Arkansas tax revenue in first fiscal quarter down 2.6%

Arkansas’ fiscal year-to-date (July 2024-September 2024) tax revenue is down 2.6% compared with the same period in the previous fiscal year. September collections were down 2.3% with the decline primarily from lower sales and use and corporate tax receipts.

Total revenue in the fiscal quarter was $2.003 billion, down 2.6% compared with the same period in the previous fiscal year, but 1% above the budget forecast, the Arkansas Department of Finance and Administration (DFA) reported Wednesday (Oct. 2).

Income tax revenue in the first fiscal quarter was $851.4 million, down 3.5% compared with the same period in the previous fiscal year and 3.9% above the forecast. Sales tax revenue in the quarter was $876.4 million, up 0.6% compared with the same period in the previous fiscal year and 0.6% below the forecast. Corporate income tax collections totaled $129.3 million, $31.3 million below the same period in the previous fiscal year and 6% below the forecast.

Total revenue in September was $783.2 million, 2.3% below September 2023, and 1% above the budget estimate. September income tax revenue was $366 million, up 4.6% compared with September 2023 and 8.1% above the budget forecast.

September sales tax revenue was $279.3 million, down $17.6 million compared with September 2023, and 5.9% below the budget estimate. Corporate income tax revenue in September was $102.3 million, down $17.7 million compared with September 2023 and $3.7 million below the budget estimate.

“September revenue collection was in-line with projections, placing the state $17.7 million above forecast three months into Fiscal Year 2025,” DFA Secretary Jim Hudson said in a statement. “Our state income tax withholding, which increased 6% over September 2023, highlights the continued strength of Arkansas’ labor economy. With September’s results, we remain positive concerning the state’s revenue forecast for the year.”

The DFA report noted that September collections were lower because of a “large economic development investment incentive” refund. Without the one-time refund, the September sales and use tax revenue would have been $6.2 million below forecast.

Budget officials still peg the fiscal year-end surplus at $280.2 million. The estimated surplus will be well below the $698.4 million in the fiscal year that ended June 2024. The state ended the fiscal year before that with a $1.161 billion tax revenue surplus. The surplus of $1.161 billion was the third consecutive year of a surplus of near or more than $1 billion.

OTHER REVENUE SOURCES
Tobacco
July 2024-September 2024: $47.8 million
July 2023-September 2023: $49.7 million

Insurance
July 2024-September 2024: $28.9 million
July 2023-September 2023: $25.2 million

Alcoholic beverages
July 2024-September 2024: $19.8 million
July 2023-September 2023: $19.9 million

Games of skill
July 2024-September 2024: $14.7 million
July 2023-September 2023: $14.1 million