Arkansas tax collections up 4.1%

Arkansas finance officials are hopeful that recent tax collection trends — especially individual income tax collection gains — point to what should be a positive year for a welcome change.

For the year (July 2010-April 2011), total collections are $4.707 billion, up 4.1% above the same period a year ago, according to the Arkansas Department of Finance & Administration report released Tuesday (May 3). The collections were 0.3% above forecasts.

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.

April total collections reached $684.3 million, up 13.8% over April 2010, and 1.8% above forecasts.

“Individual income tax and gross receipts collections, the two largest sources of general revenue by type, continue to set the pace for growth relative to year ago collections,” John Shelnutt, director of economic analysis and tax research at DFA , noted in his memo. “After ten months into the fiscal year, net available revenues are aligned with the revised official forecast and moderately above year ago levels.”

Year-to-date gross receipts collections — primarily of sales and use taxes — totaled $1.739 billion, up 5.3% above the 2010 period and $500,000 above forecast. April gross receipts collections were up 3.8%, totaling $173.2 million. The collections were 0.3% above forecasts.

Year-to-date individual income tax collections total $2.306 billion, 6.9% above the year ago period. April individual income tax collections totaled $436.7 million, 19.7% above year ago levels and 3.1% above the forecast.

The other good news in the report is that refunds for individual and corporate income taxes are likely to be lower than expected.

“Year-to-date results also reflect performance boosted by lower than expected refunds in both individual and corporate income tax. The likelihood for a reversal of this refund trend later in the filing and processing season now seems remote. That will offset lower
expected growth rates in estimated payments and returns,” Shelnutt wrote.

Year-to-date corporate income tax collections are $298.5 million, down 15.5% from a year ago, and 0.5% below a revised forecast. The decline, Shelnut noted, is because of a large one-time gain in the previous fiscal year.