Arkansas tax revenue almost 10% above forecast in October report

by Michael Tilley ([email protected]) 464 views 

It’s the same song, different month, with respect to strong state tax collections. Arkansas’ tax revenue in the first four months of the fiscal year (July-October 2022) was $2.791 billion, up 7.8% above the same period in 2021 and 9.5% above the forecast.

State tax coffers ended the previous fiscal year in June with a $1.62 billion surplus.

Individual income tax revenue in the first four months was $1.234 billion, up 7.3% compared to the same period in 2021 and 6.6% above the budget forecast, according to Wednesday’s (Nov. 2) report from the Arkansas Department of Finance and Administration (DFA). The report said the net available revenue – surplus – at the end of the first four months was $224 million.

Sales and use tax revenue in the first four months was $1.132 billion, up 10% compared with the same period in 2021 and up 8.5% above the forecast. Corporate income tax revenue in the first four months was $245.5 million, up $18.3 million compared to the same period in 2021 and 41.6% above the forecast.

“Individual and Corporate Income Tax collections accounted for $40.3 million of the gain above forecast, largely in Final Return Payments tied to extension filers. This gain was partly offset by Income Tax Refunds running $15.7 million over the forecast. Sales tax collection growth was broad-based across reporting sectors,” John Shelnutt, DFA administrator of economic and tax research, noted in Wednesday’s report.

OCTOBER COLLECTIONS
October revenue was $710.7 million, 11.9% more than October 2021 and 10.2% above forecast. October individual income tax revenue was $354.1 million, up 14% compared to October 2021 and 10% above forecast. October sales and use tax was $283.1 million, up 11.6% compared with October 2021 and 8.8% above forecast. The corporate income tax revenue in October was $38.6 million, up $2.5 million compared to October 2021 and $8 million above forecast.

“Sales Tax collection remains particularly strong across the state with double-digit percentage gains over October 2021. All major revenue categories are above forecast and exceed last year in a testament to broad-based expansion going into the holiday shopping season,” Larry Walther, secretary of the Arkansas Department of Finance and Administration, said in a statement.

Inflation is also a driver of increased tax revenue. The September Consumer Price Index, posted on Oct. 13 by the U.S. Bureau of Labor Statistics, reported that all indexed items were up 8.2% compared with September 2021. The index was slightly lower than the 8.3% in the August report.

Total tax revenue in fiscal year 2022 (October 2021-June 2022) was $8.773 billion, up 8% – or $651.2 million – compared with a robust fiscal year 2021 in which the tax surplus was $945.7 million.

OTHER REVENUE SOURCES
Tobacco
July-October 2022: $71.5 million
July-October 2021: $75.6 million

Alcoholic beverages
July-October 2022: $25.2 million
July-October 2021: $25.3 million

Games of skill
July-October 2022: $16 million
July-October 2021: $13.8 million

Insurance
July-October 2022: $24.6 million
July-October 2021: $23.1 million