November Revenue Report Sees Slip In Personal Income Taxes
State finance officials are probably hoping it’s not a November to remember. They’ve certainly seen better ones in terms of revenue growth.
Two major components of tax collections missed their mark in November leading to lower net revenues for the state.
The Arkansas Department of Finance and Administration’s November monthly revenue report showed net available general revenues topping $342.7 million, $1.7 million below last year’s levels and just 0.2% above forecast.
Individual income tax collections — which have been a strength in monthly revenue reports this year — were off for the month. Total personal income taxes reached $183.7 million, down 3.2% from last year and 2.5% below forecast.
Gross receipts — a barometer of consumer spending — hit $168.9 million, just 0.2% above November 2010 levels, but 3% below expectations.
“Payroll timing factors in withholding income tax accounted for the shortfall compared to year ago collections,” the DF&A report noted. “Such shifts are partially accounted for in the monthly forecast and are better understood when averaged over several months. Growth in withholding averaged over the volatile two-month period of October (up) and November (down) is on track for the annual Official Forecast.”
A bright spot in the November report centered on corporate income taxes, which can be volatile on a month-to-month basis and only comprise a small percentage of monthly revenues. For the month, corporate taxes totaled $10.2 million, up nearly 17% from last year and 39% above forecast.
The state is still in solid, albeit not stellar, financial shape five months into its fiscal year.
At the end of November, year-to-date net available general revenues totaled $1.92 billion, $40.3 million or 2.1% above year ago levels. Net available revenue is above forecast by $10.8 million, or 0.6%.
“Among major revenue categories, both individual and corporate income taxes are above forecast and sales tax collections (gross receipts) are down relative to forecast,” DF&A officials noted.
“The key components of individual income tax are now ahead of forecast for the year, including withholding tax and estimated payments. The sales tax results reflect a combination of generally weak retail sales across the year-to-date period and adverse one-time comparisons in business transactions in the first two months of the fiscal year,” the report said.
On Thursday, state budget leaders presented the latest revenue picture for the current fiscal year. Forecasters left unchanged the current year’s expectations for fiscal year 2012 at $4.567 billion, a 0.1% decrease.
Saying the state’s economy was facing “a lot of headwinds,” DF&A director Richard Weiss told Arkansas lawmakers, “We don’t see any strong economic recovery happening at all… We don’t see any reason to be any more optimistic than what we’re putting out here today.”