified expectations and adjusted personal income tax withholding payments coming in ahead of the estimate by $3.1 million. These surpluses are offset by higher than expected refunds and adjustments of $3.5 million. The estimate of personal income tax revenues was reduced by $82.9 million at the May 2020 Revenue Estimating Conference as follows: estimated payments, $(19.6 million); final payments, $(7.4 million); withholding, $(35.3 million); and refunds and adjustments, $17.9 million higher than the November 2019 REC estimate. Adjusted fiscal year-to-date sales and use tax revenues, which largely reflect year-to-date through April sales activity, were above expectations by $7.0 million, a variance of 0.7%. The FY 2020 sales and use tax estimate was reduced by $63.1 million at the May 2020 REC. Year-to-date FY 2020 adjusted insurance company gross premiums tax revenues were $2.7 million below the fiscal year-to-date through May estimate, a variance of 2.8%. The estimate for insurance company gross premiums tax revenues was lowered by $1.5 million at the May 2020 REC, with the entire reduction in health insurance gross premiums tax revenues. FY 2020 year-to-date through May cigarette and other tobacco product (OTP) excise tax revenues were $1.4 million less than expected. The estimate for cigarette and OTP tax revenues was revised up by $800,000 at the May 2020 REC with cigarette excise tax revenues increased by $1.3 million from the November 2019 REC estimate and OTP excise tax revenues decreased by $500,000 from the November 2019 REC estimate. Adjusted fiscal year-to-date estate and transfer tax revenues were $1.3 million below expectations. The estate and transfer tax estimate for FY 2020 was lowered by $5.3 million at the May 2020 REC. The fiscal year-to-date through May departmental receipts adjusted revenues were $2.4 behind the revised estimate adopted at the May 2020 Revenue Estimating Conference. At the conference, this estimate was reduced by $3.0 million.

May Monthly Performance. For the month of May, the report indicates that adjusted total general revenues were also $5.8 million below expectations for the month, or a variance of 3.0%. The change in methodology employed by ORA post the May 2020 Revenue Estimating Conference effectively makes May the first month of the May 2020 through June 2020 reporting period so the nominal differences for the monthly revenues are the same as the nominal differences for the fiscal year-to-date revenues. The variances, however, will be larger for the monthly revenues due to the smaller base from which the nominal differences are measured.

The entire report can be found on the Department of Revenue's web site at http://www.dor.ri.gov/revenue-analysis/2020, under 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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