One-time gains boost state revenue in May

Year-to-date revenues for Arkansas broke above the forecast in May but the state’s revenue for the first 11 months of the fiscal year is down $136.6 million compared to the 2009 period.

The Arkansas Department of Finance and Administration reported Wednesday (June 2) that year-to-date gross general revenues at the end of May totaled $4.924 billion, down 2.7% from the same period in 2009, but up 0.8% above budget forecasts.

May gross revenues totaled $401.4 million, an increase of $18.8 million or 4.9% from last year and 10.1% above forecast. However, the May gains are not directly attributable to economic improvement.

“A combination of one-time effects boosted collections in May,” DFA officials noted in a statement. “These consisted of a positive, monthly payroll timing shift in individual withholding income tax and non-recurring collections in Corporate Income tax. Lower income tax refunds in individual and corporate returns were also contributing factors for exceeding forecast in May.”

Year-to-date gross receipts collections — primarily sales and use taxes — are $1.816 billion, down $122.4 million, or 6.3% below the 2009 period. The collections are 0.3% above forecast.

The May gross receipts collections could be the source for those looking for a ray of positive economic light. May collections of the sales and use taxes — a decent gauge of consumer spending/confidence — totaled $164.3 million, up 0.3% compared to May 2009.

Lower tax revenue has forced Gov. Mike Beebe to make several budget adjustments during the state’s fiscal year (July-June).

An unexpected dip in April tax collections caused Gov. Beebe to shift $41 million in state funds, including using $17.4 million in a “rainy-day fund,” to keep state agencies and universities financially secure for the remaining two months of the state’s fiscal year.

Beebe also pushed two rounds of state budget cuts that total more than $200 million. Beebe on Oct. 20 initiated planned cuts of $100 million after collections were down 7.2% for the first three months of the fiscal year, and announced Jan. 11 cuts of $106 million.