Yield valuation report for April 2021 out there

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December 2020 sales valuation report available

Providence, RI – The Rhode Island Department of the Treasury (DOR) today released its Fiscal 2021 Revenue Assessment Report for April 2021. The monthly Revenue Assessment Report compares adjusted general income by source of income for a year since the start of the year and monthly based on expected general income by source of income. The expected general revenue is estimated by the Office of Revenue Analysis (ORA) of the DOR based on the revenue estimates included in the approved budget for fiscal year 2021, which was legally signed by Governor Raimondo on December 21, 2020.

The methodology on which the ORA's estimates are based is included in the report. The approved budget for fiscal 2021 revised total general revenue for fiscal 2021 by $ 18.0 million from the revenue estimates adopted at REC in November 2020 with the revision of the lottery broadcast. At REC in November 2020, clients passed fiscal 2021 revenue estimates that were $ 330.6 million higher than those accepted at REC in May 2020, with almost all revenue items being revised upwards. For details on the November 2020 REC impact on general revenues, see the November 2020 Conference Report on Estimating Revenue, posted on the Office of Management and Budget website. The underlying information contained in this report was available to the clients of the REC as of May 2021, when they adopted the revised estimates for the 2021 financial year on May 10, 2021.

Performance since the beginning of the year in April
Based on the current fiscal year, the April 2021 report shows that adjusted total general revenues are ahead of expected general total revenues, based on the revenue estimates included in the approved budget for fiscal 2021 and the ORA's estimation method, with adjusted general Total revenue $ 350 million more than expected, up 11.8%. The biggest driver of this outperformance is personal income tax revenue, which is $ 215.6 million, or 21.3%, above expectations. Adjusted personal income tax revenue flow was affected by the delay in filing the 2020 tax return and the final payment due from April 15, 2021 through May 17, 2021. Adjusted excise tax revenue, including sales and use taxes, is $ 85.1 million before the estimate, a variance of 7.3%. Adjusted general business tax revenue exceeds estimate by $ 35.6 million, or 10%, through April. Other tax income is $ 9.9 million below expectations, up 18%, and adjusted departmental income is $ 8.2 million above expectations, or 4.6% for the current fiscal year. Finally, the lottery transfer through April, reflecting gaming activity from July to March, is $ 15.3 million above expectations, a difference of 8.2%.

