May Tax Collections Down 3.4% From Last Year, Above Forecast

State tax officials said Tuesday that Arkansas’ May net available general revenue was $365.8 million, down 3.4% from the same month last year and 28.3% above forecast.

Year-to-date net available general revenue was $5.16 billion, down 2% year-over-year and 5.9% above forecast. 

More: See the full May revenue report here.

All major categories of revenue collections in May were above forecast, which was revised on March 23 because of the COVID-19 pandemic. Most were down from a year ago because some businesses were closed in April.

John Shelnutt, the state’s economic forecaster, told Arkansas Business the report was good for a variety of reasons.

“It’s difficult to boil it down, to simplify it,” he said. “But there were a number of different stories here.”

Individual income tax collections totaled $235.4 million, up 1.3% year-over-year and 25.9% above forecast. Tax payments were better than expected, considering the deadline shifted from April 15 to July 15, according to the report. Refunds were also less than expected.

Payroll withholding tax was down 3.4% compared to a year ago, and the state expected to see about a 14% decline, Shelnutt said.

Sales and use tax collections totaled $205.7 million, down 2.8% from a year ago and 8.5% above forecast. The retail and motor vehicle sales categories saw better than expected gains. Shelnutt said officials were expecting the decline from last year to be about 10%.

He also said Arkansas did better than its neighbor, Texas, which saw sales tax revenue in May decline by about 13% year-over-year. Shelnutt said that decline is also much more serious for Texas because it has a lower income tax and is much more dependent on the sales tax revenue, while Arkansas has a broader revenue base.

Corporate income tax collections totaled $15.1 million, down 11.5% year-over-year and 11% above forecast.

Shelnutt said corporate income tax collections have been above forecast for a few months, “and that’s really a reflection of how corporations did in the past year, with payments now. It’s not really a real-time measure of what’s going on in the economy, I don’t think, although next month we will see some reflection of what they think their tax liability is for the new tax year for them.”

He added that he thought Arkansas’ May collections were “better than what you’ll see in other states.”