Arkansas tax revenue up 4.1% in October report

Arkansas tax collections are up more than 4% for the first four months of the fiscal year, with October sales and use tax collections – associated with consumer spending – in the October report coming in below budget estimates.

Year-to-date gross revenue (July 2013-Oct. 2013) totaled $1.958 billion, 4.1% above the same period last year and above forecast by 2.3%, according to the report issued Monday (Nov. 4) by the Arkansas Department of Finance and Administration.

Individual income taxes for the fiscal year totaled $917.8 million, up 2.5% from last year and 0.6% above the budget forecast.

Year-to-date sales and use tax collections were $739.1 million, up 4.8% above last year and just 0.4% above forecast. The corporate income tax collections for the first four reporting months of the fiscal year totaled $133.7 million, up 13.3% compared to last year and 11.2% above forecast.

October gross revenue was $458.1 million, up 3.5% above last year and 0.6% above forecast. Sales and use tax collections during the month totaled $171.8 million, up 0.3% from last year and 3.8% below the forecast.

“October results were boosted by gains in Income tax categories and a variety of smaller revenue sources while offsetting a shortfall in Sales tax. Individual and Corporate Income tax both exceeded forecast and refunds were less than expected. Refunds accounted for a sizable portion of the Net Available result compared to forecast,” John Shelnutt, head of the Department of Finance and Administration’s Economic Analysis & Tax Research division, said in the report.

Shelnutt also said the October report is an example of how different revenue streams can differ month to month.

“Gains in the two economic-related revenue lines of Sales tax and Payroll Withholding were below projections, following elevated gains last month. The swings in growth are a reminder that one month results do not represent a trend in collections or the state economy,” he explained.

A trend of relatively minor growth in sales and use tax collections is evident. The collections, considered a barometer of consumer confidence, ended fiscal year 2013 on a down note. Collections in the segment for the fiscal year totaled $2.124 billion, up just 1.1% compared to the 2012 period, and 1.4% below forecast.

OTHER TAX COLLECTIONS
Alcoholic beverage
July 2013 – Oct. 2013: $17.5 million
July 2012 – Oct. 2012: $16.6 million

Games of skill
July 2013 – Oct. 2013: $12.7 million
July 2012 – Oct. 2012: $10.9 million

Tobacco
July 2013 – Oct. 2013: $77 million
July 2012 – Oct. 2012: $77.7 million

Insurance
July 2013 – Oct. 2013: $23.1 million
July 2012 – Oct. 2012: $21.3 million

COLLECTIONS HISTORY
Tax collections during fiscal year 2013 (July 2012-June 2013) totaled $6.214 billion, up 4.9% above the previous fiscal year and up 2.5% compared to budget estimates. One result of the gains was a budget surplus of $299.5 million.

Fiscal year 2013 marked the third consecutive 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.

The biggest declines in the 2009 and 2010 fiscal years were with individual income tax collections and sales and use tax collections.