State revenues up, Beebe lifts COLA freeze

Continued improvements in consumer and business spending has helped boost Arkansas tax collections 2.4% above the same fiscal period in 2009.

The Arkansas Department of Finance & Administration reported Thursday (Dec. 2) that year-to-date (July-November) total revenues are $2.198 billion, up 2.4% over the same period in 2009. The percentage gain for the first five months of the fiscal year slipped from the 7% overall revenue gain in the first four months of the fiscal year.

Year-to-date gross receipts collections — primarily sales and use tax collections — total $891.9 million, up 7.8% above the 2009 period and up 0.9% above forecast.

“Net Available General Revenue growth continues primarily from the two most economically significant revenue categories of Gross Receipts tax (Sales and Use tax) and Withholding Income tax,” noted the revenue report from the Arkansas Department of Finance & Administration. “The Gross Receipts tax was up 7.8 percent over last year representing broad-based gains across consumer and business spending. Withholding income tax from payrolls was up 4.7 percent in the year-to-date period over the same period a year ago.”

The revenue gains resulted in Gov. Mike Beebe announcing Thursday the reinstatement of cost-of-living adjustments, career-service recognitions and merit pay for state employees.

“Going into this current budget, we froze state salaries out of an abundance of caution to see how our economy would recover," Beebe said in a statement. "After seeing the strength of our economic indicators and remaining ahead of forecast for the year so far, I’ve decided to reinstate the COLA for our employees."

According to Beebe’s statement, the COLAs are built into the current budget and will not impact the funding of state services or require any budget increases.

Year-to-date individual income tax collections total $989.9 million, up 3.1% compared to the 2009 period and up 3.7% over forecasts.

Year-to-date corporate revenues total $128.9 million, down 21.4% from the 2009 period but 8% above forecast. The decline compared to year ago levels is due to large, one-time gains in the prior year, DF&A noted in the report.

November gross receipts collections totaled $168.7 million, up 8.3% above November 2009. The collections, which reflect taxes on October sales, have seen increases for eight consecutive months.

“Large percentage gains over prior year levels continue to be derived from recovery by business and consumer spending from depressed levels in the year ago period,” according to the DF&A report.