A slowdown in consumer spending during July pushed Arkansas tax collections below the revenue forecast, according to an Arkansas Department of Finance & Administration report released Friday (Sept. 2).
Year-to-date gross revenue for the first two months of Arkansas’ 2012 fiscal year (July – August) totaled $862.5 million, up 0.6% compared to the 2010 period, but 1.5% below forecast. Gross collections during July were up 2.1% above the 2010 period.
The year-to-date gross receipts collections — a gauge of consumer spending — are $364.2 million, down 10.8% compared to 2010 and down 13.4% below the revenue forecast.
“Business transactions in sales and use tax account for much of the weakness relative to forecast and year ago levels in each of the first two reporting months. Generally weak retail sales and new tax exemptions also underlie the growth comparison compared to a year ago,” John Shelnutt, director of economic analysis and tax research with the DFA, noted in the revenue report.
“The forecast anticipated the new tax exemptions and weak retail conditions with a conservative forecast. However, our research indicates that significant one-time business transactions added over $5.0 million to collections last year causing most of the volatility in current measures of collections growth.”
Gross revenue in the August report (which records consumer and business transactions during July) was $427.6 million, down 0.3% compared to the 2010 period.
Gross receipts collections for the August report totaled $182.9 million, down 2.6% compared to 2010.
Individual income tax collections during August were $6.6 million, up 11.1% compared to 2010. Corporate income tax collections during August were $5.4 million, down 6.7% below 2010.
Revenue from games of skill during the first two months of the fiscal year total $3.9 million, up 122.2% compared to the 2010 period.
Arkansas tax collections reversed a negative two-year slide in the 2011 fiscal year, with collections up 4.5% in the July 2010-June 2011 period.
State tax collections for fiscal year 2011 totaled $5.673 billion, up 4.5% above the $5.43 billion in the 2010 period. Total state revenue of $5.43 billion in fiscal year 2010 was 2.4% below the previous fiscal year and marked the second consecutive year of revenue decline. The biggest declines in the 2009 and 2010 fiscal years were with individual income tax collections and sales and use tax collections.
For those looking for evidence of a boost in consumer spending from the state’s first back-to-school sales tax holiday, they will have to wait until the September report is issued. Sales tax collections to the state lag one month behind the month of the transaction.