Arkansas creates fund to close coronavirus-driven deficit
Arkansas Gov. Asa Hutchinson has signed legislation to close a $353 million budget deficit related to coronavirus disruptions.
Hutchinson called the special session on Thursday, and lawmakers completed work on two bills Saturday. Hutchinson signed the legislation at 1 a.m. Sunday.
The bills create a COVID-19 Rainy Day Fund that will collect money from various surplus and discretionary accounts. The fund will also manage money from the federal government related to the crisis. Arkansas can expect to receive about $1.25 billion in stimulus funds from the federal government.
The state’s revenue problem stems from delays in tax filing because of the pandemic.
Arkansas is giving residents an additional three months to file their state taxes, a move that mirrors that of the federal government.
The delay does not apply to corporate filings or estimated corporate payments, Hutchinson said.
In its last monthly report before the coronavirus slammed the economy, Arkansas enjoyed better than expected payroll tax revenue and auto sales.
Year-to-date gross general tax revenue for the fiscal year that began July 1 was $4.53 billion, up 4.3% through February from the same period in 2019, and 2% above the budget estimate.
According to March 3 figures from the Arkansas Department of Finance and Administration (DFA), the surplus revenue was $185.3 million. The revenue is also $89.2 million above the budget estimate.
Individual income tax revenue for the fiscal year-to-date was $2.225 billion, up 6.4% compared with the previous period and 0.6% above forecast. Income tax refunds year-to-date totaled $184.4 million, up 9.1% compared with the same period in the previous fiscal year, and 1.5% above the budget forecast.
Year-to-date sales and use tax revenue was $1.708 billion, up 4% compared fects compared to the same period in the prior year. Sales tax collections were $3.6 million below forecast due to weakness in business-related sectors. The motor vehicle portion of the sales tax experienced high growth, John Shelnutt, DFA director of economic analysis and tax research, noted in the report.
As of Sunday, Arkansas had recorded 426 coronavirus cases with six deaths, according to state Secretary of Health Dr. Nate Smith.
On March 11, Hutchinson signed an executive order that declared a public health emergency in Arkansas. New measures are designed to assist rural hospitals and to provide extra pay for non-physician direct-care workers.
The state also requested a waiver of Medicaid regulations at a cost of about $116 million, including $25 million from the state.
“COVID-19 has changed our world in ways we never imagined a month ago,” Hutchinson said. “We can’t deliver health care today the way we did just two weeks ago. The leaders at hospitals, clinics, pharmacies, nursing homes, and in-home health care providers are having to rethink everything they do, and they are having to do it very quickly and without a road map. We want to help health care providers keep their doors open and their staff employed.”