State Government Less Reliant on Sales Taxes

by Gwen Moritz  on Monday, Oct. 8, 2012 12:00 am  

Arkansas state government collected $1.474 billion in sales tax in calendar year 2011, the lowest total from the statewide tax on consumer purchases since 2002.

The slump in state sales tax from a peak of $2.182 billion in 2006 has, of course, been by design. As soon as Gov. Mike Beebe took office in 2007, he pushed through his signature legislative initiative: cutting the sales tax on groceries from 6 percent to 3 percent. Additional cuts in the tax on groceries were made in 2009, to 2 percent, and on July 1, 2011, to 1.5 percent.

(Click here for a PDF list of county sales tax receipts for 2011. A spreadsheet version is avaiable for purchase here.)

(Click here for a PDF list of the most popular vehicles registered in Arkansas for model years 2012, 2011 and 2010.)

Meanwhile, city and county governments around the state have become more dependent upon sales taxes. Between January 2011 and January 2013, according to Department of Finance & Administration data, 27 jurisdictions in the state will have voluntarily increased their existing sales taxes, and 13 more enacted sales taxes for the first time.

Meanwhile, only eight cities or counties decreased their local sales tax rates, and this month Twin Groves in Faulkner County bucked the trend by rescinding its sales tax altogether.
DF&A said last week that the state's revenue was ahead of last year's figures and was beating expectations, but officials said they were worried about sales tax collections sliding for the third straight month.

The state's accountants said the state's net available revenue in September totaled $494.7 million, which is $31.9 million above last year and $29.9 million above forecast. The state's revenue for the fiscal year to date, which began July 1, totals $1.2 billion and is ahead of forecast by $42.1 million.

The monthly figures were boosted primarily by individual income tax collections, which were $36.7 million above last year's figures and $29.8 million above forecast. Individual income tax collections for the month totaled $275.5 million.

The gains offset another dip in sales tax collections, which totaled $177.8 million for the month. The collections were $1.2 million below last year and $7.2 million below forecast. It marked the third straight month that sales taxes came in lower than expected, the department said.

"That is an area of concern that we seem to have less spending, taxable spending, going on," said Richard Weiss, the department's director. "Who knows all the reasons for it? Clearly gas prices have been up more than they were the same time last year and all that. Utility bills have been higher ... ."

Revenue officials said they couldn't say how much the sales tax collections were affected by the annual back-to-school sales tax holiday in August. There is a one-month lag in sales tax collection data, so the September figures are the first that would include the holiday. n

(The Associated Press contributed to this report.)



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