State receipts for August top forecast

Thursday, September 4, 2014

State general revenue in August increased by $14 million over a year ago to $457 million in what the state's chief fiscal officer said reflected the state's slow economic growth.

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A chart and graph showing the chief sources of the state;s general revenue for the first two months of fiscal 2015.

Last month's tax collections exceeded the state's forecast by $13.1 million, said Richard Weiss, director of the Department of Finance and Administration.

"Slow positive growth is good compared to erratic or choppy fits and spurts," he said.

Individual income tax collections surged in August over a year ago, while the sales and use tax collections slipped from August 2013. Overall general revenue collections increased by 3.2 percent from August 2013, the department said in its monthly revenue report.

Tim Leathers, the department's deputy director, said last month's sales and use tax collections would have increased by 3.9 percent over a year ago if the state hadn't collected $13.5 million in one-time collections from tax audits in August 2013. Weiss said the year ago audits involved several large companies whose names he declined to disclose because he is barred by state law from revealing that information.

Individual income taxes and sales and use taxes are state government's two largest sources of general revenue.

Last month's tax collections are a record for August, said Whitney McLaughlin, a tax analyst for the department.

The previous record for the month was $443 million in August 2013.

August is the second month in fiscal 2015, which ends June 30.

Through the first two months of fiscal 2015, state gross general revenue has increased by $17.2 million (1.9 percent) over the same period last fiscal year to $927.8 million, exceeding the state's forecast by $3.8 million (0.4 percent).

Tax refunds and several government expenditures come off the top of "gross" general revenue, leaving a "net" amount that state agencies are allowed to spend.

So far in fiscal 2015, the net has increased by $3.4 million (0.4 percent) over the same period in fiscal 2014 to $801.4 million. That's $2.5 million (0.3 percent) above the state's forecast.

"We're on forecast and feel good about it," Weiss said.

Richard Wilson, an assistant director of research for the Legislative Research Bureau, said August's revenue report didn't include any surprises.

"It looks like it all came in about as expected," he said.

Earlier this year, the Republican-controlled Legislature approved a $5 billion budget for fiscal 2015 that increased projected spending by $109 million over the previous fiscal year with most of the increase allocated to public schools, prisons and human-services programs. That budget includes $85 million in general revenue reductions from tax cuts enacted by the Legislature in 2013 and up to $89 million in savings from the use of federal funds to purchase private health insurance for low-income Arkansans, state officials said.

According to the finance department, August's general revenue included:

• A $19.3 million (10.2 percent) increase in individual income taxes over a year ago to $209.1 million. That exceeded the state's forecast by $8.7 million (4.4 percent).

The state's unemployment rate dropped to 6.2 percent in July from a revised 6.3 percent in June, but the size of the state's labor force continued to decline, the U.S. Bureau of Labor Statistics said last month.

The national unemployment rate was 6.2 percent in July, down from 7.3 percent in July 2013.

• A $6.3 million (3.3 percent) decline in sales and use taxes from a year ago to $188.2 million. That's $2.4 million (1.3 percent) above the state's forecast.

• A $1.9 million (31.9 percent) increase in corporate income taxes from August 2013 to $7.8 million, exceeding the forecast by $1.4 million (22.2 percent). State officials have said corporate income taxes are often volatile, frequently reflecting corporations' federal tax strategies.

• A $1.7 million (8.6 percent) decrease in tobacco tax collections from a year ago to $17.5 million, falling $0.7 million (3.7 percent) below forecast. Monthly changes in tobacco tax collections can be attributed to uneven patterns of tobacco stamp sales to wholesale purchasers, state official said.

A section on 09/04/2014