Arkansas tax revenue surplus near $550 million; year-to-date collections up 7.5%

Tax revenue through the first nine months of Arkansas’ fiscal year is up 7.5%, and the fiscal year-to-date revenue surplus – “net available revenue” collected beyond what was estimated – totaled $549.9 million.

The Arkansas Department of Finance and Administration (DFA) reported Friday (April 2) that gross revenue for fiscal year-to-date (July 2020 to March 2021) is $5.482 billion, up 7.5% compared with the same period in 2019-2020 and up 11.3% over the budget forecast. Part of the gain includes a shift in collections when the 2020 tax due date was moved from April to July, according to the DFA report.

Individual income tax revenue was $2.697 billion in the first nine fiscal months, up 7.3% compared to the same period in 2019-2020 and up 12% over the budget forecast. Sales and use tax revenue – an indicator of consumer spending – during the first eight months was $2.064 billion, up 7.7% compared with the same period in 2019 and up 8.6% above budget forecast.

Corporate income tax revenue during the first nine months of the fiscal year was $344.4 million, up $39.4 million compared with the same period in 2019-2020, and up 26.6% from the budget forecast.

MARCH REVENUE
Gross revenue in the month totaled $569.7 million, down 0.1% compared with March 2020, and 9.3% above the forecast.

Individual income tax revenue totaled $286.5 million in March, down 1.1% compared with March 2020, and 13.5% above the forecast. The decline is largely attributed to late e-filing of taxes resulting from tax law changes approved by Congress and associated changes in refund timing, according to the DFA report.

“Individual refunds were $30.6 million above forecast in March after falling behind by $72 million below forecast in February. Additional catchup in return filings and refund processing is expected in April,” John Shelnutt, DFA director of economic analysis and tax research, noted in a memo with the March report.

Shelnutt also said cited other factors that decreased income tax revenue.

“Individual withholding revenue decreased 5.1 percent compared to last year, reflecting tax reductions with withholding formula changes and continued COVID-19 impact on the labor market,” he said.

Sales and Use tax revenue in March totaled $212.7 million, up 2.3% compared with March 2020 and up 3.6% above the forecast. Corporate income tax revenue was $24.3 million in March, down $1.9 million compared with March 2020, and $6.1 million above the forecast.

“Motor vehicle sales tax collections rebounded from adverse weather conditions in the prior month,” Shelnutt explained.

The previous fiscal year (July 2019-June 2020) ended with $369.4 million in net available revenue more than expected. Fiscal year 2020 tax revenue ended down just 2.5% despite several months in early 2020 of economic disruption resulting from COVID-19 shutdowns. The revenue was 4.1% above the revised forecast. Gross revenue in the previous fiscal year was $6.967 billion, 2.5% below fiscal year 2019, but up $272.5 million more than the forecast.

OTHER REVENUE SOURCES
Tobacco
July-March 2020: $166.1 million
July-March 2019: $164.9 million

Alcoholic beverages
July-March 2020: $48.3 million
July-March 2019: $44.4 million

Games of skill
July-March 2020: $23.4 million
July-March 2019: $28.9 million

Insurance
July-March 2020: $65.5 million
July-March 2019: $60.4 million