Small indications of the economic impact of the coronavirus outbreak could be showing in Arkansas's most recent revenue report. The March report, released Thursday, reflects mainly taxable transactions from February, before local and national recommendations for social distancing were widely in effect.
John Shelnutt, an economist with the state's Department of Finance and Administration, says the March report indicates a time when the economy was healthy and consumers were confident. The department is responsible for the economic forecasts, which guide state-level budget decisions.
Net general revenues was down 12.4% from the same month a year ago, but was 8.9% above the projected forecast. Net available general revenues in March totaled $356.6 million, which is $50.5 million below the same month in 2019 and $29.3 million above forecast.
Because of the health emergency, Hutchinson extended the state tax deadline to July 15 to match a federal tax deadline extension. That move is expected to drain state tax collections in the final quarter of the fiscal year.
Motor vehicle and tobacco taxes are the two categories in the recent report which may have shown early signs of what is expected to be a recession. The motor vehicle portion of sales tax had a double-digit increase in the previous report but did not rise as expected in February.
Shelnutt said it's possible tobacco tax revenue, which was $4.7 million more than forecast, reflects early concerns about the impact of COVID-19, "because cigarette stamp purchases are done in bulk by wholesalers and there could be some stocking up going on there."
"We’re doing the best we can to try to lay it out for this last portion of the fiscal year," Shelnutt said.
But there is little precedent for measuring the impact of the coronavirus on the state and national models upon which the forecasts are based. The fiscal year ends June 30. Shelnutt said states are bracing for expected bad news in next month's reports.
"The one good news item is that we’re $29.3 million above forecast, so it acts as a starting buffer for this final three-month window."
Reporting by Talk Business & Politics contributed to this story.
