LITTLE ROCK — Arkansas’ revenue was up in December but short of expectations, state officials said Tuesday.
General revenue totaled $439.5 million, an increase of $10.2 million or 2.4 percent compared with December a year ago, said the Department of Finance and Administration’s monthly report.
But that was below the state’s forecast by $20.3 million or 4.4 percent.
The 2011 legislative session starting Monday will, among other things, enact a budget for the state for fiscal 2012, but Richard Weiss, director of the department, emphasized that overall state revenue is “pretty much right on” with the forecast.
Weiss said the latest numbers give him no reason to think that Gov. Mike Beebe can’t go ahead with his plan to cut the grocery tax by one half a percentage point.
“We’re on track,” Weiss said.
“The economic factors are still strong,” Weiss said. “This gives us a lot of confidence in the forecast.Outside of a blip in corporate income tax, which we may or may not make up, we’re still doing pretty well.”
Weiss cited increases in gross receipts tax collections, which are mostly sales tax, and in income tax withholdings which employers remit to the state from employees’ paychecks.
The total state budget amounts to about $24 billion a year, of which general revenue accounts for about $5 billion. The rest is from federal taxes, special revenue (such as the tax on gasoline), cash funds (higher education tuition and fees being a major source), and others.
Individual income-tax collections for December totaled $187.5 million, an increase of $8.8 million or 5 percent from December a year ago and $1.2 million or 0.6 percent above forecast.
The largest category of individual income tax is “withholding” and that part was above forecast by $15.2 million or 9.8 percent and above year ago levels by 10.9 percent. This category reflects employment levels and salary levels.
Gross receipts collections were $171.8 million, an increase of $11.9 million or 7.4 percent above last year, the seventh straight month of growth in that category. This category is a sign of such economic activity as consumer spending and purchases by businesses.
Revenue Commissioner Tim Leathers said the drop for the month was mostly related to corporate income- tax collections being $52.3 million. This is $11.2 million or 17.6 percent below December a year ago and $20.5 million or 28.2 percent below forecast.
Corporate income tax amounts have a history of swinging significantly from month to month.
Beebe’s tax-cut plan is projected to reduce state revenue in 2012 by $20.8 million, including special revenue. The general revenue loss would be $15.5 million.
Some legislators support the governor’s plan while others prefer to cut other taxes or at least want to hear debate on other ideas.
Beebe called the revenue report’s numbers a “mixed bag.”
He said the news about sales and individual income tax was good news and gives cause for optimism for the overall economy.
But he was bothered about the corporate income-tax numbers.
“This is the second time in six months [finance department officials] have missed their projection on corporate [income tax],” Beebe said. “I’m not happy about that. But I understand that corporate is so volatile that companies can choose to make bigger [tax] payments [to the state] at different times. It all kind of washes out at the end of the year. It’s a little disturbing. But overall, it’s OK.”
Beebe also said he still believes the state can afford a further cut to the grocery tax.
During the 2007 session, the Legislature agreed with Beebe’s plan to cut the state’s portion of the grocery tax in half from 6 percent to 3 percent, reducing state revenue by about $90 million a year.
In 2009, the Legislature signed off on Beebe’s plan to cut it to 2 percent, which reduced state revenue by $30 million a year.
Information for this article was contributed by The Associated Press.
Arkansas, Pages 9 on 01/05/2011