Arkansas could see $137.7 million surplus in FY 2013

If estimates are correct, net tax collection revenue available to fund Arkansas’ government during fiscal year 2013 will total $4.865 billion, up 2.4% compared to fiscal year 2012.

The increase would create a surplus of $137.7 million, slightly lower than the $145.6 million surplus from the fiscal 2012 collections.

A budget and revenue forecast letter was sent Wednesday (May 1) by Richard Weiss, director of the Arkansas Department of Finance & Administration, to Sen. Bruce Maloch, D-Magnolia, and Rep. Joe Jett, D-Success. Maloch and Jett are co-chairs of the Joint Committee on Economic and Tax Policy.

Gross (total) revenue during fiscal year 2013 is estimated at $6.095 billion, up $171.2 million, or 2.9%, from 2012.

“Rebound in the state economy from business and household economic activity continues at a modest pace, but with better-than-expected income tax receipts,” Weiss noted in the letter. “Estimated payments in individual income tax are on track for the second consecutive year of double digit growth. The forecast recognizes gains from income tax strategy evident in estimated payments shifted to tax year 2012.”

Net available revenue in fiscal year 2014 could total $4.957 billion, up 1.9% above the 2013 estimate, according to Weiss. The 2014 estimate includes expected revenue reduction of $10.2 million from tax law changes approved in the 89th General Assembly.

SECTOR COLLECTION DETAILS
Weiss’ report provided the following detail on estimated revenue collections in fiscal years 2013 and 2014.
Individual income tax revenue
2013: $3.027 billion
2014: $3.101 billion

Sales and use tax revenue
2013: $2.133 billion
2014: $2.207 billion

Corporate income tax revenue
2013: $421.1 million
2014: $429 million

Tobacco tax revenue
2013: $228.7 million
2014: $221.6 million

Total gross revenue
2013: $6.095 billion
2014: $6.228 billion

Of the estimated 2013 revenues and budget, the public school fund is set to receive $2.046 billion, the Arkansas Department of Human Services will receive $1.131 billion, and Arkansas’ four-year universities collect $587.516 million.

Of the universities, the top five in terms of funding are:
• University of Arkansas-Fayetteville: $116.761 million
• University of Arkansas for Medical Sciences: $95.656 million
• University of Arkansas at Little Rock: $59.841 million
• Arkansas State University: $56.856 million
• University of Central Arkansas: $52.284 million

The University of Arkansas at Fort Smith is set to receive $20.245 million, and NorthWest Arkansas Community College is budgeted at $10.084 million.

ECONOMIC ASSUMPTIONS
Weiss said his forecast assumptions were based on expectations of “slow economic recovery and subdued inflation” in the national and Arkansas economies.

“The short-term outlook still carries significant risk of faltering with little relevancy to prior cycles and average recoveries. Modest revenue growth is expected over the next year. Evidence of income shifting into tax year 2012 also hinders the near-term outlook,” Weiss noted.

The forecast is assumes a 2.1% GDP growth during the period of fiscal year 2013, with Arkansas payroll employment reaching 1.172 million jobs during the period. The job level would represent an annual increase of 9,000 jobs, or a 0.7% gain in private sector employment.

Link here for the PDF of Weiss’ complete document.