DALLAS — Arkansas state revenues fell significantly below expected levels in September, as the state posted its largest monthly year-to-year revenue decline in 20 years.
Richard Weiss, director of the Department of Finance and Administration, said he is puzzled by revenues that last month came in 12% below the state’s official forecast and 14.2% less than collected in September 2008.
Revenue collections in September totaled $464.2 million, down $76.5 million from September 2008 and $63.2 million less than the $527.4 million that was expected.
“I was surprised by both the size of the decline and how broad-based it was,” Weiss said. “We had declines in revenues across the board, from the corporate income tax, personal income tax and sales tax.”
He said there had been signs that Arkansas’ economy was holding its own, despite the national recession.
“We had been seeing some growth in the withholding tax, and that means people are working,” Weiss said. “The sales tax also had been holding steady.”
The September figures marked the state’s ninth monthly revenue drop in the last 10 months, the finance department said, and the biggest non-tax-cut decline in at least 20 years.
However, individual income tax collections totaled $226.8 million in September, down $39.5 million from September 2008 and $25.8 million less than projected.
Gross receipts collections of $162.7 million, which include sales and use taxes, were $23.2 million less than expected and $20.8 million below September 2008’s total
The state’s corporate income tax brought in $45.7 million, or $18.3 million less than the estimate.
Gross general revenues for the first three months of fiscal 2010 total $1.27 billion, or $86.8 million less than the budget forecast and $99.6 million less than the first three months of fiscal 2009.
Gov. Mike Beebe has asked the finance department to review the official forecast in light of current revenue levels before revising it for the rest of fiscal 2010. A lower official forecast could result in state agency budget cuts, he said.
“I am concerned by this month’s revenue,” Beebe said.
Weiss said it is too early to speculate on potential budget cuts. It will take a couple of weeks to analyze the September revenues, he said, and added that it is misleading to compare current monthly revenues to 2008’s monthly collections.
“We’ll have a more valid month-to-month comparison after November, because right now we’re still comparing pre-recession monthly revenues to post-recession monthly revenues,” he said. “Our declines really began in Novembers 2008.”
There is no schedule for reviewing the official revenue forecast, Weiss said.
“We do it on an as-needed basis,” he said. “We attempt to tie our spending closely to our revenues.”
Despite the current weakness, Weiss said he expects Arkansas’ economy to turn around before fiscal 2011 begins on July 1, 2010.
“We’re still looking for modest but steady growth in the last two quarters of fiscal 2010,” he said.