State tax collections up 4.5% in fiscal 2011

Arkansas tax collections reversed a negative two-year slide in the 2011 fiscal year, with collections up 4.5% in the July 2010-June 2011 period.

State tax collections for fiscal year 2011 totaled $5.673 billion, up 4.5% above the $5.43 billion in the 2010 period, according to an Arkansas Department of Finance & Administration report released Tuesday (July 5). The collections were 1.6% 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. The biggest declines in the 2009 and 2010 fiscal years were with individual income tax collections and sales and use tax collections — both serving as decent gauges of consumer spending.

But tax collections throughout the 2011 fiscal year appeared to show improvements in consumer spending. Gross receipts collections (primarily sales and use taxes) totaled $2.072 billion, up 4.6% above the 2010 period, but 0.5% below forecast.

“The other major revenue category, Gross Receipts Tax, which is dominated by sales
tax, also grew with the economy, but was below forecast by $11.1 million. This reduced the amount that total collections exceeded forecast,” John Shelnutt, director of economic analysis and tax research at DFA, noted in the revenue report. “Growth in sales tax slowed late in the fiscal year as increased fuel prices impacted taxpayer spending. As a result of this trend we will cautiously monitor Gross Receipts Tax collections as we begin a new fiscal year.”

Higher prices for fuel, food and commodities may also play a part in the increased tax collections, said economist Jeff Collins. According to the U.S. Bureau of Labor Statistics, the Consumer Price Index for the “South Urban” region increased 1.7% between December 2009 and December 2010.

“At least to some degree, inflation is responsible for an uptick in tax collections, especially collections related to the consumer,” Collins said.

Fiscal year 2011 individual income tax collections totaled $2.739 billion, 6.2% above the year ago period and 2.3% above forecast. Corporate income tax collections for the fiscal year totaled $391.6 million, down 7.6% from a year ago, and 4.3% above a revised forecast.

“The fiscal year ended above forecast mainly as a result of Individual Income Tax and Corporate Income Tax exceeding forecast by $62.2 million and $16.2 million, respectively. This reflected a recovering economy during tax year 2010 as reported on tax filings in 2011,” Shelnutt noted in the report.

JUNE ACTIVITY
The fiscal year ended on a strong note, with total collections in June of $551.6 million, up 9.1% above June 2010 and 14.8% above forecast.

Collections during June of gross receipts totaled $166.4 million, up 1.2% above June 2010, but 3.4% below forecasts.

June individual income tax collections totaled $235.3 million, 4.8% above year ago levels and 21% above the forecast.

Corporate income tax collections in June totaled $72.9 million, up 27% compared to June 2010 and 25.1% above forecast.

OTHER TAX COLLECTIONS
Alcoholic beverage
July 2010-June 2011: $32.9 million
July 2009-June 2010: $21.2 million

Tobacco
July 2010-June 2011: $239.6 million
July 2009-June 2010: $245.1 million

Games of skill
July 2010-June 2011: $14.8 million
July 2009-June 2010: $8.5 million

Racing (Oaklawn, Southland)
July 2010-June 2011: $4 million
July 2009-June 2010: $4.6 million