Arkansas’ tax revenue surplus estimated to be $1.03 billion

Arkansas’ fiscal year-to-date (July 2022-May 2023) tax revenue is up 0.4% compared with the same period in the previous fiscal month, and the revised budget indicates the state will end the fiscal year in June with a $1.03 billion surplus.

It will be the third consecutive year for a budget surplus near or more than $1 billion if the estimate holds true. Total tax revenue in fiscal year 2022 (July 2021-June 2022) was $8.773 billion, up 8% – or $651.2 million – and the budget surplus was $1.628 billion. The surplus in the fiscal year that ended June 2021 was $945.7 million.

Tax revenue in the first 11 fiscal months of the year (July 2022-May 2023) totaled $7.898 billion, up 0.4% compared with the same period in the previous fiscal year and up 0.3% over the forecast, according to a report posted Friday (June 2) by the Arkansas Department of Finance and Administration (DFA). DFA officials said they revised the fiscal year budget forecast on May 17.

Individual income tax revenue in the first 11 months of the fiscal year was $3.602 billion, down 6% compared to the same period in 2021-2022, and 0.3% above the budget forecast. Sales and use tax revenue in the first 11 months was $3.105 billion, up 8.3% compared with the same period in the previous fiscal year and up 0.4% above the forecast. Corporate income tax revenue in the first 11 months was $720.2 million, up $16.5 million compared to the same period in 2021-2022, and 0.2% below the forecast.

“Monthly revenue results were above forecast in Individual Income Tax and Sales Tax, while Corporate Income Tax was marginally below forecast in a minor collection month for that category. Individual Income Tax collections were above forecast in all components, including Payroll Withholding. Sales Tax collections increased with broad-based gains compared to year ago and forecast,” John Shelnutt, DFA administrator of economic and tax research, noted in Friday’s report.

Tax revenue in May totaled $585.8 million, down 9.2% compared with May 2022, and up 4.5% compared with the budget forecast.

May individual income tax revenue was $250.4 million, down 17.5% compared with May 2022 and 4.5% above the forecast. Shelnutt said payroll withholding tax revenue was down 9.6% compared with May 2022 “due to payday timing differences.”

May sales and use tax was $291.7 million, up $11.4 million compared with May 2022, and 5% above forecast. Corporate income tax revenue in May was $8.1 million, down $36.8 million compared with May 2022 and $1.5 million below forecast.

“Revenue collections remain on track after upward revision of the Official Revenue Forecast on May 17th. Sales tax and individual income tax continue to outperform the forecast in a strong state economy,” Larry Walther, secretary of the Arkansas Department of Finance and Administration, said in a statement.

OTHER REVENUE SOURCES
Tobacco
July 2022-May 2023: $187.9 million
July 2021-May 2022: $196.8 million

Insurance
July 2022-May 2023: $83 million
July 2021-May 2022: $78.2 million

Alcoholic beverages
July 2022-May 2023: $67.6 million
July 2021-May 2022: $66.3 million

Games of skill
July 2022-May 2023: $48.8 million
July 2021-May 2022: $41.3 million