FY 2018 Monthly Revenue Assessment Report for October 2018

November 28, 2018 Providence, R.I. — The Rhode Island Department of Revenue (DOR) today released its FY 2019 Revenue Assessment Report for October 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.[1]  The methodology underlying the Office of Revenue Analysis’ estimates is contained in the report.  The revenue information contained in the report was made available to the principals of the November 2018 Revenue Estimating Conference prior to the adoption of the revised estimates for FY 2019 at the conference.

1. October Year-To-Date Performance.On a fiscal year-to-date basis, the October 2018 report shows that adjusted total general revenues are slightly below 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 $10.0 million less than expected total general revenues, a variance of ‑0.8 percent.  The primary sources of the variance are personal income tax revenues which are down $9.0 million, or ‑2.0 percent, from expectations; insurance company gross premiums tax revenues which trail expectations by $6.0 million or ‑20.9 percent; business corporation tax revenues which are $4.9 million less than expected or ‑8.4 percent;and public utilities gross earnings tax revenues which are $2.4 million, or 9.5 percent, below the fiscal year-to-date through October estimate.  Offsetting these shortfalls are the adjusted lottery transfer which is ahead of the expected transfer by $4.3 million or 4.7 percent; sales and use tax revenues which are $3.5 million more than expected, a variance of 0.9 percent; departmental receipts adjusted revenues which lead expectations by $3.4 million or 5.5 percent; and adjusted realty transfer tax revenues which are $1.2 million above the estimate, or 23.2 percent. The lottery transfer reflects the first month of gaming activity at the newly opened Tiverton Casino and Hotel.

2. October Monthly Performance. For the month of October, the report indicates that adjusted total general revenues are $1.6 million below expectations or a variance of ‑0.6 percent.  The primary drivers of this shortfall are adjusted business corporation tax revenues which are $2.3 million, or 16.3 percent below expectations; adjusted cigarette excise and other tobacco products tax revenues which trail estimates by $1.3 million or ‑11.2 percent; and adjusted departmental receipts revenues which lag expected departmental receipts revenues by $1.1 million or ‑5.5 percent.  A substantive positive variance was reported in the adjusted lottery transfer which is $3.8 million or 12.9 percent ahead of the October monthly estimate.

1. Fiscal Year-to-Date Summary of Findings:

Regarding the October year-to-date performance, Director of Revenue Mark A. Furcolomade the following observations:

• Fiscal year-to-date adjusted total general revenues through October are behind expectations by $10.0 million, or 0.8 percent;
• Adjusted personal income tax revenues are $9.0 million below expectations, a variance of 2.0 percent, due to lower than expected personal income tax estimated payments and larger than expected refunds and adjustments and final payments;
o FY 2019 year-to-date adjusted personal income tax revenues are $15.3 million, or 3.7 percent, higher than FY 2018 year-to-date adjusted personal income tax revenues were at this time last year.
• Adjusted sales and use tax revenues through October are ahead of expectations by $3.5 million, or 0.9 percent, marking the fourth month in a row that fiscal year-to-date adjusted sales and use tax revenues have exceeded estimates;
o FY 2019 year-to-date adjusted sales and use tax revenues are $21.3 million, or 5.7 percent, more than FY 2018 year-to-date adjusted sales and use tax revenues were at this time last year.
• Adjusted departmental receipts revenues are$3.4 million above the estimate, a variance of 5.5 percent; and
• Adjusted insurance company gross premiums tax, business corporation tax, and public utilities gross earnings tax revenues are a combined $13.3 million below expectations, a variance of 11.8 percent. This variance is likely driven in part by the change in the estimated payments schedule for business tax payers that was implemented effective January 1, 2018.

2.  Monthly Summary of Findings for October 2018:

Regarding the month of October performance, Director of Revenue Mark A. Furcolomade the following observations:

• October total general revenues fell short of expectations by $1.6 million, or ‑0.6 percent, an improvement from the September 2018 performance;
• Adjusted personal income tax revenues are in line with the estimate for October, with stronger personal income tax finals and withholding payment revenues largely offsetting higher than expected October refunds and adjustments payments;
• Adjusted sales and use tax revenues for October weakened, falling below the monthly estimate by $438,086 or ‑0.5 percent;
• September adjusted business corporation tax revenues are $2.3 million less than expected, a variance of ‑16.3 percent, while cigarette excise and other tobacco products tax adjusted revenues are $1.3 million below expectations, or a variance of ‑11.2 percent; and
• October adjusted lottery transfer revenues are $3.8 million more than the estimate, a variance of 12.9 percent reflecting the strong opening that the Tiverton Casino and Hotel exhibited in the month of September.  The current month’s lottery transfer is the revenue generated from the prior month’s gaming activity.

The entire report can be found on the Department of Revenue’s web site at http://www.dor.ri.gov/revenue-analysis/2019.php.

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.

[1] Reports for the FY 2019 July through November period use the enacted FY 2019 revenue estimates as the basis of comparison.  Reports for the December through April period will use the FY 2019 revenue estimates adopted at the November 2018 Revenue Estimating Conference as the basis of comparison.  The report for May will use the FY 2019 revenue estimates adopted at the May 2019 Revenue Estimating Conference as the basis of comparison.  The report for June will use the final enacted FY 2019 revenue estimates as the basis of comparison for preliminary FY 2019 audited revenues.