State revenue up 2.1% in February

Those arguing for tax cuts received support Wednesday (Mar. 2) in the form of a report that shows Arkansas tax collections up 2.1% above the same period in 2010.

Year-over-year collection increases also indicate a state economy making slow but steady progress toward recovery.

For the year (July 2010-Feb. 2011), gross collections total $3.539 billion, up 2.1% above the same period a year ago, according to the report released by the Arkansas Department of Finance & Administration. The collections were 0.8% below forecasts.

February total collections reached $371.5 million, up 1.8% above February 2010, but 2.1% below forecasts.

John Shelnutt, director of economic analysis and tax research at DFA, said the gains were primarily from increased collections from payroll withholding and sales taxes — gains which reflect job growth and consumer spending.

“Withholding income tax from payrolls was up 6.0 percent in the year-to-date period over the same period a year ago,” noted the DFA report. “The Gross Receipts tax was up 5.7 percent over last year representing broad-based gains across consumer and business spending. Overall collections growth was up 2.1 percent, reflecting rebound from weakness in year ago collections.”

Year-to-date gross receipts collections — primarily of sales and use taxes — totaled $1.399 billion, up 5.7% above the 2010 period but 0.5% below forecast.

February gross receipts collections were up 2.7%, totaling $162.4 million. The collections were 3.2% below forecasts.

Year-to-date individual income tax collections total $1.665 billion, 4.2% above the year ago period. February individual income tax collections totaled $178.1 million, up 0.2% above year ago levels and 1.1% below forecast.

Year-to-date corporate income tax collections are $197.8 million, down 25.1% from a year ago, and 9.8% below forecasts.

“Decline compared to year ago levels is due to large, one-time gains in the prior year,” Shelnutt explained.

Against the wishes of Gov. Mike Beebe, Republicans — and some Democrats — in the Arkansas House and Senate have pushed tax cut bills. They point to revenue gains and a desire to cut the size of government for the actions.

Those actions, however, are somewhat stalled.

Members of the Arkansas House have passed 4 tax cutting bills, which rest in the Senate. The upper chamber, in turn, has passed 3 tax cutting proposals now sitting in a House committee and, for now, negotiations are at an impasse.