Arkansas tax collections were up across all categories in August as the state’s economy gained momentum heading into the post-Labor Day lull before turning the corner toward the all-important holiday season.
According to the monthly revenue report released Wednesday (Sept. 5) by the Arkansas Department of Finance (DFA), net available general revenues in August jumped 6.9% or $28.1 million to $434.1 million, which is $9 million, or 2.1% ahead of the state’s forecast.
Year-to-date net available revenue totaled a healthy $903.4 million through the second month of the 2019 fiscal year, up 5% or by $43 million compared to a year ago and 2% or $18 million ahead of the state’s forecast that runs from July 1, 2018 to June 30, 2019.
Yearly gross general collections, a broader economic indicator that includes collections from all available categories, also increased by $29.8 million to $1.022 billion, up 3% compared with the same period of fiscal 2018, and $15.7 million or 1.6% above the general forecast.
Going into the second month of the new fiscal year, DFA economist John Shelnutt said key economic indicators show that healthy tax collections are consistent with the overall direction of a growing Arkansas economy with a brimming workforce.
“Yes, everything clicked in August with all major revenue categories above forecast and above year ago,” Shelnutt told Talk Business & Politics. “Collections in payroll withholding were up 5.8% over last year with no known payday timing differences. That growth rate is a fair glimpse of the state economy during the summer showing good growth that is in-line with essentially full employment, rising wage rates, good overtime opportunities, and moderate inflation.”
Arkansas ended fiscal year 2018 with a surplus of nearly $42 million as moderate growth from sales tax collections. Strong payroll additions to the state’s growing labor force in June pushed net available general revenue collections to $5.49 billion, up $146.3 million or 2.7% above year ago levels, and $41.7 million, or 0.8% above the state’s forecast. Gross tax revenue rose by 2.7% to $6.726 billion, up $174.7 million above the same period in fiscal 2017.
Statewide, general revenues are primarily driven by individual and corporate income tax collections, sales taxes and other smaller pockets of revenue collected by the state. Shelnutt said sales tax revenues were just above forecast and would have been higher except it appears motor vehicle sales tax gains of 8.9% in July collections were reversed in August.
“Otherwise sales tax growth was good in both consumer and business sectors of the economy and the sales tax base,” said Shelnutt, the state’s chief economic forecaster and administrator of DFA’s Office of Economic Analysis & Tax Research.
Overall, August sales tax collections totaled $211.2 million, up $10.8 million or 5.4% above a year ago, and $200,000 or 0.1% above forecast. On a yearly basis, those totals climbed to $420.7 million, an increase of $20.7 million or 5.4% and $2.2 million or 0.5% above forecast.
August individual income tax collections also climbed by 5.6% or $11.5 million to $216.9 million, and $4.7 million or 2.2% ahead of expectations. As noted by Shelnutt, individual withholdings increased were up nearly 6% in August as the state’s 1.3 million civilian labor force nears full employment. Corporate income tax collections were up $1.5 million from a year ago, and $1.9 million or 41.5% above forecast in an otherwise minor collection month for the category, state budget officials said.
Personal income tax refunds, which add to funds available for state use, came in at $6.8 million, which was 8.9% below year ago levels and 2.6% above forecast. Corporate income tax refunds were minimal at $2.6 million, up $400,000 above year ago levels and $600,000 above forecast.
OTHER TAX REVENUE SOURCES
July-August 2018: $10.2 million
July-August 2017: $10 million
Games of skill
July-August 2018: $11.2 million
July-August 2017: $10.4 million
July-August 2018: $38 million
July-August 2017: $38.9 million
July-August 2018: $20.7 million
July-August 2017: $20.1 million