Officials with the Arkansas Department of Finance & Administration, taking a “cautious stance,” forecast revenue for fiscal year 2012 to reach $5.739 billion, up an estimated $157.5 million from fiscal year 2011 but $93.4 million lower than a previous forecast.
DFA Director Richard Weiss, in a report released Thursday (April 21), expects fiscal year 2011 (July 1, 2010-June 30, 2011) revenue to hit $5.582 billion, up 3.6% compared to fiscal year 2010. FY 2010 revenue was 2.5% down from FY 2009.
“The forecast for FY 2011 is unchanged from the Official Forecast and current budget. Rebound in the state economy from business and household economic activity continues,” Weiss noted in the letter directed to Sen. Jake Files, R-Fort Smith, and Rep. Bobby J. Pierce, D-Sheridan — co-chairs of the Joint Committee on Economic and Tax Policy.
The FY 2012 forecast includes a revenue reduction of $25.4 million from tax law changes enacted during the recent legislative session. The report also predicts for FY 2012 a 5% increase in Arkansas nonfarm personal income in and a 2.2% increase in employment. FY 2012 begins on July 1, 2011.
“Economic models employed by the Department of Finance and Administration indicate continued but moderate economic recovery,” Weiss noted.
He reported that the state continues to rank ahead of the national average and a majority of states in measures of growth in private sector employment, total wage income, housing sector indicators, and with lower unemployment rates.
“Recognition of the combined risks in the U.S. forecast for successful transition of recovery from public to private sectors and new concerns for consumers in the face of energy price pressure calls for a cautious stance,” Weiss concluded in his note about the FY 2012 forecast.
The DFA forecast was compiled using national forecasting models from Moody’s Analytics and IHS Global Insight.
Other findings in the DFA report include:
- During FY 2012, the U.S. economy is expected to produce final goods and services valued at $15.70 trillion in current dollars, or an increase of $725.5 billion for 4.8% annual growth, unadjusted for inflation.
- The Consumer Price Index is expected to increase 2.2% and the GDP price deflator is expected to rise by 1.6%.
- U.S. gross domestic product in inflation-adjusted dollars is estimated at $13.87 trillion, an increase of $432.4 billion for 3.2% growth.
- FY 2012 Arkansas nonfarm personal income (the sum of wages and salaries, proprietor’s income, rent, dividends, interest and transfer payments) is estimated at $102.6 billion (current dollars), an increase of $4.91 billion or 5% over FY 2011.
- FY 2012 Arkansas wage and salary disbursements are estimated at $49.29 billion, an increase of $3.03 billion or 6.6%.
- FY 2012 Arkansas payroll employment is expected to reach a level of 1.197 million jobs, an annual increase of 25,600 jobs or 2.2%.
Michael Tilley with our content partner, The City Wire, is the author of this article. He can be reached by e-mail at email@example.com.