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Arkansas Year-to-Date Revenue Misses Forecast by $36M

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Arkansas revenue collected during the first four months of the fiscal year was up 1.3 percent from the same period last year, but $36 million below forecast, according to a monthly report compiled by the state Department of Finance and Administration.

The report showed year-to-date net available general revenue at $1.8 billion, up by $22.4 million, or 1.3 percent. But revenue missed forecast by $36 million, or 2 percent.

Finance officials cited several factors for the missed projections, including less than expected totals for corporate income tax and sales tax collections. The state also issued more individual income tax refunds than expected.

“It is a blend of different stories thrown together in one month, and, together, those caused October revenue to be below a year ago, not just forecast,” John Shelnutt, the department’s administrator for economic analysis and tax research, told Arkansas Business.

“October saw an unusual combination of both business-oriented sectors and consumer sectors down together. Of course, the big component of that is retail, and that was slightly negative, which is unusual,” he said. “But the business categories of manufacturing, construction, wholesale — those were all down, and then those categories that were a blend of consumer and business, like utilities, were down significantly.”

October revenue came in at $414.5 million, down $24.5 million, or 5.6 percent, from the same month last year and $38.5 million, or 8.5 percent, below forecast.

October sales tax collections, at $191 million, were below forecast by $15.9 million. The report attributed the decline to a drop in business spending, weak consumer categories and lower utility bills from cooler weather over the summer. 

Individual income tax collections came in at $254.4 million, down $1.7 million from the same month last year but exceeding forecast by $1.1 million. Corporate income tax collections were $21.3 million, down $19.7 million, or 48 percent, from the same month last year, and down $17.2 million, or 45 percent, from forecast.  

Shelnutt said he believes much of October’s results were one-time occurrences. 

“We have some evidence of some recovery in corporate income going forward, not enough to make up for this shortfall, but some stability ahead … We’re watching to see if some of these come back to a normal rate of growth,” he said.

Shelnutt also said collections from consumers had shifted and may have been conducted in September instead of last month, but he doesn’t expect that to continue. He said the above-forecast individual income tax is a good economic indicator.

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