Strong income tax collections spilled over into state budget coffers in January as Arkansas’ revenue picture improved ahead of the upcoming legislative session to approve the state’s budget for fiscal 2019.
Three weeks ago, Gov. Asa Hutchinson called for a modest 2.8% budget increase in general revenues for fiscal year 2019. In doing so, Department of Finance and Administration officials have revised the forecast for fiscal 2018, which closes on June 30, to end with around $5.45 billion in state budget coffers.
Gov. Hutchinson said Friday’s (Feb. 2) report reflects a strong economy.
“The January report reflects the overall acceleration of the state’s economy. A significant rise in individual income tax collection was a key factor in concluding the month $41.7 million above forecast. The strong income tax growth signals the strength of our job market. We are off to a very solid start in 2018, but we will continue to be cautious as we enter tax filing season,” the governor noted in a statement.
As part of the new budget, Hutchinson also asked top education officials to freeze tuition rates at the state’s four-year colleges as part of a $5.6 billion budget plan for fiscal 2019 that will increase year-over-year state government spending by nearly $173 million.
The General Assembly’s fiscal session begins Feb. 12.
In January, the state’s net general revenues — which are primarily driven by individual and corporate income tax collections, sales taxes and other tax collections — were up 8.8%, or $37.3 million above year ago levels to $583.3 million. That is also $41.7 million or 7.7% above the revised forecast.
The January totals left Arkansas’ year-to-date net available general revenues at $3.27 billion, or $121.8 million (3.9%) above year-ago levels. After two months from the revised forecast and seven months into the fiscal year, net available is above forecast now by 2%, or $65.4 million.
Last month, Arkansas net available general revenues jumped 11.5%, or by $53.7 million, above year-ago levels to $521.1 million, which is also $23.7 million or 4.8% above the revised forecast. That left year-to-date available general revenues through the first six months of fiscal 2018 at $2.69 billion, or $74.5 million and 2.8% above year-ago levels.
Year-to-date gross tax receipts rose by $125.5 million, or 3.4% million, to $3.77 billion. That tally is $35.6 million, or 1%, above the revised forecast, state budget officials said. Yearly individual income tax collections continued an upward trend at $1.84 billion, or $88.7 million (5.1%) above year-ago levels, and $37 million, or 2.1%, above forecast.
On a year-to-date basis, sales and use tax receipts were $1.4 billion, up 2.2% or $30.5 million from the same period a year ago, and $4.8 million or 0.3% above the revised forecast.
Like the yearly totals, individual income taxes, the state’s single largest category for gross receipts, increased from a year ago by $24.5 million, or 6.8%, to $383.2 million. Individual withholding tax was up 1.7% compared to last year, reflecting payday timing effects anticipated for the month, DFA officials said.
January sales and use tax collections, however, continued to trend below expectations. Revenue tallies for the month were $206.6 million, an increase of $6.1 million, or 3.1%, above a year ago, but $5.4 million, or 2.5%, below budget forecast.
Corporate income tax collections jumped 12.6%, or $2.8 million, from a year ago to $25.4 million but were $9 million, or 26%, below forecast.
Monthly individual income tax refunds, which reduce net available state funds, totaled only $3.6 million, $14.9 million and $15.2 million, respectively, above last year levels and the monthly forecast as taxpayers try to figure out the impact of the new tax cuts approved by Congress in December. Corporate income tax refunds were $4.5 million, unchanged from year ago levels and $10.2 million below forecast.
OTHER TAX REVENUE SOURCES
July-January 2018: $33 million
July-January 2017: $31.9 million
Games of Skill
July-January 2018: $36 million
July-January 2017: $32.8 million
July-January 2018: $128.8 million
July-January 2017: $128.2 million
July-January 2018: $44.4 million
July-January 2017: $44.5 million