Arkansas tax revenue collections in May were well above a recently revised forecast mainly because of improved sales and use tax revenue and inflows in other major tax categories. But state budget coffers are still likely headed for a $70 million shortfall at the end of fiscal year.
The state’s official forecast was revised on May 2, resulting in a reduction of $70 million in the year end amount for net available revenue to $5.26 billion. The monthly forecasts for May and June reflect this revision to year end expectations and now account for actual collections in the year-to-date values through April.
In May, the Arkansas Department of Finance and Administration report totaled $339.2 million, $1 million, or 0.3%, above last year and $57.8 million, or 20.5%, above forecast. May gross tax collections came in at $468.9 million, up 8.3% above last year and 4.5% above forecast.
“Results in May were positively impacted by lower than expected individual income tax issued and gross revenue collections meeting or exceeding forecast in all of the major tax categories,” state budget officials noted in the month report.
With only one month remaining in the fiscal year that ends June 30, net available revenues totaled $4.77 billion, about $49.1 million or 1% below year ago levels. Following last month’s revision, net available revenue is $57.8 million, or 1.2% above forecast. Year-to-date gross tax collection were $5.88 billion, representing an increase of $58.4 million, or 1%, above last year and $20.3 million, or 0.3%, above the revised forecast.
Individual income tax collections were the year total $2.93 billion, 2.1% above year ago levels and $11.3 million, or 0.4%, above the revised forecast. forecast. Sales and use tax collections through the first 11 months of fiscal 2017 were $2.13 billion, a spike of $40.1 million or 1.9% better than a year ago and $7.6 million or 0.4% above forecast.
In the special session a month ago, Arkansas lawmakers created a “rainy day” fund to bolster Arkansas’ credit rating at the behest of Gov. Asa Hutchinson. Senate Bill 5, introduced by Sen. Jim Hendren, R-Gravette, will transfer $105 million from the Arkansas Health Century Trust Fund to the newly created Long Term Reserve Fund.
According to Arkansas Department of Finance and Administration officials, monies from the tobacco settlement provided core funding for the Arkansas Healthy Century Trust Fund, which have been gaining in interest for nearly 17 years. Today, there is more than $102.8 million in the account, with lawmakers having accessed more than $30 million again in interest to fund programs mostly related to health concerns.
Overall, May results were above forecast in several major categories of collections, including individual corporate income and sales and use tax collections. May individual income tax collections total $209.4 million, down 3.5% compared with last year. With respect to the forecast, collections were up $11.3 million, or 5.7%, above the revised forecast. Individual withholding decreased 3% compared to last year due to payroll timing differences, DF&A officials said.
Individual income tax refund for the month were $63.6 million, a whopping $36.2 million, or 131.9%, above last year but 33.8% below the revised forecast. Refund amounts below forecast increase net available fund results.
May sales and tax use collections, which now include tax revenue collected from online retail giant Amazon.com, totaled $192.4 million, an increase of $20.8 million or 12.1% above last year. Collections were above monthly forecast levels by $7.6 million or 4.1 percent. Comparison to year ago results was impacted by a refund in the prior year in accordance with a court settlement.
In corporate collections, income tax collections from Arkansas businesses totaled $33.4 million, an increase of $24.4 million from year ago, and $400,000 above forecast. Corporate income tax refunds total $1.1 million, $3.6 million below year ago levels and $1.9 million below forecast.
OTHER TAX REVENUE SOURCES
July-May 2017: $50.2 million
July-May 2016: $49.7 million
Games of skill
July-May 2017: $54.0 million
July-May 2016: $51.1 million
July-May 2017: $199.5 million
July-May 2016: $203.7 million
July-May 2017: $63.1 million
July-May 2016: $64 million