Arkansas revenue rises in February, lowers budget cut fears

By ANDREW DeMILLO - Associated Press - Thursday, March 2, 2017

LITTLE ROCK, Ark. (AP) - Arkansas Gov. Asa Hutchinson said Thursday an improvement in the state’s revenue collections mean it’s unlikely that state agencies will have to make budget cuts he had warned them about.

The Department of Finance and Administration said the state’s revenue in February totaled $276.7 million, which was $3.2 million below the same month last year but $40.9 million above what had been forecast. The state’s revenue for the fiscal year that began July 1 totaled $3.4 billion, which was $19 million more than at the same point last year and $15 million less than forecast.

Hutchinson told several agencies last month to come up with contingency plans for possible cuts after the state’s revenue dipped $57 million below forecast. The Republican governor wouldn’t rule out the possibility of cuts, but said the latest numbers eased those fears.

“It diminishes the likelihood of it, but we’ll continue to monitor it,” Hutchinson told reporters. “I’m relatively confident we’ll have continued good months in the future and hopefully we’ll not have to make any adjustments to the budget.”

Hutchinson last month said any budget cuts would be in the “B’’ category of the state’s budget, which prioritizes funding based on expected revenue. The $127 million in that category isn’t set to go toward the agencies until June.

Much of the gain came from a payroll timing issue that had lowered the state’s revenue in January, finance officials said. The state’s individual income tax collections were $23.7 million above forecast. The state also paid out $25 million less in income tax refunds than expected last month.

The state’s sales and corporate income tax collections, however, were below the same month last year and below forecast.

Finance officials said the state won’t know until May the revenue boost the state will see from Amazon’s decision to begin collecting Arkansas sales taxes this month. The e-commerce giant announced last month it would begin collecting sales taxes, while an effort to force other out-of-state online retailers to collect is still pending in the Legislature.