July tax revenue gets boost with $1.4 million from unclaimed property program

Robust individual and corporate income tax collections and an unexpected $1.4 million boost from the State Auditor’s Office unclaimed property program improved the state’s budget profile at the start of the new fiscal year, according to the Arkansas Department of Finance and Administration’s monthly revenue report released Wednesday (Aug. 2).

The first glimpse at the state’s budget picture for fiscal 2018, which runs from July 1, 2017 to June 30, 2018, follows last month’s strong revenue report when tax collections in all major categories came in well above forecast and the state’s financial books for fiscal 2017 were closed with a $15.7 million surplus.

Net available general revenues in July totaled $454.5 million, $53.8 million or 13.4% above last year’s results and $10.5 million or 2.4% above forecast. State budget officials said individual and corporate income tax collections were well above forecast and year ago levels, and an annual deposit from the Arkansas State Auditor’s Office to general revenue came in at $21.4 million, well above the $20 million that was forecasted.

At the end of fiscal year 2016, the State Auditor’s office collected approximately $49 million in unclaimed property and returned approximately $17.1 million to the citizens of Arkansas in payment of claims through the Great “Arkansas Treasure Hunt” program. Another $20.5 million was then transferred back to general revenue from the state’s unclaimed property program that holds abandoned assets, DF&A revenue data shows.

Two months ago, State Auditor Andrea Lea reported that $317 million is owed to Arkansans that have been turned over to the state from abandoned assets, including bank accounts, uncashed checks, utility refunds, stocks and securities, mineral proceeds, life insurance benefits and contents of safe-deposit boxes.

After a swoon in tax collection earlier this year, the state’s revenue picture has improved after the legislature adjourned in May and continued into fiscal 2018, which began July 1, state budget officials said. Last month, the strong June tally closed out an up-and-down year in fiscal 2017, which included several warnings of possible budget shortfalls for the 12-month period that ended on June 30.

July gross general revenues for were 524.1 million, up $56.4 million or 12% ahead of last year and $11.3 million or 2.4% above forecast. Sales and use collections totaled $199.6 million, an increase of $6.5 million or 3.4% above last year. Collections were 0.7% below forecast as motor vehicle sales tax revenue was down 3% in July.

June individual income tax collections totaled $240.1 million, up $29.5 million or 14% above last year. With respect to the forecast, collections were up 7.9% or 3.4% as withholding tax from payrolls jumped a whopping 15.8% compared to last year due in part to payday timing shifts.

Volatile corporate income collections totaled $30.3 million, an increase of $23.4 million or $4.8 above forecast. Corporate income tax refunds were only $600,000, which is $2.2 million below year ago levels and $1.4 million below forecast.

Individual income tax refunds came in at $10.3 million, $4.4 million above last year and $2.7 million or 35.1% above forecast. All refund amounts below forecast, both individual and corporate, add to net general revenue tallies, state budget officials said.

OTHER TAX REVENUE SOURCES
Alcoholic beverage
July 2017: $5.5 million
July 2016: $5.6 million

Games of skill
July 2017: $5.1 million
July 2016: $4.6 million

Tobacco
July 2017: $17 million
July 2016: $17.1 million

Insurance
July 2017: $800,000
July 2016: $1.1 million