MAY 2024 REVENUE REPORT
MAY STATE SURPLUS GROWS WHILE SALES TAX SLOWS
The Arkansas Department of Finance and Administration (DFA) reported today that revenue collections in May added $4.9 million to the $708.1 million state surplus, which was just announced in their May 15, 2024 forecast revision. However, May Sales and Use Tax collections were $6 million, or 2.1%, less than actually collected last year and $8.8 million, or 3%, less than DFA had forecast for the month.
Individual Income Tax collections continued to exceed expectations after recent tax cuts. Collections were only $2.5 million, or 1%, below last year but were above forecast by $5.8 million, or 2.4%. DFA stated that Individual Withholding Tax decreased by $1.4 million, while the remainder of the Income Tax collections decreased by $1.1 million from last year. Individual Income Tax Refunds were down $69.6 million from last year and $0.9 million higher than forecast, as recent tax cuts are now fully implemented in tax withholding systems.
Corporate Income Tax collections were $17.8 million higher than last year and exceeded the forecast by $8 million.
May Sales and Use Tax collections were below both forecast and actual collections due to two major factors. The manufacturing reporting sector was below last year by $4.1 million. May last year reflected extraordinary growth in Sales and Use Tax from the manufacturing sector, which seems to be slowing. Additionally, a technical decrease from a tax holding fund reduced the total by $5.5 million. After accounting for these two items, total Sales and Use Tax collections for May have less significance for future collections.
As Governor Sanders and the Legislature are poised to decrease income taxes with new legislation this month, collections continue on track to support their plan. All local economic indicators are pointing to continued employment growth to support tax collections. If conservative budgeting and revenue forecasting continue, there should be room for more tax cuts. It seems only a national economic downturn could interrupt the state's continued financial success.
The May 2024 revenue report may be viewed and downloaded here.
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