Arkansas ends fiscal year 2020 with better-than-expected revenue of $369.4 million

Fiscal year 2020 (July 2019-June 2020) tax revenue ended down just 2.5% despite several months in early 2020 of economic disruption resulting from COVID-19 shutdowns. The revenue was 4.1% above the revised forecast.

The fiscal year ended with $369.4 million in net available revenue more than expected. Gov. Asa Hutchinson on Tuesday gave a preview of the report, saying the state would end the year with more than $360 million in tax revenue than expected. The governor cited several budget areas to benefit from the revenue, including $121 million to the public school fund and $72.2 million to the Medicaid trust fund.

Gross revenue in the fiscal year was $6.967 billion, 2.5% below fiscal year 2019, but up $272.5 million more than the forecast, according to figures provided Thursday (July 2) by the Arkansas Department of Finance and Administration (DFA).

Individual income tax revenue for the fiscal year is $3.418 billion, down 2.9% compared with the previous period and 5.4% above forecast. Income tax refunds total $503.6 million, 14.1% below the budget forecast.

Fiscal year sales and use tax revenue was $2.543 billion, up 3.2% compared with fiscal year 2019 and 1.2% above the forecast. Corporate income taxes for the year are $482.1 million, down 15.4% below fiscal year 2019 and $48.1 million, or 11.1%, above forecast.

John Shelnutt, DFA director of economic analysis and tax research, provided four reasons for the better than expected fiscal year revenue.
• Better than expected sales tax revenue from retail and auto sales
• Individual income tax revenue received ahead of the July 15 date shift
• Reduced individual income tax refunds paid out because of the date shift
• Corporate income tax revenue that exceeded the forecast

“Negative impact from COVID-19 was evident in low annual growth from Sales Tax and Payroll Withholding Tax with negative results in the final months of FY 2020 during social distancing and reduced business operations,” Shelnutt said in his revenue memo.

JUNE NUMBERS, OTHER TAX REVENUE SOURCES
Gross general revenue collected in June totaled $696 million, down 6.3% compared with June 2019 and 12.5% above the forecast. Individual income tax revenue in June was $302.2 million 7.9% below June 2019 and 12.2% above the forecast.

Sales and use tax revenue – an indicator of consumer spending – was $227.4 million, 8.8% above revenue in June 2019 and 11.5% above the forecast. Corporate income tax revenue was $63.3 million, 13.5% below June 2019 and 17.4% above the forecast.

Tobacco
July-June 2020: $220.4 million
July-June 2019: $212 million

Insurance
July-June 2020: $125 million
July-June 2019: $161.6 million

Alcoholic beverages
July-June 2020: $60.8 million
July-June 2019: $60.5 million

Games of skill
July-June 2020: $32.4 million
July-June 2019: $69.7 million