October Revenue Report
The Arkansas Department of Finance and Administration (DFA) released its report of General Revenue Collections today for the month of October. This is the first monthly report to be released following last month’s forecast revision, which increased the amount of revenue expected to be collected this fiscal year. DFA reported that net general revenue for October exceeded the new forecast by $15.8 million or 0.7%.
Last month’s forecast revision paved the way for providing growth money in future years to offset potential tax cuts as Governor Hutchinson has planned for a special legislative session. The Governor announced this week that a special tax cut session will be delayed until at least after Thanksgiving. The revised forecast and the “trend value” of October collections will be the latest and best collection data for tax cut decisions unless the session is delayed into December.
Year-to-date net general revenues above the new forecast now total $43.6 million or 2.0% above forecast when increased by the overage this month. At this point, revenue is on track to provide a surplus by the end of the fiscal year on June 30, 2022.
DFA reported that net revenue collections are somewhat distorted this month because income tax filing dates were delayed last year, pushing revenue into the early part of the year. This caused revenue collections to exceed last year by $10.4 million or 3.5%.
Sales and use tax collections for October were on track with the new forecast exceeding by $2.4 million or 1%. DFA reported mixed results among sectors, with higher level growth in the areas that experienced later recovery from the COVID-19 economy.
Corporate income tax collections are on track to exceed the revised forecast by $1.9 million.
First month collections are trending with the newly increased forecast. Watch for considerable discussion as to the reliability of the new forecast in a coming special session for tax cuts. Some may argue the forecast is too conservative and could fund more tax cuts in the future, while others may contend the new forecast is overly optimistic and will not support continued growth to fund substantial tax cuts. Get out the crystal balls!
The October 2021 revenue report may be viewed and downloaded here.