Arkansas’ available tax revenue surplus just under $1 billion

Arkansas’ net available fiscal year-to-date revenue surplus is $987.9 million thanks in large part to record business and individual income tax payments in April. The fiscal year (July 2021 to April 2022) income tax is 24% higher than the same period in the previous fiscal year.

The fiscal year-to-date revenue is $7.224 billion, up 12.3% compared with the same period in 2021 and up 16.7% above forecast, according to Tuesday’s (May 3) report from the Arkansas Department of Finance and Administration (DFA).

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 April that pushed some of fiscal 2020 income tax payments into 2021.

Individual income tax revenue in the first 10 fiscal months was $3.529 billion, up 11.4% from the same period in the previous fiscal year, and 24% above the budget estimate. Sales and use tax revenue, an indicator of consumer spending, was $2.607 billion in the first 10 months, up 10.8% compared with the previous fiscal year and 5.5% over the budget forecast. The income has generated $681.9 million of the year-to-date surplus.

“Income Tax Collections benefited from high growth in payments from final returns and extensions. Estimated payments on representing the first payment on Tax Year 2022 liabilities also exceeded forecast,” John Shelnutt, DFA administrator of economic and tax research, noted in the report. “Sales Tax collections were below year ago and above forecast, reflecting adverse comparison with the surge in consumption last year but better than expected compared to forecast because of current economic conditions.”

Shelnutt said the motor vehicle sales tax was down 24.1% in April compared to a “spike in vehicle sales and collections last April.”

Fiscal year-to-date corporate income tax revenue totaled $658.7 million, up $162.4 million compared with the previous fiscal year and 43.1% above the budget forecast.

APRIL REVENUE
Gross revenue in April was $1.125 Billion, up 44.3% compared with April 2021 and 89.6% above forecast. Individual income tax revenue was $810.8 million, up 72.2% over April 2021 and 99.6% above the budget forecast.

“Income tax payments from both individuals and businesses significantly exceeded expectations in April,” DFA Department Secretary Larry Walther noted in a statement. “This made April the largest month of collection in state history. Additionally, growth in payroll withholding tax indicates a strong labor market across the state. Overall, we continue to see stronger-than-expected economic growth compared to projections.”

Sales and use tax revenue in April was $271.5 million, down 6% compared with April 2021 and 12.3% above the forecast. Corporate income tax revenue was $210 million, up $58.2 million compared with April 2021 and $136.8 million above forecast.

OTHER REVENUE SOURCES
Tobacco
July 2021-April 2022: $178.9 million
July 2020-April 2021: $187 million

Alcoholic beverages
July 2021-April 2022: $59.4 million
July 2020-April 2021: $54.4 million

Games of skill
July 2021-April 2022: $36.4 million
July 2020-April 2021: $29 million

Insurance
July 2021-April 2022: $76.9 million
July 2020-April 2021: $65.7 million