September 2020 Revenue Assessment Report available

Providence, R.I. -- The Rhode Island Department of Revenue (DOR) today released its FY 2021 Revenue Assessment Report for September 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 from the revised FY 2021 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.

September Year-To-Date Performance On a fiscal year-to-date basis, the September 2020 report shows that adjusted total general revenues are ahead of expected total general revenues, based on the revised FY 2021 revenue estimates adopted at the May 2020 REC and the Office of Revenue Analysis' estimation methodology, with adjusted total general revenues $104.5 million more than expected total general revenues, a variance of 12.1%. The strongest driver of this outperformance are excise taxes, including sales and use taxes, revenues, which are up $45.6 million, or 13.3%, over expectations. Adjusted personal income tax revenues for the fiscal year-to-date through September are $42.5 million more than expected, a variance of 13.1%. General business taxes adjusted revenues are $16.3 million ahead of the estimate, or 17.6%, while other taxes revenues are $6.2 million more than expected, a variance of 44.9%, and departmental receipts adjusted revenues are $4.4 million below expectations, or 9.7% on a fiscal year-to-date basis. Finally, the lottery transfer through September is $1.6 million below expectations, a 3.6% difference.

Regarding the September year-to-date performance, Director of Revenue Mark A. Furcolo made the following observations: • Fiscal year-to-date adjusted total general revenues through September accelerated to $104.5 million ahead of expectations based on the FY 2021 revised estimates adopted at the May 2020 REC, a variance of 12.1%. • Adjusted personal income tax revenues through September are $42.5 million above the estimate, a variance of 13.1%, led by strong personal income tax withholding payment revenues, which may have benefitted from the $600 per week enhanced unemployment benefits received in July 2020 and the $300 per week enhanced unemployment benefits paid in September. The $20.1 million outperformance of personal income tax withholding revenues was supported by solid gains relative to expectations in both personal income tax estimated and final payments revenues, which on a combined basis, were $26.1 million above the estimate, a difference of 40.4%. Personal income tax refunds and adjustments exceeded the estimate in FY 2021 through September by $3.7 million or 18.4%. • FY 2021 year-to-date adjusted sales and use tax revenues through September were ahead of expectations by $37.8 million, or 12.5%, likely a reflection of the increased spending capability of consumers as a result of the enhanced unemployment benefits and the federal COVID-19 relief payments. Fiscal year-to-date through September sales and use tax revenues generally reflect June through August 2020 sales activity. • Adjusted insurance company gross premiums tax revenues were above expectations by $13.1 million in FY 2021 year-to- date with gross premiums taxes paid by both non-health and health insurers exceeding their respective estimates. • Fiscal year-to-date through September cigarette and other tobacco products (OTP) excise tax revenues are $8.0 million more than estimated, a variance of 22.8%, with cigarette excise tax revenues $7.3 million above expectations. The outperformance of cigarette and OTP excise tax revenues could be due to the banning of flavored tobacco and cigarettes in Massachusetts effective June 1, 2020. • Estate and transfer tax adjusted revenues are ahead of the estimate by $6.0 million or 63.9% on a fiscal year-to-date basis through September while combined public utilities gross earnings tax and financial institutions tax adjusted revenues are $5.4 million above expectations for the same period • Adjusted departmental receipts revenues through September are 9.7% below expectations or $(4.4 million). • Fiscal year-to-date business corporation tax revenues are $2.1 million less than the estimate, a variance of 6.1%. This shortfall may be due to the stronger than expected receipt of business corporation tax payments in FY 2020, which have left C-corporations overpaid relative to potential TY 2020 liability. • The lottery transfer through September is below expectations by $1.6 million, or 3.6%, mostly due to the underperformance of video lottery terminals (VLTs) relative to the estimate.

September Monthly Performance For the month of September, the September 2020 report shows that adjusted total general revenues are ahead of expected total general revenues, based on the revised FY 2021 revenue estimates adopted at the May 2020 REC and the Office of Revenue Analysis' estimation methodology, with adjusted total general revenues $45.7 million more than expected total general revenues, a variance of 12.3%. The strongest driver of this outperformance are personal income tax adjusted revenues, which exceeded the monthly estimate by $25.6 million or 18.4%. Excise taxes revenues are up $12.2 million, or 10.8%, over expectations for September. General business taxes adjusted revenues are $8.5 million ahead of the estimate, or 11.0% while adjusted other taxes revenues for September are $2.1 million more than expected, a variance of 50.9%. September departmental receipts adjusted revenues are $0.5 million below expectations, or 3.2% while the lottery transfer for September, reflecting month of August gaming activity, is $2.2 million less than the monthly estimate or 9.8%.

Regarding September monthly performance, Director of Revenue Mark A. Furcolo made the following observations: • September adjusted total general revenues are $45.7 million ahead of expectations based on the monthly FY 2021 revised estimates adopted at the May 2020 REC, a variance of 12.3%. • Adjusted monthly personal income tax revenues are $25.6 million above the estimate, a variance of 18.4%, led by personal income tax estimated payments revenues, which are a combined $10.7 million above the estimate for September, a variance of 24.9%. o Personal income tax final payments revenues also strongly beat the monthly estimate with an overage of $8.2 million or 121.6%. It is unclear but certainly possible that final payments normally received in October are being received earlier this year as a result of the delay in the due date for TY 2019 returns to July 15, 2020. o September personal income tax withholding revenues are $7.7 million more than expected for the month while personal income tax refunds and adjustments also exceeded the monthly estimate, albeit by only $1.0 million. • Sales and use tax revenues for September exceed expectations by $10.2 million, or 10.3%. September sales and use tax revenues generally reflect August sales activity. • Adjusted insurance company gross premiums tax revenues for September were above expectations by $6.8 million, or 30.6% with both non-health insurance and health insurance gross premiums taxes revenues ahead of expectations. • September public utilities gross earnings tax revenues are $3.4 million above the estimate, a 16.4% difference, while cigarette and OTP excise tax revenues and estate and transfer tax revenues are respectively $2.3 million and $1.9 million more than expected for the month. • The monthly performance of business corporation tax and lottery transfer revenues were below expectations, trailing the respective estimates by $(2.6 million) and $(2.2 million). The lottery transfer revenues reflect August gaming activity.

The entire report can be found on the Department of Revenue's website at http://www.dor.ri.gov/revenue-analysis/2021.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) 378-1080.