Arkansas revenue for April down by $47 million
Arkansas Democrat-Gazette
May 5, 2009
State general revenue in April lagged behind the state's forecast by $23.5 million as the month's collections fell by $47 million compared with the same month last year to $650 million.
But tax collections for the first 10 months of this fiscal year ending June 30 still are $54.8 million above the state's forecast in November, the state Department of Finance and Administration said Monday in its monthly revenue report.
April's collections represent the fourth month in the past five in which tax collections dipped compared with the same period a year ago. "We expected to be losing money each month, and we dropped accordingly," said department director Richard Weiss, the state's chief fiscal officer.
"We're in the recession, along with everybody else, although still not as bad as most [states]," he said.
"There are some glimmers of hope in there, but just glimmers at this point," Weiss said, adding, "I am still real confident that our forecast is good, which does say it is going to get worse."
Finances for state governments across the nation are growing increasingly dire, the National Conference of State Legislatures said in a recent report on state budgets.
The conference said 43 states and Puerto Rico report that they have closed or are resolving fiscal 2009 gaps between expenses and revenue totaling $62.4 billion. The bulk of states' financial problems can be traced to the national recession and the resulting effects on state revenue collections, the group said.
A year ago, Arkansas' Finance Department removed nearly $107 million from the state budget for this fiscal year by lowering the forecast, citing an expectation of a "mild recession."
April's general revenue declined by 6.7 percent over April 2008 to $650 million, which was 3.5 percent behind the state's forecast, the department said.
The record for the month remains the collections of $697.2 million in April of 2008, said Whitney McLaughlin, technical assistance manager for the Finance Department. That month in 2008 represented the fifth consecutive April in which the state collected a record monthly amount of general revenue. The Legislature in 2003 moved the due date for state individual income tax returns from May 15 to April 15, starting in 2004, to match the federal returns' due date.
According to the Finance Department, last month's individual income taxes declined by $47.1 million (10.2 percent) over the same month last year to $414.8 million. That's $32.1 million (7 percent) below the forecast.
Individual withholdings last month increased by $4.4 million over the same month last year to $189.7 million, but large declines in estimated payments and payments with year-end returns accounted for the overall decline.
Estimated payments for individual income taxes declined from $136.6 million in April of 2008 to $100.1 million last month, and payments with year-end tax returns fell from $140 million to $125 million in the same period, according to McLaughlin.
The decline in estimated individual income tax payments reflects reduced quarterly payments by self-employed individuals or people with "a lot of investments," Weiss said.
April's gross receipts, which are primarily sales and use taxes, dipped by $4.3 million (2.5 percent) over April 2008 to $166.2 million, the Finance Department said. That's $4.4 million (2.6 percent) below the forecast.
However, the month's corporate income tax collections increased by $2.2 million (5.1 percent) over the same month last year to $45.6 million. That's $9.8 million (27.4 percent) above the forecast for the month.
Corporate income tax collections fluctuate widely and are often driven by corporations' federal tax strategies, according to Finance Department officials.
Gov. Mike Beebe said he views the revenue report as showing sales tax collections "are above even with last year .... and we are even a little above last year on [individual income tax] withholding, which means people working."
Individual income tax withholdings are part of individual income tax collections. "The big drop is in [individual] income tax estimates, which is either from investment income or self-employed people," Beebe said. "You still get layoffs and plant closings, and then when you see something big, like a major automobile maker, even though we don't have one of those car companies here it ripples with our parts companies."
In the first 10 months of this fiscal year, gross general revenue totaled $4.678 billion, an increase of $33.9 million (0.7 percent) above the same period in the past fiscal year. That's $54.8 million (1.2 percent) above forecast.
Net general revenue is what's left for state agencies to spend after off-the-top transfers and refunds to taxpayers from gross revenue.
April's net general revenue totaled $491.9 million, $60.2 million (10.9 percent) below the same month last year and $25.3 million (4.9 percent) below the forecast.
In the first 10 months of this fiscal year, the net totaled $3.706 billion, a decrease of $35.6 million (1 percent) over the same period last year but $38 million (1 percent) above forecast, largely because of gains in corporate income taxes.
"We still plan to lose that [$38 million in net general revenue above the forecast] between now and June 30, but we don't expect it to be worse than our forecast," Weiss said.
"We are still looking at the economy not turning around really until the first quarter at the earliest of next year in 2010," he said.
John Shelnutt, the state's chief economic forecaster, said the state's declining employment "points back to a deep recession for the state."
He said he expects the state to continue losing jobs, probably through the summer.
Arkansas' unemployment rate rose to 6.5 percent in March but was still 2 percentage points lower than the national average of 8.5 percent, the U.S. Bureau of Labor Statistics said last month.
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