Even though state general revenue has improved since this time last year and is in step with the revenue forecast, our state budget still has not returned to the level we saw before the recession hit Arkansas.

The General Revenue Report for March was released on April 4 and paints a slightly better picture than we’ve seen recently.  From July 1 last year until the end of March, the net available general revenue totaled $3,252.1 million which is 1.6 percent ($50.7 million) above the forecast. (Net available general revenue is the revenue available for distribution to state agencies after off-the-top set asides and tax refunds.) These number are also a little above the numbers from a year ago. General revenue still comes primarily from income tax withholding and the sales and use tax (also called Gross Receipts collection). To date, $1,869.5 million in individual income taxes have been collected. This is an increase of $76.1 million or 4.2 percent above last year. Sales and use taxes have led to a collection of $1,556.4 million to date. Sales and use taxes have increased by $80.8 million or 5.4 above Fiscal Year 2010 but slightly below forecast. Also, the increase in general revenue can be due to refunds for both sales and corporate income tax coming in 15 percent below forecast.

Two special revenue sources have seen increases as well. The Medicaid Program Trust Fund collects a dedicated soft drink tax which totals $35.1 million so far this fiscal year. This represents a $1.8 million or a 5.3 percent increase from last year. The Educational Adequacy Fund was a sales tax increase on vending machine decal fees (that went into effect July 1, 2004) as well as an increase in the corporate franchise tax and tax rate. In March 2011, this tax collected $34.1 million (a 3.2 percent increase from last year’s collections) that were used to fulfill the state’s financial obligations to provide an adequate education system.  Corporate income tax collections so far this fiscal year totaled $255.9 million was $59.9 million or 19 percent below Fiscal Year 2010. This tax revenue was also below forecast by $22.8 million or 8.2 percent.