$100 million surplus feasible in fiscal ?12, finance chief says
Arkansas Democrat Gazette
6/5/12
LITTLE ROCK ? Arkansas is more than $67 million ahead of forecast 11 months into the fiscal year, according to the May revenue report released Monday, and the finance department director said there is a strong chance the state will be $100 million above forecast when the fiscal year ends June 30.
May was the sixth month in a row that gross receipts revenue ? which is mainly derived from the sales tax ? came in above forecast.
?We really hesitate getting out and starting to try to forecast surpluses,? Richard Weiss said, but a $100 million surplus would ?be a reasonable ballpark. We?ll have a pretty sizable surplus at the end of the fiscal year.?
General revenue in Arkansas comes mostly from sales and income taxes.
The Department of Finance and Administration said in its May revenue report that general revenue totaled $433.9 million, an increase of $19.7 million, or 4.8 percent, compared with May of last year. That?s $7.6 million, or 1.8 percent, above the state?s official forecast, which was revised upward as recently as May 9.
During the first 11 months of this fiscal year, gross general revenue increased by $220.9 million, or 4.3 percent, over the same period last fiscal year to $5.34 billion, the department reported. That exceeds even the state?s new forecast by $7.6 million.
Tax refunds and several government expenditures come off the top of ?gross? general revenue, leaving a ?net? general revenue that agencies are allowed to spend.
During the first 11 months of this fiscal year, net revenue increased by $142.9 million, or 3.5 percent, over the same period last fiscal year to $4.241 billion. That exceeds the revised forecast by $13.3 million, or 0.3 percent.
The change in the forecast means more state general revenue for Medicaid, higher education institutions and some other state agencies, Gov. Mike Beebe said.
The change came after the April revenue report showed revenue was $93.6 million above projections.
When the governor increased the forecast, $39.4 million of the $93.6 million went to the state rainy day fund and the agencies funded as ?category B? through the Revenue Stabilization Act. That means the budget enacted for this fiscal year will be fully funded.
The remaining $54.2 million in excess is factored as surplus, along with the $13.3 million brought in above the May forecast.
Still, Weiss said, Arkansas? economy hasn?t completely recovered from the downturn, even with that much of a surplus.
?It looks good. Is it strong growth? No, it?s not strong growth like you?d have in nonrecessionary times,? Weiss said. ?We have forecast very, very conservatively ? and that?s the reason that it?s better than the forecast.?
Weiss said national factors can affect state revenue.
?It certainly is not fully recovered,? he said. ?If you had normal growth going on, normal employment out there and all that, this whole picture would be considerably stronger than it is.?
Beebe spokesman Matt DeCample said it is too early to know how the surplus will be spent.
The Beebe administration is expected to release its general revenue forecast and budget plan for fiscal 2014 in mid-November. Lawmakers will debate the budget during the 2013 Legislative session.
Beebe has emphasized that tough choices, either Medicaid cuts or new taxes, are coming in fiscal 2014 because of a projected state shortfall that could be as large as $400million in the Medicaid program.
?You can speculate all you want on where it might go, but it depends on what the big picture looks like by the end of this year,? DeCample said. ?We?re going to be patient, we?re going to see what comes down the line.?
Beebe was attending the American Wind Energy Conference in Atlanta on Monday.
May gross general revenue collections totaled $433.9 million, an increase of $19.7 million, or 4.8 percent, over last year.
Whitney McLaughlin, a tax analyst for the state Department of Finance and Administration, said May 2012 set the record level of gross revenue collections of any May. The previous record for May was $426.6 million in May 2001, she said.
As for last month?s general revenue collections for this fiscal year, the department reported:
An $8.4 million (4.3 percent) increase in individual income tax collections over May 2011 to $205.8 million. That exceeded the forecast by $10.3 million (5.2 percent).
A $7.8 million (4.7 percent) increase in gross receipts over the same month last year to $174.2 million. That exceeded the forecast by $2.4 million (1.4 percent).
An $800,000 increase (3.9 percent) in corporate income tax collections over the same month last year to $21 million. That?s $3.1 million (17.4 percent) above the forecast.
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