May 2021 Revenue Assessment Report available

Published on Thursday, June 17, 2021

Providence, R.I. -- The Rhode Island Department of Revenue (DOR) today released its FY 2021 Revenue Assessment Report for May 2021. 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 (ORA) from the revenue estimates adopted at the May 2021 Revenue Estimating Conference (REC) on May 10, 2021. The methodology underlying the ORA's estimates is contained in the report. The May 2021 REC revised total general revenues for FY 2021 was up by $177.1 million from the revenue estimates enacted in the FY 2021 budget in December 2020. Details on the impact of the May 2021 REC by general revenue item can be found in the May 2021 Revenue Estimating Conference Report posted on the Office of Management and Budget's website under the Revenues and Caseload tab.

May Year-To-Date Performance. On a fiscal year-to-date basis, the May 2021 report shows that adjusted total general revenues are ahead of expected total general revenues, based on the revenue estimates adopted at the May 2021 REC and ORA's estimation methodology, with adjusted total general revenues $60.1 million more than expected total general revenues, a variance of 1.6%. The strongest driver of this outperformance are personal income tax revenues which are up $42 million, or 3.0%, over expectations. Both adjusted and expected personal income tax revenues include the impact of the shift in the TY 2020 due date for returns and final and extension payments from April 15, 2021 to May 17, 2021. The personal income tax estimate was increased by $89.6 million at the May 2021 REC. Excise taxes adjusted revenues, including sales and use taxes, are $23.5 million ahead of the estimate, a variance of 1.7%. The principals of the May 2021 REC revised the estimate for excise taxes up by $84.3 million. Adjusted general business taxes revenues exceed the estimate through May by $3.1 million or 0.8%. The estimate for general business taxes revenues was decreased by $35.3 million at the May 2021 REC. Other taxes revenues are $1.7 million less than expected, a variance of 3.4% and departmental receipts adjusted revenues are $12 million below expectations, or 5.6% on a fiscal year-to-date basis. The conferees reduced the estimate for other taxes by $12.7 million and increased the estimate for departmental receipts revenues by $8 million at the May 2021 REC. Finally, the lottery transfer through May, reflecting July through April gaming activity, is $5.1 million above expectations, a difference of 2.2%. The lottery transfer estimate was increased by $34.4 million at May 2021 REC.

Regarding the May year-to-date performance, Acting Director of Revenue Guillermo L. Tello, made the following observations: • Fiscal year-to-date adjusted total general revenues through May are a robust $60.1 million ahead of expectations based on the FY 2021 revised estimates adopted at the May 2021 Revenue Estimating Conference, a variance of 1.6%. • Adjusted personal income tax revenues through May are $42 million above the estimate, a variance of 3%. The personal income tax revenue estimate was revised upward by $89.6 million at the May 2021 REC. o Personal income tax final payments are $42.4 million above expectations, or 14%. The FY 2021 estimate for personal income tax final payments revenues was increased by $30.6 million at the May 2021 REC, including $150.4 million of payments received in July that were accrued back to FY 2020 and $70.9 million of personal income tax payments from pass-through entities made on behalf of their shareholders. o Personal income tax adjusted estimated payments tax revenues lead expectations based on the May revised FY 2021 estimates by $6.6 million or 3.1%. The FY 2021 estimate for personal income tax estimated payments revenues was increased by $28.7 million at the May 2021 REC, including $29.0 million of payments received in July that were accrued back to FY 2020. o Adjusted personal income tax refunds and adjustments are $3.3 million above the revised estimate, a difference of 1%. The FY 2021 estimate for personal income tax refunds and adjustments revenues was decreased by $5 million at the May 2021 REC, including $19.3 million of disbursements made in July that were accrued back to FY 2020. o Personal income tax withholding payments adjusted revenues lag the revised estimate by $3.7 million, or 0.3%. The FY 2021 estimate for personal income tax withholding revenues was increased by $32.1 million at the May 2021 REC. • FY 2021 year-to-date adjusted sales and use tax revenues through May were ahead of revised expectations by $24.5 million, or 2.1%. The surge in adjusted sales and use tax revenues has likely been impacted by the distribution of $1,400 per person third round stimulus checks that were authorized under ARPA. The FY 2021 estimate for sales and use tax revenues was increased by $79.5 million at the May 2021 REC. Fiscal year-to-date through May sales and use tax revenues generally reflect June 2020 through April 2021 sales activity. • Adjusted business corporation tax revenues through May are $9.6 million above the revised FY 2021 estimate through May, a variance of 6.2%. The business corporation tax revenue estimate for FY 2021 was revised down by $36.8 million at the May 2021 REC. • The adjusted lottery transfer revenues through May, reflecting gaming activity from July 2020 through April 2021, are $5.1 million more than expected. The principals at the May 2021 REC increased the estimated lottery transfer for FY 2021 by $34.4 million. • FY 2021 adjusted departmental receipts revenues through May are 5.6% below expectations, or $12 million, based on the FY 2021 revised estimate. The conferees revised FY 2021 departmental receipts up by $8 million at the May 2021 REC. • Insurance company gross premiums tax adjusted revenues through May are $6.6 million less than expected with the shortfall primarily health insurance gross premiums tax revenues. Insurance company gross premiums tax revenues were revised up by $1.4 million at the May 2021 Revenue Estimating Conference. • Fiscal year-to-date through May estate and transfer tax revenues are $1.2 million less than the revised estimate, a variance of 3.4%. The estimate of estate and transfer tax revenues for FY 2021 was decreased by $15.2 million at the May 2021 REC

May Monthly Performance. For the month of May, the report indicates that adjusted total general revenues were also $60.1 million above expectations, or a variance of 18.7%. The change in methodology employed by ORA post the May Revenue Estimating Conference effectively makes May the first month of the May 2021 through June 2021 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/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.

May 2021 Monthly And Year-To-Date Revenue Assessment