In a letter to the co-chairs of the Joint Committee on Economic and Tax Policy, Arkansas Department of Finance and Administration director Richard Weiss revealed that the official general revenue forecast for the state is being revised upward.
Weiss said that his agency is transferring a surplus of $145.6 million from FY 2012, which ended June 30, 2012.
He also said DF&A is forecasting a $113.6 million increase in revenue collections above current projections in FY2013 and a $92.4 million increase in FY2014.
The reason for the optimism? Improving economic conditions, albeit slow improvement.
“Rebound in the state economy from business and household economic activity continues at a modest pace, but with better-than-expected income tax receipts,” Weiss said in a letter to lawmakers.
“Forecasts of the U.S. and state economies indicate continued slow economic recovery and subdued inflation,” Weiss said in a section of the memo detailing economic forecast assumptions.
“Arkansas maintained moderate net job growth in the private sector in the past year, with additional gains expected in the near term,” he added.
Weiss warned that job losses in manufacturing and construction would need to be replaced to meet projections. “New and expanded projects in primary steel and metal fabrication plus energy-related projects are encouraging for recovery. Transportation services will also help drive additional gains,” Weiss said.
Other highlights from the DFA memo included:
- The forecast for FY2013 is expected to fund allocations 100% of the “A” spending category plus a $137.7 million surplus.
- For FY2014, the forecast is expected to fund allocations 100% of “A” + “B” + “C.”
- It will also allow for $18.9 million to be allocated to the Rainy Day Fund set-aside and still provide $13.8 million in surplus.
Weiss’ letter also details other spending notes and forecasts for a variety of revenue categories. You can read the full memo here.
Rep. Duncan Baird (R-Lowell), co-chair of the powerful Joint Budget Committee, said the revised forecast for FY2014 is a reflection of the good stewardship of legislators to budget prudently.
“I think the projected surplus demonstrates the conservative nature of the budget we passed for next year. We were able to fund our priorities, set aside money in a rainy day fund, and do so while cutting taxes and putting money back in the pockets of Arkansas taxpayers,” Baird said.