Arkansas budget coffers bolstered by individual income and sales tax collections in August
Arkansas tax collections improved substantially in August as individual income and sales tax revenue came in well above forecast and pushed year-to-date net available funds for government spending near the $1 billion mark.
The Arkansas Department of Finance and Administration (DFA) reported Wednesday (Sept. 4) that year-to-date (July – August) net available revenues in August grew by 0.9%, or $8.4 million at $991.8 million, and 0.8% or $7.5 million when compared with the state’s official budget forecast. Gross tax revenue for fiscal year 2019, a key economic indicator that includes collections from all available categories, totaled nearly $1.028 billion at the end of August, a gain of 0.7% or $6.7 million when compared to year ago levels and the DFA forecast.
“Overall, it was a good month for state tax revenue and a good look at the underlying state of the economy,” said DFA economist John Shelnutt.
In fiscal 2019 ended June 30, Arkansas produced a surplus above the maximum allocations available for distribution of $295.4 million. At the end of the 2019 legislation session, the Arkansas General Assembly endorsed Gov. Asa Hutchinson’s $5.75 billion budget with the overwhelming approval of the Revenue Stabilization Act. Before the 2019 session began in January, Gov. Hutchinson’s $5.75 billion budget request for fiscal 2020 reflected a 2.3% increase above the prior year’s allocation of $5.6 billion. The 2021 fiscal budget projections would rise another 2.3% to nearly $5.88 billion.
As the new fiscal year gets underway, Arkansas also joins the growing list of states to require internet vendors and out-of-state remote sellers that do not have a physical presence in Arkansas and annual sales of at least $100,000 to collect and remit Arkansas sales and use taxes. DFA also has begun posting tax collection receipts from gaming and racing venues, which totaled $11.2 million and $300,000, respectively, through the second month of the fiscal year.
“In addition to the revenue report summary I would add that August revenue collections benefited from short-term rebound in the retail sales portion of Sales and Use Tax along with the first month of collections from the online marketplace sellers internet sales tax law,” said Shelnutt, adding that the new law came into effect on July 1 “but there is a normal one-month lag in state collections after the economic activity itself.”
In August, net available general revenues totaled $449 million, which is 3.4% or $14.9 million above year ago levels and $7.5 million or 1.7% above forecast. Among the major revenue categories, individual income tax revenue was up 5.6% compared to the prior year and $2.8 above forecast. Sales tax collections jumped 5.5% above last year and $6.3 million or 2.9% above forecast.
Year-to-date individual income tax collections rose by $8.4 million or 1.9% to $461.4 million compared to a year ago and beat the state’s forecast by 1% or $4.7 million. As noted, individual income tax collections in July rose by $12.1 million to $229 million, which was also $2.8 million or 1.3% above forecast.
Sales and use tax collections through the first two months of fiscal 2020 rose by 1.9% or $7.9 million from a year ago to $428.5 million. However, that total is slightly below forecast by $500,000 or 0.1%. August sales and use tax collections jumped $11.6 million to $222.8 million from a year ago and beat monthly forecast levels by $6.3 million or 2.9%.
For the year, corporate income tax collections totaled $29.2, down $8.1 million from a year ago and $1.6 million or 5.1% below forecast. However, July corporate income tax collections were only $4.1 million in a light month of business activity, a decrease of $2.5 from a year ago and $800,000 or 15.7% below forecast.
OTHER TAX REVENUE SOURCES
July-August 2019: $10.7 million
July-August 2018: $10.2 million
July-August 2019: $8.4 million
July-August 2018: $11.2million
July-August 2019: $40 million
July-August 2018: $38 million
July-August 2019: $20.4 million
July-August 2018: $20.7 million