Arkansas' sales tax collections surged in May as the state's individual income tax collections dipped

FILE — The state Capitol is shown in this undated file photo.
FILE — The state Capitol is shown in this undated file photo.

Arkansas’ general revenue collections in May dropped by $59.6 million from the same month a year ago to $585.8 billion, but beat the state’s May 17 forecast by $25.5 million.

The state's sales and use tax collections surged in May, increasing by $29.9 million over a year ago to $291.7 million and exceeding the state's forecast by $13.8 million, the state Department of Finance and Administration said Friday in its monthly revenue report.

The state's individual income tax collections in May decreased from a year ago by $53.2 million to $250.4 million, but outdistanced the state's forecast by $11.8 million,

The decline in individual income tax collections in May compared with a year ago is the result of a combination of tax cuts enacted by the Legislature, one fewer Friday payday in May compared to a year ago and unusual income tax collection gains a year ago, said John Shelnutt, the chief economic forecaster for the state Department of Finance and Administration.

The May revenue report shows a stronger economy than forecast, Shelnutt said.

Tax refunds and some special government expenditures are taken off the top of total general revenue collections, leaving a net amount that state agencies are allowed to spend up to their maximum distribution under the state’s Revenue Stabilization Act.

The state’s net general revenue in May fell by $119.8 million below the same month a year ago to $392.9 million, but exceeded the state’s latest forecast by $18.5 million.

May is the eleventh month of fiscal 2023, which started July 1 and ends June 30.

During the first eleven months of fiscal 2023, the state’s total general revenue collections increased by 28.9 million over the same period in 2022, to $7.8 billion, and exceeded the state’s latest forecast by $25.5 million.

So far in fiscal 2023, the state’s net general revenue has dropped by $282.9 million, from the same period in fiscal 2022, to $6.4 billion, but has outdistanced the state’s latest forecast by $18.5 million.

In the 2022 fiscal session, the General Assembly and then-Gov. Asa Hutchinson authorized a general revenue budget of $6.02 billion for fiscal 2023 — up by $175.1 million from fiscal year 2022’s general revenue budget, with most of the increase going to public schools and human service programs.

On May 17, the finance department revised its general revenue forecast for fiscal year 2023, fiscal year 2024 and fiscal year 2025.

The department is now projecting a $1.035 billion general revenue surplus at the end of fiscal 2023. Its previous Nov. 10 forecast projected a general revenue surplus of $598.1 million at the end of fiscal 2023.

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