Arkansas revenues for September greater than year ago; some tax payments below forecast

Ark. revenues for September top ‘09, miss forecast

LITTLE ROCK, Ark. — State tax revenues for September fell short of forecast but came in above collections from a year ago, the fifth straight month the numbers were above those from 2009, the state’s fiscal officer said Monday.

The Arkansas Department of Finance and Administration said net available general revenues totaled $483 million for September, up 6.9 percent from a year ago. Revenues were 1.8 percent below forecast.

Lagging individual income tax withholdings dropped revenues below forecast, but state finance director Richard Weiss said that does not raise red flags.

Weiss explained that people who make quarterly income tax payments only have to match what they paid the year before to avoid penalty. Thus they can invest earnings above the prior year’s total and then settle up at tax time.

“They have an incentive to wait to report” the additional income, Weiss said.

September individual income tax collections were $223.8 million. Within that number, the largest category — tax withheld by employers and paid to the state — came in above forecast by $3.4 million, or 2.2 percent. The sum was $5.1 million, or 3.2 percent, above September 2009.

Estimated payments were down, offsetting the above gain. Collections were down $3 million, or 1.3 percent, from last year and $22.6 million or 9.2 percent below forecast.

Weiss said he expects the additional earnings to start showing up in January and continue through April.

The state is in a “choppy” economic recovery, Weiss said.

Gov. Mike Beebe said flat returns on investments may also be behind the sluggish personal income tax payments, but he said the state’s overall economic picture is good.

“The good in that is, where we’re down is likely in the area that’s not reflective of where the economy is. It’s in estimates. Those are based upon to a large extent last year’s estimates, which were overestimated because of the economy,” Beebe said.

“The other good news is for the year, for the first quarter of the fiscal year, for the first three months, we are up significantly above last year and appreciably above forecast,” Beebe said.

For the first quarter of the fiscal year, which started July 1, Arkansas has net available general revenues of $1.18 billion, which is $24.6 million, or 2.1 percent, ahead of forecast.

A year ago there was $71 million in one-time transfers into the budget. The revenue report says that even with that windfall factored in, the state is still ahead of 2009 tax collections.

General revenue for September was $28.1 million greater than a year ago, though $8.1 million lower than the forecast. Higher corporate income tax collections came in at $68.2 million for September, up by $22.5 million in September 2009.

State budget hearings begin Tuesday, with last year’s $247 million budget cut still fresh in lawmakers’ minds.

“We’re still going to be cautious. I’m pretty conservative when it comes to money. So we’ll still ask the agencies — and we’ve already asked the agencies — to kind of hold the line as much as they possibly can, relatively flat,” Beebe said. “For the most part, the state agencies are holding the line.”

Legislators already have delayed a decision on school funding because of the fragile revenue picture. A legislative committee put on hold a proposal to add $69 million to the public schools budget.

Associated Press writer Jill Zeman Bleed contributed to this story.