Arkansas ended fiscal year 2021 with a revenue surplus of $945.7 million thanks in part to a COVID-19 induced shift in a tax filing deadline from April to July that pushed some of fiscal 2020 income tax payments into 2021.
The state’s tax revenue surplus in the previous two fiscal years totals $1.315 billion.
The Arkansas Department of Finance and Administration (DFA) reported Friday that gross revenue for fiscal year 2021 (July 2020 to June 2021) is $8.121 billion, up 16.6% compared with the previous fiscal year and up 18.2% over the budget forecast.
“Results from collections and distributions for FY 2021 reached $6.845 billion or $945.7 million above the forecast of June 30, 2021, and $945.7 million in excess of full funding level for the Revenue Stabilization Act representing a surplus as defined by that budget control and allocation process,” John Shelnutt, DFA director of economic analysis and tax research, noted in a memo with Friday’s report.
Factors cited by Shelnutt for the significant surplus include:
- Individual income tax collections for two years falling partially in fiscal year 2021 because of the extended tax filing deadline
- Increased payroll tax collections because of a faster rebound in the state economy than what was expected
- Increased sales tax revenue because of federal stimulus payments and “base growth in online marketplace sales”
- Higher than expected corporate income tax revenue.
Individual income tax revenue was $3.969 billion in the fiscal year, up 16.1% compared with the same period in 2019-2020 and up 18.2% over the budget forecast. Sales and use tax revenue – an indicator of consumer spending – during the fiscal year was $2.883 billion, up 13.4% compared with the same period in 2019 and up 12.2% above budget forecast.
Corporate income tax revenue during the fiscal year was $651.9 million, up 35.2% compared with the same period in 2019-2020, and up 45.1% from the budget forecast.
JUNE REVENUE
Gross revenue in June totaled $867.7 million, up 24.7% compared with June 2020, and 27.5% above the forecast.
Individual income tax revenue totaled $328.8 million in June, up 8.8% compared with June 2020, and 27.5% above the forecast. Sales and Use tax revenue in June totaled $256.8 million, up 12.9% compared with June 2020 and up 7.9% above the forecast. Corporate income tax revenue was $115 million in June, up 81.7% compared with June 2020, and 64.1% above the forecast.
The previous fiscal year (July 2019-June 2020) ended with $369.4 million in net available revenue more than expected. Fiscal year 2020 tax revenue ended down just 2.5% despite several months in early 2020 of economic disruption resulting from COVID-19 shutdowns. The revenue was 4.1% above the revised forecast. Gross revenue in the previous fiscal year was $6.967 billion, 2.5% below fiscal year 2019, but up $272.5 million more than the forecast.