Arkansas tax revenue up, consumer spending flat

Tax collections are up almost 5% in Arkansas for the first 11 months of the fiscal year, with the numbers presenting an uncertain trend with respect to consumer spending.

For the first 11 months of Arkansas’ fiscal year (July 2012-May 2013), total tax collections are $5.592 billion, up 4.7% above the same period in the previous year, and above forecast by 2.6%, or $141 million. Arkansas two largest revenue sources are individual income tax collections and sales and use tax collections.

The Arkansas Department of Finance & Administration reported the collections on Tuesday (June 4).

Year-to-date individual income tax collections total $2.859 billion, 8.2% higher than the 2012 period. The revenues were 6.2% above forecast. Individual income tax collections during May were $201.1 million, down 2.3% compared to 2012, but 1.9% above forecast.

Sales and use tax collections for the fiscal year total $1.94 billion, up just 0.9% compared to the 2012 period, and 1.4% below forecast.

And while the 11-month trend shows a decline in consumer spending, the May report had sales and use tax collections at $183.9 million, up 7% compared to May 2012 and 2.6% above forecast. Total May revenue was $443.2 million, up $9.3 million compared to May 2012, and 2.9% above the budget forecast.

“Results for gross revenue were mainly driven by rebound in sales tax collections, which surged 7.0 percent compared to year ago May levels. This compares to only 0.9 percent in the year-to-date 11-month period of FY 2013 and a 2.5 percent decline recorded in April collections,” John Shelnutt, head of the Department of Finance and Administration’s Economic Analysis & Tax Research division, said in the report. “Individual Income tax collections also contributed to collection gains in May as withholding collections continued to perform well at 4.7 percent growth and overall results exceeded forecast by $3.8 million or 1.9 percent.”

Income tax refunds for the first 11 months of the fiscal year totaled $471.9 million, down 0.2% compared to the prior-year period, and 4.6% below forecast. During April, the refunds totaled $39.9 million, up 21.2% compared to May 2012, and up 16% above forecast.

“The gains follow filing delays at the IRS and among states early in the tax filing season,” Shelnutt explained.

Year-to-date corporate income taxes totaled $359.5 million, up 1.7% from the 2012 year-to-date period, and below the forecast by about $700,000.

OTHER TAX COLLECTIONS
Alcoholic beverage
July 2012 – May 2013: $46.6 million
July 2011 – May 2012: $45.1 million

Games of skill
July 2012 – May 2013: $32.6 million
July 2011 – May 2012: $24.8 million

Tobacco
July 2012 – May 2013: $209.5 million
July 2011 – May 2012: $220.3 million

Insurance
July 2012 – May 2013: $65.1 million
July 2011 – May 2012: $65.8 million

COLLECTIONS HISTORY
Fiscal year 2012 marked the second year of year-over-year gains. 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. 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.