Arkansas budget coffers overflowed in April with nearly a billion dollars in record gross revenue collections with two months remaining in the fiscal year, state Department of Finance & Administration (DF&A) officials said Tuesday (May 2).
In April, net available revenues were a robust $751.1 million, up 14.3% or $94 million from a year ago, and $102.2 million or 15.7% above forecast, according to the monthly revenue summary from DF&A. Monthly gross collections, a broader economic indicator that includes collections from all available categories, came in at a record $958.8 million, a spike of $166 million, or 13.8% above last year, and $125.1 million, or 15% ahead of the state’s monthly outlook.
With less than 60 days left before fiscal year 2019 ends on June 30, Arkansas’ net available general revenues total more than $4.89 billion, which is $301.1 million, or 6.6% ahead of year-ago levels and $148.9 million or 3.1% ahead of the state’s official forecast.
Likewise, yearly, the benchmark gross general collections jumped by $310.9 million, or 5.5% to $5.9 billion compared with the same period of fiscal 2018, which DF&A economist John Shelnutt said represented a new monthly record. That left gross revenues above forecast by $189.9 million, or 3.2%.
“The tax filing month of April is always the high water mark each year, but the 13.8% gain in gross collections from last April was an unusual uptick. I think you will see a lot of states indicating growth like this when they report,” said Shelnutt. “Some of this is good growth in the economy, some is rebound in corporate earnings from a low year, and some is probably due to taxpayer strategy following the federal tax cuts with changes in filing patterns.”
The state’s top economic forecaster said fiscal and budget experts in Arkansas and other states are still figuring out the impact of the Trump administration’s $1.8 trillion corporate tax act on the growth of business investment.
“The latter factor continues to be the topic of great interest for a lot of states sorting out the effects of the federal Tax Cut and Jobs Act,” Shelnutt said of the omnibus tax legislation approved by Congress in December 2017.
Tax collections were also boosted by stronger yearly growth in individual and corporate income revenue, which also were above forecast and saw better margins in the number of returns, extension payments and withholding.
“The gain in withholding of 6.8% over last year was not anticipated and probably amounts to some one-time gains that will not repeat,” said Shelnutt. “The gains in non-withholding categories reflect higher income growth and tax liabilities from both working families and business partnership incomes reported on Individual returns.”
DECLINING SALES TAX REVENUE
One small caveat in the record month was lower sales tax collections, which were significantly below forecast and year ago levels.
“We were already experiencing low growth because of the final tax cut on the state portion of the grocery tax, but this decline goes beyond that factor,” sad the DF&A economist. “The later timing for Easter-related retail shopping this year compared to an early Easter last year may be part of the difference in collections.”
In other sales tax sectors, motor vehicle collections and restaurant receipts were up. Many other business sectors were also down in April, including mixed consumer and business sectors of Utilities and Information. Individual and corporate tax refunds were above forecast, which kept net available gains from rising even higher.
“We expect refunds to be caught up and actually run below year ago and forecast levels in the remaining months of the fiscal year,” said Shelnutt.
Among the major categories, individual income tax collections in April increased by 15.1%, or $79.1 million, to $265.9 million compared to a year ago, which is $87.4 million, or 17% below forecast. Year-to-date individual income tax collections were up 4%, or $114.7 million, to $2.596 billion, which is $60.6 million, or 2.1%, below forecast.
As noted, sales and use tax revenue slowed in April to $200 million, down 3.9% or $8.2 million compared to last year, and 5% or $1.5 million below forecast. Year-to-date, sales and use tax collections in April were just over $2 billion, up 2% or $39.3 million, but 1.5% below, or $31.5 million, below the state’s forecast.
OTHER TAX REVENUE SOURCES
July-April 2019: $47.2 million
July-April 2018: $45.9 million
July-April 2019: $57.3 million
July-April 2018: $53.3 million
July-April 2019: $177.1 million
July-April 2018: $182.2 million
July-April 2019: $64.3 million
July-April 2018: $62.2 million
Miscellaneous (Severance, corporate franchise, real estate transfer, dyed diesel)
July-April 2019: $73.4 million
July-April 2018: $74.2 million