State finance officials told legislators Wednesday trends in revenue collections and economic forecasts do not warrant any adjustment in the Official Revenue Forecast for fiscal years 2014 or 2015.
Department of Finance and Administration Deputy Director Tim Leathers said one reason adjustments aren’t necessary is because Arkansas, unlike some other states, successfully anticipated the impact of federal tax changes by reducing related revenue projections.
“I think we’re pretty close to on target unlike a lot of other states we’re seeing around the country that didn’t do that for whatever reason, we don’t know, and now they’re having a shortfall as a result of it and having to deal with that. There will be more reports of that as they close out their fiscal years, all of them don’t report on the month, but the states that didn’t realize that or chose to ignore that are suffering at this time. We did not do that,” said Leathers.
The sparsely attended joint meeting of the Economic and Tax Policy Committees generated a few questions about the expected surplus at the end of the 2014 fiscal year. Finance officials did not give a firm estimate but suggested it may be between 50 and 70 million dollars.
Responding to a question from the committee Chair, Bruce Maloch of Magnolia, Leathers explained the relationship between some state tax code changes and 2015 revenue projections.
“It’s two percent growth and we did factor $85 million for the sales tax decreases. Seeing moderate growth, if we hadn’t had those tax decreases that growth would have been at 3.66 percent,” said Leathers.
While no adjustments in forecast are necessary the department will continue to monitor economic indicators. But he said the continued economic recovery is expected to lead to encouraging future revenue numbers and projections.