October Tax Revenues Boost State Collections, But Sales Tax Sluggish

Four months into the state’s fiscal year, revenues are trending higher but sales tax collections remain sluggish.

The Arkansas Department of Finance and Administration’s October revenue report showed that a variety of income tax categories offset a shortfall in expected sales tax revenue during the month.

For October, net available general revenues totaled $372.8 million, up 4.8 percent above last year and 2.2 percent above forecast.

Year-to-date, net available general revenues topped $1.69 billion, a 4.3 percent gain above year ago levels and 2.3 percent above projections.

“October results were boosted by gains in income tax categories and a variety of smaller revenue sources while offsetting a shortfall in sales tax,” said John Shelnutt, director of DF&A’s Economic Analysis & Tax Research division.

“Individual and corporate income tax both exceeded forecast and refunds were less than expected. Refunds accounted for a sizable portion of the net available result compared to forecast. Gains in the two economic-related revenue lines of sales tax and payroll withholding were below projections, following elevated gains last month. The swings in growth are a reminder that one month results do not represent a trend in collections or the state economy,” Shelnutt added.

Here are the highlights of the monthly report:

• October Gross General Revenues: October collections totaled $458.1 million, an increase of $15.6 million or 3.5 percent above last year and $2.6 million or 0.6 percent above forecast.
• October Individual Income Tax collections totaled $226.4 million. Collections increased by $8.3 million, or 3.8 percent compared to last year. With respect to the forecast, collections were $3.2 million or 1.4 percent above forecast.
• Individual withholding increased 2.2 percent compared to last year.
• October Individual Income Tax Refunds totaled $16.5 million, $1.3 million or -7.2 percent below last year and $2.2 million or -11.7 percent below forecast. Refund amounts below forecast add to net available fund results.
• October Sales and Use Tax Collections: October collections totaled $171.8 million, an increase of $0.6 million or 0.3 percent above last year. Collections were below monthly forecast levels by $6.8 million or -3.8 percent.
• October Corporate Income Tax collections totaled $25.6 million, an increase of $3.3 million from year ago, and $2.6 million or 11.3 percent above forecast.

You can access the full report at this link.