Arkansas’ fiscal year-to-date tax revenue surplus tops $290 million

An improving economy for hotels and restaurants and increased motor vehicle sales helped push Arkansas’ tax revenue up 7.1% in February, with year-to-date (July 2021 to February 2022) revenue up 6% to $5.206 billion.

The fiscal year-to-date revenue is also up 8.9% above the budget forecasts, according to Wednesday’s (March 2) report from the Arkansas Department of Finance and Administration (DFA). The fiscal year-to-date gain results in $293.8 million for the state above the budget expectation.

“Revenue growth in February beat expectations while refund claims have started to ramp up in the current income tax filing season,” DFA Department Secretary Larry Walther noted in a statement. “Year-to-date revenue growth remains elevated in key categories. As a sign of wage growth across Arkansas, gains in payroll withholding tax were higher than expected. This follows stage one implementation of the largest income tax cut in state history on January 1.”

Arkansas ended fiscal year 2021 (July 2020 – June 2021) with a revenue surplus of $945.7 million thanks in part to the COVID-19 induced shift in a tax filing deadline from June to February that pushed some of fiscal 2020 income tax payments into 2021.

Individual income tax revenue in the first eight fiscal months was $2.406 billion, down 0.2% from the same period in the previous fiscal year, but 8.9% above the budget estimate. John Shelnutt, administrator of economic and tax research at the Arkansas Department of Finance and Administration, said the revenue picture is still being impacted by previous changes in tax filing deadlines.

“Tax due date shifts account for the disparity against year-ago levels while Estimated Payments and Payroll Withholding account for most of the current gains above forecast,” he noted in the revenue report.

Sales and use tax revenue, an indicator of consumer spending, was $2.052 billion in the first eight months up 10.9% compared with the previous fiscal year and 2.6% over the budget forecast. The sales and use tax has generated $200.9 million of the year-to-date budget surplus.

Fiscal year-to-date corporate income tax revenue totaled $408.2 million, up $88.2 million compared with the previous fiscal year and $35.7 million above the budget forecast.

FEBRUARY REVENUE
Gross revenue in February was $528.5 million, up 7.1% compared with February 2021 and 13.4% above forecast. Individual income tax revenue was $264.8 million, up 11.1% over February 2021 and 26.8% above the budget forecast.

Sales and use tax revenue in February was $228.2 million, up 2.9% compared with February 2021 and 2.3% above the forecast. Corporate income tax revenue was $7 million, up $1.7 million compared with February 2021 and $100,000 below forecast.

OTHER REVENUE SOURCES
Tobacco
July 2021-February 2022: $144.4 million
July 2020-February 2021: $147.4 million

Alcoholic beverages
July 2021-February 2022: $47.6 million
July 2020-February 2021: $43.8 million

Games of skill
July 2021-February 2022: $27.7 million
July 2020-February 2021: $21 million

Insurance
July 2021-February 2022: $51.4 million
July 2020-February 2021: $48.2 million