Arkansas tax revenue almost 10% above forecast in October report

It’s the same song, different month, with respect to strong state tax collections. Arkansas’ tax revenue in the first four months of the fiscal year (July-October 2022) was $2.791 billion, up 7.8% above the same period in 2021 and 9.5% above the forecast.

State tax coffers ended the previous fiscal year in June with a $1.62 billion surplus.

Individual income tax revenue in the first four months was $1.234 billion, up 7.3% compared to the same period in 2021 and 6.6% above the budget forecast, according to Wednesday’s (Nov. 2) report from the Arkansas Department of Finance and Administration (DFA). The report said the net available revenue – surplus – at the end of the first four months was $224 million.

Sales and use tax revenue in the first four months was $1.132 billion, up 10% compared with the same period in 2021 and up 8.5% above the forecast. Corporate income tax revenue in the first four months was $245.5 million, up $18.3 million compared to the same period in 2021 and 41.6% above the forecast.

“Individual and Corporate Income Tax collections accounted for $40.3 million of the gain above forecast, largely in Final Return Payments tied to extension filers. This gain was partly offset by Income Tax Refunds running $15.7 million over the forecast. Sales tax collection growth was broad-based across reporting sectors,” John Shelnutt, DFA administrator of economic and tax research, noted in Wednesday’s report.

OCTOBER COLLECTIONS
October revenue was $710.7 million, 11.9% more than October 2021 and 10.2% above forecast. October individual income tax revenue was $354.1 million, up 14% compared to October 2021 and 10% above forecast. October sales and use tax was $283.1 million, up 11.6% compared with October 2021 and 8.8% above forecast. The corporate income tax revenue in October was $38.6 million, up $2.5 million compared to October 2021 and $8 million above forecast.

“Sales Tax collection remains particularly strong across the state with double-digit percentage gains over October 2021. All major revenue categories are above forecast and exceed last year in a testament to broad-based expansion going into the holiday shopping season,” Larry Walther, secretary of the Arkansas Department of Finance and Administration, said in a statement.

Inflation is also a driver of increased tax revenue. The September Consumer Price Index, posted on Oct. 13 by the U.S. Bureau of Labor Statistics, reported that all indexed items were up 8.2% compared with September 2021. The index was slightly lower than the 8.3% in the August report.

Total tax revenue in fiscal year 2022 (October 2021-June 2022) was $8.773 billion, up 8% – or $651.2 million – compared with a robust fiscal year 2021 in which the tax surplus was $945.7 million.

OTHER REVENUE SOURCES
Tobacco
July-October 2022: $71.5 million
July-October 2021: $75.6 million

Alcoholic beverages
July-October 2022: $25.2 million
July-October 2021: $25.3 million

Games of skill
July-October 2022: $16 million
July-October 2021: $13.8 million

Insurance
July-October 2022: $24.6 million
July-October 2021: $23.1 million