Arkansas tax revenue up almost 10%, available revenue surplus reaches $319 million

Tax revenue continues to post solid gains considering that Arkansas’ economy still struggles under the weight of COVID-19. Gross revenue for the first six fiscal months (July-December) is up almost 10% compared with the same period in 2019, down from 12% through the first five months.

The Arkansas Department of Finance and Administration (DFA) reported Tuesday (Jan. 5) that gross revenue for fiscal year-to-date is $3.697 billion, up 9.5% compared with the same period in 2019 and up 10.4% over the budget forecast. Tuesday’s report also showed a fiscal year-to-date revenue surplus – “net available revenue” collected beyond what was estimated – of $319.4 million.

Individual income tax revenue was $1.771 billion in the first six fiscal months, up 11.1% compared to the same period in 2019 and up 10.3% over the budget forecast. Sales and use tax revenue – an indicator of consumer spending – during the first six months was $1.392 billion, up 7.9% compared with the same period in 2019 and up 8.5% above budget forecast.

Corporate income tax revenue during the first six months of the fiscal year was $263.7 million, up $36.1 million compared with the same period in 2019, and up 28.1% from the budget forecast.

John Shelnutt, DFA director of economic analysis and tax research, again cited consumer spending for some of the ongoing revenue gains.

“All major collection categories were above forecast in December. Individual Income Tax was above forecast by $19.9 million, with Payroll Withholding Tax running ahead of projections. Sales tax collections were above forecast by $5.2 million, with continued gains in retail and vehicle sales. Corporate income tax collections were $18.3 million above forecast led by estimated payments,” Shelnutt noted in his memo.

DECEMBER REVENUE
Gross revenue in the month totaled $605.3 million, down 1.4% compared with December 2019, and 7.6% above the forecast.

Individual income tax revenue totaled $249.7 million in December, down 9.8% compared with December 2019, and 8.7% above the forecast. Sales and Use tax revenue in December totaled $229.7 million, up 2.1% compared with December 2019 and up 2.3% above the forecast. Corporate income tax revenue was $90.5 million in December, up $16.4 million compared with December 2019, and 25.4% above 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-December 2020: $116.3 million
July-December 2019: $110.4 million

Alcoholic beverages
July-December 2020: $33.8 million
July-December 2019: $30.6 million

Games of skill
July-December 2020: $15.3 million
July-December 2019: $19.1 million

Insurance
July-December 2020: $46.2 million
July-December 2019: $45.6 million