Arkansas’ fiscal year tax revenue up almost 30%

As measured by double-digit gains in sales tax revenue in the state’s August report, Arkansans continued to spend through the summer despite COVID-19 worries, with gross revenue up almost 30% to $1.331 billion during the first two months (July-August 2020) of the fiscal year.

The gross general revenue was up 29.4% compared to the same period in 2019, and up 11.2% above the budget forecast, according to Wednesday’s (Sept. 2) report from the Arkansas Department of Finance and Administration (DFA).

Individual income tax revenue in the first two months of the fiscal year was $685.4 million, up 48.6% compared to the same period in 2019 and up 6.4% over the budget forecast. Sales and use tax revenue – an indicator of consumer spending – during the first two months was $472.7 million, up 10.3% compared with the same period in 2019 and up 12.7% above budget forecast.

John Shelnutt, DFA director of economic analysis and tax research, said the two largest revenue drivers generated almost $45 million in revenue than expected. He said some of the gains come from the income tax deadline shift from April to July.

“The largest collection categories of Individual Income and Sales Tax were above forecast and year ago levels. Individual Income Tax revenue was up 7.2 percent compared to prior year contributing $23.9 million above the gross revenue forecast. Sales Tax collections were 6 percent above last year contributing $20.7 million above forecast,” Shelnutt noted in his monthly report.

Corporate income tax revenue during the first two months of the fiscal year was $56.5 million, up $27.3 million compared with the same period in 2019, but down 61% from the budget forecast.

AUGUST REVENUE
Individual income tax revenue totaled $564.9 million in August, up 11.2% compared with August 2019, and 10.6% above the forecast. Sales and Use tax revenue in August totaled $245.5 million, up 7.2% compared with August 2019 and up 10.8% above the forecast. Corporate income tax revenue was $3.7 million in August, down $400,000 compared with August 2019 and 37.7% below the forecast.

The previous fiscal year (July 2019-June 2020) ended with $369.4 million in net available revenue more than expected. Fiscal year 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. Gross revenue in the previous fiscal year was $6.967 billion, 2.5% below fiscal year 2019, but up $272.5 million more than the forecast.

OTHER REVENUE SOURCES
Tobacco
July-August 2020: $39.6 million
July-August 2019: $40 million

Alcoholic beverages
July-August 2020: $11.9 million
July-August 2019: $10.7 million

Games of skill
July-August 2020: $5.1 million
July-August 2019: $8.4 million

Insurance
July-August 2020: $20 million
July-August 2019: $20.4 million