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Arkansas Ends Fiscal Year with $191M Surplus

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Arkansas ended the fiscal year with a surplus of $191.6 million, according to data released Thursday by the state Department of Finance & Administration.

Net available general revenue for fiscal 2015 totaled $5.25 billion, up $228 million, or 4.5 percent, from a year ago. 

John Shelnutt of DFA’s Economic Analysis & Tax Research Division credited the revenue increase to “improving growth in gross revenue collections and lower-than-expected payouts from income tax refunds and other deductions.”

More: Get the full fiscal 2015 and June report.

Michael Pakko, chief economist and state economic forecaster for the Institute for Economic Advancement at the University of Arkansas at Little Rock, said he viewed the year-end summary as a positive indicator of the current state of Arkansas’ economy.

“After several years of sluggish employment growth following the 2008-09 recession, we saw a solid increase in job growth in the latter part of calendar year 2014,” he said. “This had a positive impact on incomes and consumer spending, and hence the growth in income tax and net sales tax receipts.”

Pakko said state sales tax receipts showed that Arkansas consumers remained cautious for much of the fiscal year compared to U.S. retail sales statistics.

“But the recent acceleration reflects the recent improvement in economic conditions,” he said.

According to the report, the state benefitted from one-time collections of $51.1 million from the state Insurance Department and $14.4 million from the state attorney general’s office.

For the fiscal year that ended Tuesday, sales and use tax collections reached about $2.2 billion, an increase of $24.6 million, or 1.1 percent, over fiscal 2014. Those collections came in $14.9 million, or 0.7 percent, below forecast. 

In the report, Shelnutt said growth in sales tax collections accelerated in the final quarter of the fiscal year, but the category was also hit with a one-time refund in sales tax on sand and other proppants used in hydraulic fracturing for natural gas. 

The refund came after the state Supreme Court ruled 4-3 in June that state finance officials were wrong to collect more than $1.3 million in taxes from a Texas company on sand used in natural gas drilling. As a result, the state refunded $28.7 million in tax collections.

Pakko said his calculations suggested that sales tax receipts would have shown an increase of 2.5 percent even without the one-time refund related to hydraulic fracturing.

For June, net available general revenue totaled $587 million, 8.9 percent above last year and $58.9 million, or 11.2 percent, above forecast.

June highlights include:

  • Individual income tax collections of $279.5 million, down 2.6 percent but exceeding the June forecast by 17.8 percent.
  • June individual income tax returns totaled $32.3 million, an increase of 116 percent over a year ago.
  • Corporate income tax collections in June were $80.3 million, up 21 percent from 2014 and 21 percent above forecast.
  • Corporate income tax refunds for June came in at $1.9 million, down from $9 million a year ago.
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