LITTLE ROCK, Ark – As the state of Arkansas closes the book on its business year, officials say it has built up a billion-dollar-plus nest egg.
Figures released July 5 by the Department of Finance and Administration show the Natural State’s fiscal year ended June 30 with a $1.628 billion surplus for 2022.
The Arkansas Revenue Stabilization Act, passed in 1944, prohibits deficit spending, so state officials must forecast out their expenses and income each year.
With the 2022 budget, which runs from July 1, 2021, through June 30, 2022, closed, Arkansas lawmakers now have $1.6 billion is essentially extra money.
The sizeable surplus was not a surprise. As early as this spring, Gov. Asa Hutchinson announced the state’s budget surplus was expected set a record and would likely exceed the $1 billion mark by June. The final tally showed the state handily exceeded even that high bar.
A legislative special session has been discussed to determine how best to use the surplus, but no date has been set. State projects such as increased funding for state-wide broadband, teacher raises and a rebate to Arkansans has been discussed by the governor as it became increasingly apparent the state would achieve revenue surplus.
One source for the higher surplus has been the increased cost of goods and services due to a variety of factors, inflation not in the least. Through May, the last month available, the Consumer Price Index has climbed 8.6% over 12 months, the largest 12 month increase since 1981. Other thank fuel, with taxes as a percent of purchase cost, tax revenues would climb.
While some may think that higher gas prices may mean more cash for the state, the amount of fuel tax Arkansas brings in is set per gallon, so rising prices at the pump would not translate into higher state revenues.
Here is how the surplus breaks down by the numbers:
- The overall surplus is $1.628 billion, which was 2.1% over the state’s forecast
- State collections were $8.773 billion, which were 8% over forecast
- Individual income tax paid was $4.17 billion, which was 0.9% over projections
- Individual tax refunds paid out totaled $453.6 million, which was down 9.7% from 2021
- Sales and use collections brought in $3.15 billion, which was 1.3% above forecast
- Corporate tax income was $837.2 million, a 28.4% jump from the previous year and 7% above forecast
- Corporate tax refunds came in at $52.4 million, which was down 19.7% from the previous year and 0.8% below forecast
Noted in the fiscal-year-end report was good news for Arkansas’s education funding. The Arkansas Educational Adequacy Fund gained $58 million in June, which was 8% over numbers from June 2021.
For 2022 the fund gained $662 million, 10.8% or $597.5 above the 2021 total. The fund is used to fund state obligations to provide an adequate education system.