Fiscal cliff-related delays in the filing and processing of federal tax returns are being blamed for a more than 12% decline in individual tax refunds to Arkansans for the first eight months of the fiscal year, with most of the declines in the January and February reporting periods.
The Arkansas Department of Finance & Administration reported Monday (Mar. 4) that year-to-date revenues (July 2012-Feb. 2013) total $3.82 billion, up 3.8% compared to the prior-year period and up 1.4% over the budget forecast.
Individual income tax collections for the fiscal year remain positive, with proceeds in the first seven months at $1.87 billion, or 7% higher than the 2012 period. The overall revenues were 3.9% above forecast.
The income tax refunds for the first eight months of the fiscal year total $210.8 million, down 12.2% – or $29.2 million – compared to the prior-year period, and 16% below forecast.
With almost $30 million not in the hands of some Arkansans, it’s not a surprise that consumer spending remains flat. Gross receipts collections — primarily sales and use taxes — for the first eight months of the state’s fiscal year at $1.412 billion, up just 0.8%, and 0.8% below forecast.
However, gross receipts collections for the February report totaled $174.6 million, up 5.2% compared to February 2012, and 0.9% above forecast.
“The gain in February offsets a decline in January, with the two-month average amounting to 2.0 percent year-over-year growth.,” John Shelnutt, head of the Department of Finance and Administration’s Economic Analysis & Tax Research division, said in the report.
February tax collections totaled $411.3 million, up 4.5% compared to January 2012, and 0.5% above the forecast. Individual income tax collections during January were $198.3 million, up 2.3%.
“Results were mainly driven by the relative lack of refunds from Individual Income tax returns received rather than normal gains or losses in collections,” Shelnutt noted in his report. “Calendar year-to-date returns were still down significantly compared to year ago patterns after IRS-related delays at the start of the tax filing season in January. Total refunds were below year ago levels by 3.0 percent in February and 12.2 percent year to date. Rebound in returns and refunds is evident but not back to year ago levels or forecast as of February results. Additional shift in refund payout is expected in March and April as a result of the IRS filing delay and initial rate of tax filings in Arkansas returns.”
Year-to-date corporate income taxes totaled $227 million, down 3% from the 2011 year-to-date last year, and below forecast by 1.9%.
OTHER TAX COLLECTIONS
July 2012 – Feb. 2013: $32.7 million
July 2011 – Feb. 2012: $32 million
Games of skill
July 2012 – Feb. 2013: $21.8 million
July 2011 – Feb. 2012: $16.2 million
July 2012 – Feb. 2013: $150.5 million
July 2011 – Feb. 2012: $159.1 million
July 2012 – Feb. 2013: $43.2 million
July 2011 – Feb. 2012: $44.1 million
Fiscal year 2012 marked the second year of year-over-year gains. 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.