Arkansas Revenue Report Shows Mixed Results for March 2024

The Arkansas Department of Finance and Administration recently released the state’s general revenue report for March 2024, providing a snapshot of the state’s financial health nine months into the fiscal year. The report shows mixed results, with some revenue sources exceeding expectations while others fell short.

Year-to-Date Revenue Summary

According to the report, Arkansas’s net available general revenues totaled $4,871.4 million for the first nine months of fiscal year 2024, which is $288.7 million or 5.6% below the same period last year. However, net available revenue is still above the forecast by $77.8 million or 1.6%.

Gross general revenues, which totaled $6,100.5 million, decreased by $91.7 million or 1.5% compared to last year. Despite the decrease, gross general revenues remain above the forecast by $85.4 million or 1.4%.

Here’s a breakdown of some key revenue sources:

  • Individual Income Tax: Collections totaled $2,658.8 million, $90.0 million or 3.3% below FY 2023 but $48.0 million or 1.8% above forecast.
  • Sales and Use Tax: Collections totaled $2,598.9 million, an increase of $72.6 million or 2.9% above FY 2023 and $26.6 million or 1.0% above forecast.
  • Corporate Income Tax: Collections totaled $442.9 million, a decrease of $71.0 million from FY 2023 but still above forecast by $11.6 million or 2.7%.
  • Refunds also played a role in the revenue picture:
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Individual income tax refunds totaled $518.2 million, up $113.7 million or 28.1% compared to last year and $12.3 million or 2.4% above forecast. Corporate income tax refunds totaled $107.9 million, an increase of $56.9 million compared to the same period last year.

March Revenue Summary

Focusing specifically on March 2024, net available general revenues totaled $452.0 million, which was $34.4 million or 8.2% greater than March 2023 and an impressive $67.2 million or 17.5% above forecast. Most major revenue categories performed well in March:

  • Individual income tax collections were $37.8 million or 14.3% above forecast
  • Sales tax collections exceeded the forecast by $19.9 million or 7.2%
  • Corporate income tax collections were $5.4 million above forecast
  • Both individual and corporate income tax refunds came in below forecast
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However, tobacco tax collections, while a relatively small component of general revenue, totaled $15.5 million in March, a decrease of $2.8 million from March 2023 and $2.4 million below forecast.

Special Revenues

The report also highlights the Educational Adequacy Fund, a special revenue fund established in 2003 to fulfill the state’s obligation to provide an adequate education system. In March 2024, $62.5 million was collected and deposited into the fund, which after deductions, netted $60.6 million. This represents a 1.8% decrease from March 2023 collections.

Looking Ahead

With three months remaining in fiscal year 2024, Arkansas’s revenue picture is somewhat mixed but generally positive. Key revenue sources like individual income tax and sales tax are exceeding forecasts, helping to offset shortfalls in other areas.

The state will need to monitor refunds and smaller revenue sources like tobacco taxes in the coming months. Economic factors like inflation, employment, and consumer spending will also play a role in shaping Arkansas’s revenue outlook for the remainder of the fiscal year and beyond.

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As lawmakers and state officials begin to look ahead to the next budget cycle, they will undoubtedly be closely watching these revenue trends to inform their decision-making. While challenges remain, Arkansas appears to be weathering the current economic climate relatively well based on this latest revenue report.

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  • Subin Gurung

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