Sales tax revenue helps push overall Arkansas tax collections up 5.6%

Continued “high growth” in sales tax revenue helped push Arkansas’ fiscal year-to-date (July-November) tax collections to $2.971 billion, up 5.6% compared with the same period in 2021. The revenue is 0.4% above a forecast revised in November.

Individual income tax revenue in the first five months of the fiscal year was $1.479 billion, up 4.1% compared to the same period in 2021, and 0.1% above the budget forecast, according to Friday’s (Dec. 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 five months was $12.3 million. The surplus is well below the $224 million at the end of October because of the budget revision.

“The Official (Annual) General Revenue Forecast was revised on November 10th to reflect tax cuts from the special session of 2022 and updated economic assumptions. Monthly forecast values for all revenue categories were reset in the second half of the month to reflect expected change in monthly collection patterns in reaching the expected annual endpoint for collections on June 30th and the indicated surplus of $598.1 million,” John Shelnutt, DFA administrator of economic and tax research, noted in Friday’s report.

Sales and use tax revenue in the first five months was $1.401 billion, up 15.4% compared with the same period in 2021 and up 1.9% above the forecast. Corporate income tax revenue in the first five months was $255.4 million, up $20.3 million compared to the same period in 2021, and 1.3% million above the forecast.

NOVEMBER NUMBERS
November revenue was $581.2 million, 1% lower than November 2021 and 2.9% above forecast. November individual income tax revenue was $245.5 million, down 9.4% compared to November 2021 and 0.5% above forecast. November sales and use tax was $268.9 million, up 7% compared with November 2021, and 4.5% above forecast. Corporate income tax revenue in November was $10 million, down $2 million compared to November 2021 and $3.2 million above forecast.

“Collections were above monthly forecast levels by $11.6 million or 4.5 percent. Most major reporting sectors of Sales Tax displayed high growth over the prior year, reflecting continuing economic expansion in many sectors. Motor vehicle sales tax collections were down -2.6 percent from year ago November,” Shelnutt noted in his report.

While it is declining, inflation continues to impact tax revenue. The October Consumer Price Index, posted Nov. 10 by the U.S. Bureau of Labor Statistics, reported that all indexed items were up 7.7% compared with October 2021. The index was lower than the 8.2% in the October report.

Total tax revenue in fiscal year 2022 (November 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. State tax coffers ended the previous fiscal year in June with a $1.62 billion surplus.

OTHER REVENUE SOURCES
Tobacco
July-November 2022: $87.7 million
July-November 2021: $94.2 million

Alcoholic beverages
July-November 2022: $31.1 million
July-November 2021: $30.8 million

Games of skill
July-November 2022: $19.7 million
July-November 2021: $17.5 million

Insurance
July-November 2022: $48.9 million
July-November 2021: $47.5 million