Arkansas revenue picture mixed in November, corporate refunds offset sales tax growth

Arkansas’ revenue picture for November was a mixed bag as continued strong revenue growth boosted by robust sales and use tax collections was partially offset by shrinking available income due to larger than expected corporate tax refunds, the state’s fiscal office reported Tuesday.

The state’s net available general revenue last month totaled $374.6 million, $16.5 million or -4.2% below last year and $4.3 million or -1.1% below forecast. However, year-to-date net available general revenues totaled $2.11 billion, which is $0.9 million more or approximately equal to year ago levels.

“The corporate refunds reduced the results significantly and those were reconciliation for 2014 earnings for Arkansas (companies),” said John Shelnutt, director of economic analysis and tax research at the state Department of Finance and Administration. “That essentially means that they overpaid during that period of time a year ago.”

Overall, Shelnutt said year-to-date gross collections continued on a strong path. As of Wednesday, gross collections totaled $2.47 billion, up $18.9 million or 0.8% above last year. Gross general revenues are above forecast by $74.0 million or 3.1%.

November collections totaled $462.9 million, a decrease of $1.7 million or -0.4% below last year and $7.4 million or 1.6% above forecast. November individual income tax collections totaled $213.4 million, down by $13.7 million, or 6% compared to last year. With respect to the forecast, collections were $1.0 million or -0.4% below
forecast.

Income tax refunds for the month were a robust $14 million, $1.9 million or 15.3% above last year and $1.2 million or 9.5% above forecast. Those refund amounts, however, were subtracted from net available fund results.

Meanwhile, November sales and use tax collections continued to grow, sitting at $184.9 million, an increase of $4.5 million or 2.5% above last year. Collections were above monthly forecast levels by $0.9 million or 0.5%. “This is the eight consecutive month of growth for sales and use taxes,” Shelnutt said.

Corporate income tax collections came in at $7.6 million, an increase of $1.2 million from year ago, and $1.3 million or 20.4% above forecast. Corporate tax refunds, however, were $20.5 million versus $13.7 million above year ago levels. Refunds were $12.5 million above forecast, reflecting elevated claims from reconciliation of 2014 tax
liability.

November tobacco tax collections, a smaller component of general revenue in annual terms, totaled $18 million. Collections increased by $0.6 million or 3.6% from year earlier levels and were slightly above forecast by $0.4 million. Monthly changes in tobacco tax collections can be attributed to uneven patterns of stamp sales to
wholesale purchasers.

For the year, Arkansas taxpayers have received $47.6 million in tax refunds, down $1.5 million or -3.1% compared to last year and $4.1 million or 8% below forecast. At the same time, sales and use tax collections jumped to $974.6 million, an increase of $52.8 million or 5.7% from a year ago and $34.6 million or 3.7% above forecast.

The bellwether corporate income tax collections totaled $144.7 million, an increase of $5.6 million or 4% from a year ago. Corporate income is above forecast by $600,000 or 0.4%. Year-to-date corporate income tax refunds total $44.3 million, an increase of $26.9 million compared to the same year-to-date period last year.