Payroll Timing Issue Blamed For Lower October Revenues

Arkansas October revenues were thrown off by a payroll timing issue and lower consumer spending, according to state revenue officials.

For the month, which is the first fiscal quarter mark for Arkansas tax collections, October net general revenues were down 2.5% from last year and  5.7% below forecast to $355.6 million.

“Results were mainly driven by a temporary downswing in Individual Income tax from payroll timing in withholding tax,” said economist John Shellnut in a memo prepared from the Department of Finance and Administration’s Economic Analysis and Tax Research division. “Sales and Use taxes were down in both business and consumer-related categories, but automobile sales tax rebounded. A significant upswing in corporate income tax refunds also detracted from net revenue during the month.”

The major revenue categories for October reported:

• October Individual Income Tax collections total $218.1 million.  Collections decreased by $10.7 million, or -4.7 percent compared to last year.
• October Sales and Use Tax Collections: October collections total $171.3 million, a decrease of $1.1 million or -0.6 percent from last year. Collections were below monthly forecast levels by $8.3 million or -4.6 percent.
• October Corporate Income Tax collections total $22.3 million, a decrease of $2.5 million or -10.1 percent below year earlier levels, and $0.7 million or -3.0 percent below forecast.

Year-to-date net general revenues are up 2.9% above last year and 1.3% above forecast. You can access the full report here.