State revenues improved in August

Arkansas tax revenues are up almost 6% compared to last year, with consumer spending boosting the August revenue report from the Arkansas Department of Finance & Administration.

Year-to-date (July and August, first two months of fiscal year 2011) gross revenues totaled $856.9 million, up 5.7% above the same period in 2009 and up 3.1% over the forecast.

DFA officials said in the report released Thursday morning (Sept. 2) that the improvement in revenue comes from the individual income tax and gross receipts taxes — primarily sales and use taxes. Those two taxes account for 87% of total collections, according to DFA.

“The Individual Income Tax was up 5.4% over last year which was primarily from employee withholding indicating increased employment and wages. The Gross Receipts tax was up 8.8% over last year and the gain was from both consumer and business spending in the state economy. These factors indicate that we may be trending toward improved revenues and bolster confidence in the forecast,” noted the DFA statement.

The July and August numbers look even better when considering that the 2009 period included one-time transfers of $71 million. And the improved financial picture follows two tough years.

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 $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.

AUGUST REPORT SUMMARY
• Year-to-date individual income tax collections total $370.1 million, or 5.4% above the 2009 period and 3.1% above forecast. Collections growth for individual withholding is up 5.7 percent over year ago levels.

• On a year-to-date basis, gross receipts total $376.2 million, up 8.8% compared to the 2009 period and 2.5% above forecast.

• Year-to-date corporate income taxes total $28.8 million, up 17.9% from the 2009 period and 2.9% above forecast.

• Year-to-date corporate income tax refunds total $2.9 million, down $1.2 million or -29.2 percent from the comparable year-to-date period last year.

• August gross revenue collections were $431.1 million, up 6.6% above last year and 2.9% above forecast.

• August individual income tax collections were $188.9 million, up 6.5% compared to last year and 4.3% above forecast.

• August gross receipts collections were $187.9 million, or 8.7% above last year 2.4% above forecast.