With regard to year-to-date performance in April, acting Director of Revenue Marilyn S. McConaghy, Esq., Made the following comments:
• Adjusted total general income for the current fiscal year through April is a very sharp $ 350 million above expectations based on budget estimates for fiscal 2021, which is an 11.8% variance.
Adjusted income tax revenue through April is $ 215.6 million above estimate, a deviation of 21.3%. Each personal income tax component is each more than $ 20 million above its respective estimates. Realized income tax revenue streams were unpredictably due to the delay in the start of the 2020 fiscal year filing season until February 12, 2021 (personal income tax refund and adjustment), as well as the postponement of filing and final closing for the Year 2020 affects payment dates from April 15, 2021 to May 17, 2021 (estimated income tax and remaining payments). As the ORA expects, it turns out that income tax refunds and adjustments in May will be higher than expected, while final income tax payments in May will be lower than expected, reducing the difference between adjusted and expected sales on the market Basis of the previous financial year.
o Final income tax payments are $ 98.5 million above expectations, or 92.6%. That strong growth is linked to receiving income tax payments of $ 57.7 million from pass-through companies made on behalf of their shareholders, versus expected revenue of $ 17.2 million from the same source. The personal income tax estimate for FY 2021 has increased by $ 170.2 million to the REC in November 2020, including payments received in July of $ 150.4 million that decreased through FY 2020 .
Adjusted Personal Tax Refunds and Adjustments are $ 63.4 million below estimate, a difference of 18.1%. The 2021 estimate of income from personal income tax refunds and adjustments was increased by $ 22.0 million in the REC in November 2020, including $ 19.3 million in July payouts that decreased through fiscal 2020.
Adjusted income tax withholding revenue tops the estimate at $ 30.5 million and may reflect the recent $ 300 extension to unemployment benefits under both the Consolidated Appropriations Act (CAA) of 2020 and Included in the American Rescue Plan Act (ARPA) of 2021, withholding tax revenue estimate for fiscal 2021 was increased by $ 71.5 million from the November 2020 REC.
o Income tax-adjusted estimated tax receipts for payments increase expectations by $ 23.2 million, or 12.5%, based on estimates that are in effect for fiscal year 2021. Fiscal year 2021 estimate of estimated income tax revenue increased by $ 41.6 million in the REC in November 2020, including payments received in July of $ 29.0 million that decreased through fiscal 2020 .
• Adjusted sales and use tax revenue for fiscal 2021 since April was $ 79.6 million, or 7.8%, above expectations. The increase in adjusted sales and use tax revenue was likely influenced by the distribution of $ 1,400 per person in the third round of stimulus testing approved under ARPA. Fiscal 2021 estimate for sales and use tax revenue increased by $ 103.7 million from the November 2020 REC. Sales and usage tax revenues for the current fiscal year through March generally reflect sales activities from June 2020 through March 2021.
Adjusted corporate tax revenue through April is $ 36.5 million above the fiscal year 2021 estimate approved through April, a deviation of 27.5%. This increase may be due in part to the fact that the fourth quarter corporate income tax due date was estimated to be December 15, and federal tax law at that point made the deductibility of expenses incurred from Paycheck Protection Program (PPP) loans, did not allow an unintended potential tax hike for recipients of such loans.
o It is important to note that the increase in corporate tax revenue may be temporary. Given that federal tax law now allows for the deductibility of expenses paid in PPP loans, much of that increase may be refunded in the future as an overpayment of actual corporate tax.
Adjusted lottery transfer income through April, reflecting gaming activity from July 2020 through March 2021, is $ 15.3 million above expectations. The approved budget for fiscal 2021 reduced the lottery transfer by $ 18 million to explain the closure of the two state-owned casinos during the hiatus initiated by then-governor Raimondo in December 2020.
• Financial institutions' tax-adjusted earnings for fiscal 2021 through April are $ 9.7 million more than expected, in large part due to receipts of large tax payments totaling $ 15.0 million. This is the second year in a row that such large payments have been received by April of the fiscal year. Financial institutions' tax revenues were cut by $ 2.7 million at the Revenue Estimating Conference in November 2020.
Adjusted department receipt earnings through April are 4.6% above expectations, or $ 8.2 million, based on fiscal 2021 estimate. The November 2020 commissioners of the REC revised the department's revenue for the 2021 fiscal year by $ 13.0 million.
• The tax-adjusted gross premium income of the insurance company for the current financial year is USD 6.7 million above the effective expectations for the current financial year 2021, which corresponds to a deviation of 6.9%. The 2021 fiscal year gross premium tax revenue estimate for insurance companies was revised by $ 13.0 million in November 2020.
• Excise-adjusted revenues from cigarettes and other tobacco products through April are $ 5.5 million more than expected. November 2020 commissioners of the REC increased their estimate for cigarette and OTP excise taxes for the 2021 fiscal year by $ 24.4 million.
o It appears that state cigarette and OTP excise tax revenues continue to benefit from the ban on sales of menthol cigarettes and flavored cigars introduced in Massachusetts on June 1, 2020.
Adjusted property transfer tax revenue brings expectations through April by $ 1.5 million, or 11.2% on a year-on-year basis. The increase in property transfer transfer income over the estimate likely reflects the glowing real estate market in Rhode Island.
• Estate and transfer tax revenues for the fiscal year ended April are $ 11.4 million below the current estimate, a 27.5% variance, while gross income tax-adjusted public utility revenues for the fiscal year 2021 will also be USD 11.4 million below the expected amount is based on the estimate that came into effect in December 2020. Estate and transfer tax revenue estimate for fiscal 2021 increased by $ 13.2 million and gross public utility income tax revenue estimate for fiscal 2021 increased by $ 10.7 million in November 2020 REC
Adjusted earnings from evaluating health care providers through April are $ 4.3 million, or 12.2%, higher than last year.

