Arkansas revenue up in first month of new fiscal year

The first month of Arkansas’ new fiscal year (FY 2011) starts off on the right foot with July collections coming in above 2009 levels and above forecast.

July gross revenues totaled $425.8 million, up 4.8% above July 2009 and 3.3% above the forecast, according to a report released Tuesday (Aug. 3) by the Arkansas Department of Finance and Administration.

“The main contributors to growth by revenue line in dollar terms consisted of gross receipts (+$4.9 million) and individual income (+$3.4 million). In percentage terms the largest contributor was from Corporate Income collections (+7.5 percent), a more volatile source subject to corporate tax filing strategies,” explained the DFA memo.

July comparisons are even better when considering that the July 2009 revenue included $71 million in transfers from unclaimed property proceeds and a reserve allotment fund.

Consumer spending showed signs of strength in July, with gross receipts collections — primarily from sales and use taxes — totaling $188.3 million, up 8.9% below July 2009. Collections were also above monthly forecast levels by $4.9 million, or 2.7%.

July individual income tax collections were $181.2 million, up 4.3% compared to last year. The collections were $3.4 million, or 1.9%, above forecast.

July corporate income tax collections total $23 million, an increase of $4.3 million or 23.2% above the 2009 period. The collections are 7.5% above forecast.

Arkansas’ budget is in need of improved revenue.

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. In fiscal year 2010 (July 1, 2009 – June 30, 2010), total state revenue was down $130.7 million (2.4%), but were $73.3 million above budget estimates. The biggest declines were with individual income tax collections and sales and use tax collections — both serving as decent gauges of consumer spending.

“The decline in Net Available funds in FY 2010 and FY 2009 marks an unusual period of back-to-back annual declines in revenue,” state budget officials noted in the fiscal 2010 summary. “Prior recessions were limited to single year impacts and with few resulting in zero or negative annual change.”