Tax revenue in Arkansas remains positive through the first eight months of the fiscal year, with higher than expected sales and use tax collections and lower than expected income tax refunds pushing gross revenue up 3.2% on a year-over-year comparison.
Gross revenue between July 2014 and February was $4.034 billion, up 3.2% compared to the same period in the previous fiscal year. The amount is also 1.7% above the budget forecast, according to the report issued Tuesday (March 3) by the Arkansas Department of Finance and Administration.
However, February gross revenue of $420.7 million was down 1.5% below February 2014 and was 2.3% below the estimate. Driving the February decline was a 7.2% decline in individual income tax revenue. Collections in the category during February was $210.5 million, down $16.2 million compared to February 2014.
Individual income tax collections for the first eight months of the fiscal year totaled $1.97 billion, up 3.3% from last year and 1.2% above the budget forecast. Year-to-date sales and use tax collections were $1.48 billion, up 2.3% compared to last year and 1.2% below the budget forecast. Income taxes and the sales and use tax collections are the two primary sources of state revenue.
The February report did benefit from higher sales and use tax collections and reduced income tax refunds, according to John Shelnutt, head of the Department of Finance and Administration’s Economic (DFA) Analysis & Tax Research division. February sales and use tax collections totaled $176.5 million, up 5.7% compared to last year and up 5% over the forecast. February income tax refunds were $148.4 million, down 9.3% compared to February 2014.
“The lower tax refunds result for the month is a continuation of the timing effects from the earlier start of IRS electronic filings of tax returns than in the prior two years. This earlier start effects both year ago and forecast comparisons over the course of the income tax filing season,” Shelnutt said in the report. “The decline in February and a similar but opposite increase in January indicate timing effects of tax payments, among other factors. Corporate Income tax, a more volatile, mid-sized collection category was also below forecast in a minor collection month for that category.”
Corporate income tax collections for the first eight reporting months of the fiscal year totaled $262.2 million, up 9.2% compared to last year and 10.9% above forecast.
OTHER TAX COLLECTIONS
July 2014 – Feb. 2014: $34.8 million July 2013 – Jan. 2013: $33.8 million
Games of skill
July 2014 – Feb. 2014: $28.6 million
July 2013 – Jan. 2013: $24.8 million
July 2014 – Feb. 2014: $145.4 million
July 2013 – Jan. 2013: $146.8 million
July 2014 – Feb. 2014: $46.3 million
July 2013 – Jan. 2013: $45.8 million
Tax collections during fiscal year 2014 (July 2013-June 2014) totaled $6.242 billion, up 0.5% above the previous fiscal year and up just 0.2% compared to budget estimates. The year marked the fourth consecutive year of revenue increases. The fiscal year ended with a budget surplus of $78.7 million.
Tax collections during fiscal year 2013 (January 2012-January 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.
Arkansas tax collections reversed a negative two-year slide in the 2011 fiscal year, with collections up 4.5% in the January 2010-January 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.