Arkansas tax revenue declines fiscal year-to-date, but 9.5% above forecast

Arkansas tax revenue for the first two months of the fiscal year (July-August 2021) is down almost 11% compared to the same period in 2020, but is 9.5% above budget estimates. The decline is primarily the result of a tax deadline shift in 2020.

Revenue in the first two months was $1.888 billion, down 10.7% compared with the 2020 period, according to Thursday’s (Sept. 2) report from the Arkansas Department of Finance and Administration (DFA).

Arkansas ended fiscal year 2021 (August 2020 – June 2021) with a revenue surplus of $945.7 million thanks in part to the COVID-19 induced shift in a tax filing deadline from June to August that pushed some of fiscal 2020 income tax payments into 2021.

Individual income tax revenue in the first two fiscal months of 2021 was $506.8 million, down 26.1% from the same period in 2020, but 12.5% above the budget estimate.

“Tax due date shift accounts for the disparity against year ago levels while Individual Return payments and Payroll Withholding collections account for the gains above forecast,” John Shelnutt, DFA director of economic analysis and tax research, noted in the report.

Sales and use tax revenue, an indicator of consumer spending, was $516.6 million in the first two months up 9.3% compared with the 2020 period and up 6.5% over the budget forecast. Shelnutt said collections from motor vehicle sales tax were up 2.5% from last year.

“Most major reporting sectors of Sales Tax displayed high growth over the prior year, reflecting continuing economic expansion in many sectors and rebound from later recovery in service sectors and restaurants,” Shelnutt wrote.

Corporate income tax revenue totaled $51.1 million, down $5.4 million compared with the same period in 2020 and $11.1 million above the budget forecast.

AUGUST REVENUE
Gross revenue in August was $588.6 million, up 4.2% compared with August 2020 and 9.7% above forecast. Individual income tax revenue was $265.1 million, up 8% over August 2020 and 12% above the budget forecast.

Sales and use tax revenue in August was $256.5 million, up 8.6% compared with August 2020 and 5.9% above the forecast. Corporate income tax revenue was $11.2 million, up $7.5 million compared with August 2020 and $3.2 million above the forecast.

OTHER REVENUE SOURCES
Tobacco
July-August 2021: $38.7 million
July-August 2020: $39.6 million

Alcoholic beverages
July-August 2021: $13.7 million
July-August 2020: $11.9 million

Games of skill
July-August 2021: $7.1 million
July-August 2020: $5.1 million

Insurance
July-August 2021: $20.9 million
July-August 2020: $20 million