State Revenues Above Forecast In October
The Arkansas Department of Finance and Administration released a report Monday showing the state continues to exceed revenue expectations for this fiscal year. The state collected 372.8 million dollars in net available revenue in the month of October, outpacing expected collections by about 8 million dollars. So far the state has collected 37.8 million dollars above forecast for the entire fiscal year which began July 1.
State Economist John Shellnut says this can be partially attributed to larger individual and corporate income tax collections. Though he says lower than expected sales tax collections and other indicators still point to a weaker economic recovery than what may appear on the surface.
“The year to date amount above forecast—the 37.8 million—might be necessary because of tax strategy used by high income tax payers to shift income to tax year 2012. And now we’re on the downhill side of that strategy where we may have a shortfall later in the year and we could see some of this money go back,” says Shellnut.
Shellnut notes federal rates were lower in tax year 2012, thus prodding many wealthy taxpayers to shift their taxes to that year. State net sales tax collections were lower than last month's collections, which Shellnut says indicates the economy isn't necessarily growing rapidly.
“We still have a slow recovery underway. We don’t see that changing with such low interest rates in the economy and gradual improvements in the labor market and other indicators but we have imposed on that some of these other unusual technical issues such as taxpayer strategy.”
Forecasts for November show that state expects to collect around 358 million dollars in net available revenue, above last year’s 350 million dollars.