Arkansas ended the fiscal year with a $1.161 billion tax revenue surplus driven in part by a more than 8% growth in sales tax collections. But recent federal data suggests Arkansas’ economy may not be as robust in the back half of 2023.
Total tax revenue in the fiscal year (July 2022-July 2023) was $8.85 billion, up 0.9% compared with the previous fiscal year and 1.7% more than the budget forecast, according to a report posted Wednesday (July 5) by the Arkansas Department of Finance and Administration (DFA).
Individual income tax revenue in the fiscal year was $3.916 billion, down 6.1% compared to the previous fiscal year and 1.1% above the budget forecast. Sales and use tax revenue in the fiscal year was $3.418 billion, up 8.4% compared with the previous fiscal year and up 1% above the forecast. Corporate income tax revenue was $842.5 million, up 0.6% compared to the previous fiscal year and 6.5% above the forecast.
Tax revenue in June totaled $951.2 million, up 5.2% compared with June 2022 and up 14.4% compared with the budget forecast.
The fiscal year surplus of $1.161 billion marks the third consecutive year of a surplus of near or more than $1 billion. Total tax revenue in fiscal year 2022 (July 2021-June 2022) was $8.773 billion, up 8% – or $651.2 million – and the budget surplus was $1.628 billion. The surplus in the fiscal year that ended June 2021 was $945.7 million.
A June 30 report from the U.S. Bureau of Economic Analysis shows signs of relative weakening of the Arkansas economy, according to Michael Pakko, chief economist and state economic forecaster at the Arkansas Economic Development Institute. The report indicated that Arkansas’ personal income increased at a 3.2% annual rate in the first quarter, below the national growth rate of 5.1%.
“Quarterly growth rates of personal income can vary significantly without necessarily indicating a change in trend. If we consider the longer-term performance of income growth in Arkansas, the first-quarter results are disappointing, but they do not suggest an imminent downturn. In fact, the growth rate of total personal income over the past four quarters has been 6.2% in Arkansas and 5.1% for the U.S.,” Pakko noted in his analysis.
See the full article from KUAR here.