Arkansas’ November report tax revenue below forecast

Year-to-date tax collections in Arkansas continue to trend higher, but an unusual corporate income tax swing helped push collections in the November report below budget estimates.

Year-to-date gross revenue (July 2013-Nov. 2013) totaled $2.389 billion, 3.5% above the same period last year and above forecast by 1.1%, according to the report issued Tuesday (Dec. 3) by the Arkansas Department of Finance and Administration.

Individual income taxes for the fiscal year totaled $1.115 billion, up 2.5% from last year and 0.2% above the budget forecast. Year-to-date sales and use tax collections were $914.3 million, up 4.1% above last year and just 0.2% above forecast. Income taxes and the sales and use tax collections are the two primary sources of state revenue.

The corporate income tax collections for the first five reporting months of the fiscal year totaled $139.9 million, up 8.7% compared to last year and 7.1% above forecast.

NOVEMBER NUMBERS
November gross revenue was $430.2 million, up 0.6% above last year and 1.9% below forecast.

“Results in November were impacted by swings in Corporate Income tax, a volatile component of general revenue. Gross collections in Corporate Income tax were $4.2 million below forecast and -41.6 percent below year ago levels, while Corporate Refunds were $2.6 million above expectations and 36.6 percent above year ago levels. These monthly results differed dramatically from year-to-date results for the same categories,” John Shelnutt, head of the Department of Finance and Administration’s Economic (DFA) Analysis & Tax Research division, said in the report. “Timing effects in collections compared to year ago activity and the Thanksgiving holiday were anticipated as shown in Sales Tax growth compared to last year.”

Individual income tax collections during November totaled $197.7 million, up 2.7% compared to November 2012 and below forecast by 1.8%. Sales and use tax collections during the month totaled $175.2 million, up 1.2% from last year and 0.5% below the forecast.

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.

The DFA reported Monday the projections for 2014 and 2015 fiscal year revenue.

Gross general revenues are estimated at $6.203 billion for the current fiscal year (July 1, 2013-June 30, 2014), down about 0.2% from fiscal 2013 collections, according to a report issued Monday (Dec. 2) by Richard Weiss, director of the Arkansas Department of Finance and Administration.

The revenue forecast for fiscal year 2015 is $6.333 billion, up just 2.1% above the 2014 estimate. The 2015 estimate includes an anticipated reduction of $85.2 million from tax cuts approved in the 2013 Legislative Session.

OTHER TAX COLLECTIONS
Alcoholic beverage
July 2013 – Nov. 2013: $21.7 million
July 2012 – Nov. 2012: $20.7 million

Games of skill
July 2013 – Nov. 2013: $15.8 million
July 2012 – Nov. 2012: $13.5 million

Tobacco
July 2013 – Nov. 2013: $94.3 million
July 2012 – Nov. 2012: $97.2 million

Insurance
July 2013 – Nov. 2013: $43.5 million
July 2012 – Nov. 2012: $41.6 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.