Arkansas’ April revenue report showed strong individual income tax collections, but sales taxes – a sign of consumer spending – lagged despite an overall positive month.
For the month, net available general revenues totaled $642.8 million, $84.0 million or 15% above last year and $79.8 million or 14.2% above forecast.
“Results were mainly driven by high growth in individual income tax. Much of the increase in recent collections represents income shifted to Tax Year (TY) 2012 and paid in FY 2013 revenue. Larger than anticipated payments with filing extensions and returns received in April for Tax Year 2012 resulted from taxpayer strategy and improved business earnings,” said state economist John Shelnutt.
“Other states and the IRS are reporting similar results this month,” he added.
On the sales and use tax front, Shelnutt noted a slump in collections.
“Sales and Use tax collections were below forecast by $12.0 million or -6.5% and also below year ago levels. A variety of factors relate to ongoing weakness in sales and use tax receipts, including slow job and income growth, low inflation, and the diversion effect on taxable sales from elevated motor fuel costs to consumers in recent months,” Shelnutt said. “Corporate Income tax collections were also below forecast in April but remained close to forecast year to date.”
Despite the concerns, the April report is being viewed as a positive by state officials. On Wednesday, the Department of Finance and Administration boosted its general revenue forecast stating its optimism for next year and beyond.
“Rebound in the state economy from business and household economic activity continues at a modest pace, but with better-than-expected income tax receipts,” said DF&A director Richard Weiss. “Arkansas maintained moderate net job growth in the private sector in the past year, with additional gains expected in the near term.”
Year-to-date, Arkansas only has two more months before closing its annual books. For the 10-month period, state revenue categories reflect the following trends:
- Year-to-date Individual Income Taxes: Year-to-date individual income tax collections total $2,657.9 million, $222.3 million or 9.1 percent above FY 2012 collections and $163.3 million or 6.5 percent above forecast. Collections growth for individual withholding is up 3.9 percent over year ago levels.
- Year-to-date Sales and Use Tax Collections: On a year-to-date basis, sales and use taxes total $1,756.7 million, an increase of $4.9 million or 0.3% from FY 2012 and $32.5 million or -1.8 percent below forecast.
- Year-to-date Corporate Income Taxes: Year-to-date corporate revenues total $336.7 million, an increase of $4.2 million or 1.3 percent above year-to-date FY 2012. Corporate income tax is below forecast by $1.4 million.
- Year-to-date Soft Drink Tax (for Medicaid Program Trust Fund): Year-to-date collections of the dedicated soft drink tax total $37.5 million, a decrease of $1.6 million or -4.2 percent from last year.
You can read the full April report at this link.