Budget surplus continues to grow according to Arkansas revenue report
Eight months into Arkansas' fiscal year, the Department of Finance and Administration released its revenue report for February on Wednesday showing money taken in by the state continues to exceed what had been forecast.
Gov. Asa Hutchinson responded to the report on Twitter, saying the revenue report shows the state is "on the right track to provide surplus funds to law enforcement and invest in necessary capital projects."
The governor had noted strong tax collections in January when he proposed his $6 billion budget for the fiscal year 2023 to the legislature's Joint Budget Committee. The budget accounted for more spending than the previous year by a little over 3%.
"These investments are one-time commitments that meet priority needs. We continue to manage the budget conservatively which puts Arkansas in excellent financial position for the future," Hutchinson said Wednesday.
He had allocated funding in his proposed budget for police, higher education, workforce development and services for people with disabilities. The fiscal session, with lawmakers considering the budget, began on Feb. 14.
The report showed that last month Arkansas had a budget surplus of $240.8 million, which has continued to increase.
John Shelnutt with the department’s office of Economic Analysis and Tax Research had previously published a forecast surplus of $264 million.
"Now we’re looking at $317 million above that forecast in this monthly tracking, which would imply a much larger surplus at year-end on June 30th,” Shelnutt said in an interview with KUAR News
Net available revenue for February totaled $406.6 million, which is 7% below last year and 23.4%, or $77 million, above forecast.
“February reflects mixed result by the reporting sector but high growth overall,” Shelnutt said. It was “the smallest month for net available collections.”
This follows the Christmas shopping season and Shelnutt says there is usually an increase in refund claims in the income tax filing season during February.
According to the revenue report, some sectors showing high growth were in accommodations and food services like restaurants, other personal services, and the motor vehicle sales tax. That is part of the economic recovery from the pandemic.
“Interestingly, the motor vehicle sales tax was up 10% year-over-year, which includes the week-long snow event last year,” Shelnutt said, “We can’t really separate out what is inflation and what was happening in this snow week comparison.”