Revenue Forecast Revised Upward
LITTLE ROCK – State government will collect more in tax revenue this year than previously estimated, according to a revised forecast by the Department of Finance and Administration.
The department notified the Legislative Council that revenue for the current fiscal year would be $246 million more than was projected earlier, when legislators finalized a state budget.
The revised forecast means that state government will end the current fiscal year with a surplus of $263 million, rather than the $17 million that legislators put in a restricted reserve account earlier this year.
Under the new forecast, Arkansas will have $6.1 billion to spend from state taxes. The current budget year, Fiscal Year 2022, ends on June 30, 2022. The main sources of state revenue are sales taxes, about $2.9 billion, individual income taxes and almost 4 billion, corporate income taxes of about $652 million.
The expected surplus will be available even after all spending categories in the Revenue Stabilization Act are funded. The act is how Arkansas operates under a balanced budget every year. The legislature prioritizes spending programs by placing them in categories labelled A, B and C.
This fiscal year, all three categories should be fully funded and the surplus will be available in future fiscal years.
That sets the stage for possible tax cuts. The governor has announced that he wants to call a special session to lower state income tax rates. He and his staff are working with legislative leaders on proposed tax cuts that would save Arkansas families several hundred million dollars a year when they are fully in effect.
One tricky aspect of a possible tax cut is a so-called “trigger,” which is language that would postpone tax reductions in the event of an unexpected drop in revenue. Lawmakers want to ensure that state revenue is sufficient to maintain vital services such as education, health care and public safety.
Last year Arkansas ranked 38th in the country in the value of its export products, according to the Arkansas Economic Development Commission.
Arkansas exports were valued at $5.2 billion, which actually represented a decrease from the previous year of about 16 percent.
As was the case in previous years, Canada was our top destination for exported products. About 22 percent of Arkansas exports, valued at $1.5 billion, were sold in Canada last year.
Mexico was the second highest purchaser of Arkansas products, buying about $712 million worth of goods.
Aircraft and spacecraft were the largest category of export products made in Arkansas last year. They were valued at $1 billion and accounted for almost 20 percent of all Arkansas products sold abroad. The top three destinations for aircraft products were France, the Netherlands and Brazil.
Mexico and China were the largest markets for Arkansas poultry. Mexican companies bought $$82 million worth of poultry and Chinese firms bought $48 million worth of poultry from Arkansas producers. Guatemala bought $27 million worth of Arkansas poultry, and companies in Canada bought $21 million worth of poultry.