Monthly performance in April.
For the month of April, the report states that adjusted total general income was $ 129.6 million above expectations, a variation of 41%. The main driver of this outperformance is adjusted income tax revenue, which is $ 82.3 million above expectations, a variance of 157.2%. Adjusted excise tax revenue, including sales and use tax revenue, is $ 33.7 million, or 31.5%, above expectations. Adjusted general business tax revenue is $ 2 million above the monthly estimate, a deviation of 1.9%. April other tax revenue is $ 1.7 million off estimate for the month, up 42%, and adjusted departmental income for April is $ 2.6 million above expectations, or 11.6%. Finally, April lottery transfer, reflecting gaming activity in March, is $ 10.7 million above expectations, a difference of 44.1%.

In relation to April's performance, Acting Director of Revenue, Marilyn S. McConaghy, Esq. made the following observations:
• Adjusted total general revenue for April is $ 129.6 million above expectations based on budget estimates for fiscal year 2021, which is a deviation of 41%.
Adjusted April income tax revenue is $ 82.3 million above estimate, up 157.2% led by final income tax payments, which are $ 47 million above expectations, or 359.5%.
o Income tax-adjusted estimated tax receipts for payments for the month resulted in expectations based on the effective estimates for fiscal 2021 of $ 11.1 million, or 40.5%.
Adjusted withholding income for income taxes tops April estimate at $ 13.1 million. This reflects part of the extension of the $ 300 per week weekly unemployment benefit bonus payments that were part of the ARPA, as well as the beginning of the reopening of the state economy as COVID-19 vaccines became more prevalent.
o March Personal Income Tax Refunds and Adjusted Revenue were $ 11.1 million, or 12.4%, below expectations for the month. The late start of the 2020 fiscal filing season has likely delayed filing of some refund declarations until May, a month when the volume of these types of tax returns is typically low.
• Monthly adjusted sales and use tax revenues for fiscal year 2021 are $ 31.4 million, or 33.5%, above expectations. This is the fourth straight month that adjusted sales and use tax revenue was more than $ 10.0 million above estimate. This strong monthly performance may have been enhanced by receiving the coronavirus recovery discounts of $ 1,400 issued after the ARPA was passed in March 2021. April sales and use tax revenue generally reflects sales activity in March.
• April corporate tax revenue returned a monthly estimate of $ 12 million, or 36.6%, continuing a trend that resumed last month in which adjusted corporate tax revenue exceeded expectations.
• April adjusted lottery transfer, reflecting gaming activity in March, was $ 10.7 million above the monthly estimate, up 44.1%, and was led by general increases in all lottery products, including casino games .
• Adjusted earnings for the department, tax-adjusted earnings for cigarettes and other tobacco products, and tax-adjusted gross premium income for insurance companies resulted in a combined expectation of $ 5.9 million in April.
• Financial institutions' tax-adjusted April income is 72.2% lower than expected for April, a difference of $ 5.6 million, while April adjusted gross income tax income of public utilities is $ 4.7 million lower were than expected, which corresponds to a deviation of 17.6%.
Finally, April's adjusted monthly estate and transfer tax revenues were $ 2.4 million below expectations, a difference of 76.6%. This is the fourth month in a row that adjusted sales have lagged behind expected sales.

The full report is available on the Treasury Department's website at http://www.dor.ri.gov/revenue-analysis/2021.php.

If you have any questions or comments about the report, please email paul.grimaldi@revenue.ri.gov or call Paul Grimaldi, Head of Information and Public Relations, at (401) 378-1080.