With federal stimulus payments boosting the state's economy, Arkansas' general revenue tax collections in April increased by $260 million, or 37.8%, over the same month a year ago to $947.8 million.
The month's general revenue collections beat the state's April 2, 2020, forecast by $153.3 million, or 19.3%, the state Department of Finance and Administration reported Tuesday in its monthly revenue report.
Gov. Asa Hutchinson said Tuesday that the April revenue report is great news and "reflects the growth we see in all sectors of our economy in the state.
"Our state economy is robust, and our state budget has never been in better shape," the Republican governor said in a written statement.
The state's record general revenue collection for the month of April continues to be the $958.8 million collected in 2019, said Whitney McLaughlin, a tax analyst for the finance department. The state's individual income tax filing and payment deadline was April 15 that year.
The same deadline was extended from April 15 until July 15 in 2020 because of the covid-19 pandemic. This year, that deadline has been extended from April 15 until May 17.
Sales and use tax collections in April exceeded the state's April 2, 2020, forecast by $81.7 million, and corporate income tax collections beat the forecast by $63.2 million, while individual income tax collections were above the forecast by $2.3 million, according to the finance department.
The April 2, 2020, forecast anticipated a recession spawned by the covid-19 pandemic in fiscal 2021.
The state's chief economic forecaster, John Shelnutt, said last month's general revenue collection "demonstrates the V-shaped recovery in most of the state economy, not all."
Tax refunds and some special government expenditures are taken off the top of total general revenue, leaving a net amount that state agencies are allowed to spend.
Net general revenue last month increased by $242.4 million or 45.1% over the same month a year ago to $779.6 million and exceeded the forecast by $166.9 million, or 27.2%.
April is the 10th month in fiscal 2021, which ends June 30, 2021.
During the first 10 months of fiscal 2021, net general revenue increased by $651.7 million, or 13.6%, over the same period in fiscal 2020 to $5.44 billion.
So far in fiscal 2021, the net beat the forecast by $716.8 million, or 15.1%. The results include net collection increases tied to the income tax deadline shift from April 15 to July 15 last year.
The amount of net available collected through April of this fiscal year is the highest level ever collected through 10 months in a fiscal year, McLaughlin said.
"We have wisely set that surplus aside for our long-term reserve account to the largest extent, so that's the good news for the state," Hutchinson said. The governor has described that fund as the state's long-term savings account.
Asked if there is any chance that the state will hit a $1 billion surplus in fiscal 2021, Shelnutt said, "I don't think we'll go that high."
In its fiscal session in April 2020, the Arkansas General Assembly enacted a $5.89 billion general revenue budget for fiscal 2021.
The April 2, 2020, forecast, which anticipated the possibility of a pandemic-related recession, was to provide less money, $5.68 billion, in general revenue for that budget.
But net general revenue has exceeded that forecast by more than $700 million so far in fiscal 2021, so at least part of the unfunded budget in fiscal 2021 is expected to be covered this fiscal year.
In the regular session that recessed a week ago, the General Assembly enacted a Revenue Stabilization Act that will distribute $5.84 billion in general revenue in fiscal 2022 to state-supported programs. Most of the increase over fiscal 2021's budget will go to human services, public schools, colleges and universities, and correctional programs.
The fiscal 2022 budget was based on an estimated net general revenue of $6.06 billion before the Legislature's tax cut measures collectively reduced projected net revenue by $203.1 million, according to legislative records. The budget projects a surplus of $17 million in fiscal 2022.
The tax cuts include $179 million from Act 248, which is covid-19 relief program tax deductions and loan forgiveness; $3.1 million from Act 254, which exempted unemployment benefits from income taxes; and other tax cuts enacted by lawmakers this year, according to the finance department.
On April 22, Hutchinson said state officials expected a surplus of about $600 million at the end of fiscal 2021 and expect similarly strong growth in tax collections in fiscal 2022 because of the federal covid-19 stimulus package.
State officials have estimated the long-term reserve fund, which has a balance of $209.9 million, could increase to $711.1 million, with the help of surplus funds.
Hutchinson has said he plans to call a special session in the fall for the Legislature to consider individual income cuts, but has not yet spelled out the size of the envisioned tax cuts. Legislative leaders said they want to see how tax collections fare before deciding on tax cuts.
APRIL REVENUE
According to the finance department, April's general revenue included:
• A $94.3 million, or 48.5%, increase in sales and use tax collections over a year ago to $288.8 million, which beat the forecast by $81.7 million or 39.5%.
Most major reporting sectors of sales tax collections reflected double digit percentage growth in April over the previous year, reflecting a combination of relative weakness in sales during the onset of the covid-19 pandemic in 2020 and continuing expansion with federal stimulus payments in recent months.
Retail sales tax collections in April totaled $117.7 million compared with $77.1 million a year ago, Shelnutt said.
Motor vehicle sales tax collections in April totaled about $42 million, up from about $22 million a year ago, Shelnutt said. Sales tax collections on food service and accommodations last month reached $23.4 million, up from $14.7 million a year ago, he said.
Sales tax collections on utilities in April totaled $24.2 million compared with $15.9 million a year ago, Shelnutt said. The April collections are based on February utility usage in which there was a snow week in Arkansas, he said.
• A $104.5 million, or 28.5%, increase over a year ago to $470.9 million in individual income tax collections, which outdistanced the forecast by $2.3 million, or 0.5%.
The change in the filing deadline from April 15 until July 15 last year accounted for part of the growth in April compared with last year. This year, the filing deadline changed from April 15 until May 17, within the same fiscal year.
Withholdings are the largest category of individual income tax collections.
They increased by $17.4 million from a year ago to $292.1 million, beating the forecast by $43.8 million. That indicates that more people are working, and more people are working long hours plus possible bonuses, Shelnutt said.
Collections from individual income tax estimated payments increased by $28.5 million over a year ago to $74.9 million, exceeding the state's forecast by $26.7 million.
Collections from individual income tax returns and extensions increased by $58.6 million over a year ago to $103.9 million, but fell $68.2 million short of forecast.
• A $53.2 million, or 53.9%, increase in corporate income tax collections over a year ago to $151.8 million, which beat the forecast by $63.2 million, or 71.4%.
Corporate income taxes are volatile and difficult to predict, Shelnutt said.
"We had a fairly conservative forecast on corporate [income tax collections] because it is so volatile and it had such a good year in the prior year, so we didn't count on two years running," he said. "But this reflects large corporations and corporations in Arkansas doing well for a second year."