Arkansas tax revenue down 2%, year-end surplus estimated at $240.5 million

Tax revenue is down 2% in Arkansas’ fiscal year, with a revised general revenue forecast including an estimated fiscal year-end surplus of $240.5 million, according to a report posted Monday (March 4) by the Arkansas Department of Finance and Administration (DFA).

State tax revenue totaled $5.411 billion in the first eight months (July 2023-February 2024) of the fiscal year, down 2% compared with the same period in the previous fiscal year, and up 0.5% against the revised budget forecast.

Income tax revenue in the first eight fiscal months was $2.356 billion, down 4.7% from the same period in 2023 and 0.4% above forecast. Sales tax revenue in the first eight fiscal months was $2.303 billion, up 2.7% above the same period in 2023 and 0.3% above the forecast. The corporate income tax in the first eight months was $406.8 million, down $57.9 million compared with the 2023 period and $6.1 million above the forecast.

“February revenue collection remained consistent with our revised forecast as we enter the four remaining months of Fiscal Year 2024,” Jim Hudson, Secretary of the Arkansas Department of Finance and Administration, noted in a statement. ”February through March net revenues are historically impacted by tax refunds. This year is no exception, with over 270,000 refunds issued to Arkansas taxpayers.”

FEBRUARY COLLECTIONS
Total revenue in February was $551 million, down 3.7% compared with February 2023, and 4.8% above forecast. Individual income tax revenue in February was $245.8 million, down 6.4% compared with February 2023, and 4.3% above the budget forecast.

Sales and use tax revenue was $258.1 million, flat compared with February 2023 and 2.7% above the forecast.

“Major reporting sectors of Sales Tax displayed mixed results over the prior year. Motor vehicle sales tax collections were up 17.0 percent from year ago. Sales tax collections in the Utilities sector were down 17.9 percent, likely in part to the warmer-than-average weather last December,” the DFA noted in the report.

Corporate income tax revenue was $14.6 million, down $6.5 million compared with February 2023, and $6.1 million above the forecast.

Arkansas ended the previous fiscal year (July 2022-June 2023) with a $1.161 billion tax revenue surplus driven in large part by a more than 8% growth in sales tax collections. Total tax revenue in the fiscal year was $8.85 billion, up 0.9% compared with the previous fiscal year and 1.7% more than the budget forecast.

The fiscal year surplus of $1.161 billion was the third consecutive year of a surplus of near or more than $1 billion. 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.

OTHER TAX REVENUE
Tobacco
July 2023-February 2023: $130.1 million
July 2022-February 2022: $134.9 million

Insurance
July 2023-February 2023: $61.6 million
July 2022-February 2022: $55.9 million

Alcoholic beverages
July 2023-February 2023: $49.3 million
July 2022-February 2022: $48.7 million

Games of skill
July 2023-February 2023: $35.4 million
July 2022-February 2022: $32.4 million