Tue, Jul 5, 2022 3:32 PM
By Kim Jarrett, The Center Square
Arkansas Gov. Asa Hutchinson is calling lawmakers back to Little Rock on Aug. 8 to discuss how to spend a $1.6 billion surplus from fiscal year 2022.
The state ended fiscal year 2022 with $7.5 billion in collections and distributions, according to a report from the Department of Finance and Administration.
Hutchinson said in a news release Tuesday the special session will focus on tax relief and other issues he will announce later.
"June revenue collection was more than $150 million above forecast, leaving a net surplus for the year in excess of $1.6 billion for the fiscal year," the governor said. "This represents the largest surplus in Arkansas history and demonstrates the state is collecting too much in tax revenue. Our collections are above last year, despite the tax reductions enacted last year."
In December, lawmakers approved a decrease in the income tax rate from 5.9% to 5.5% this year. The rate will gradually drop to 4.9% by 2025.
Hutchinson indicated in June that some of the surplus money could be used to fund school safety initiatives. The governor reinstated the Arkansas School Safety Commission, which is currently holding meetings every Tuesday. The committee will present a preliminary report to Hutchinson on Aug. 1.
Overall, state tax collections are 9.2% higher than in fiscal year 2021, according to the report. FY22 income tax collections were up $202.3 million from FY21, a 5.1% increase.
Corporate income tax revenue increased 28.4% from FY21 to the same time period in 2022 at $837.2 million.
"This growth is attributable to the state’s dynamic job creation coming out of the pandemic and increased consumer buying power," Hutchinson said.
Sales and use tax collections also rose 9.4% in fiscal year 2022, according to DFA.
The state also added more money to its Education Adequacy Fund, according to the report. FY22 collections were $662 million, a 10.8% increase over FY21. Last year the state added $597.5 million to the fund.
The Education Adequacy Fund was created by lawmakers in 2003 to fund the state's schools. The revenue comes from an increase in the state sales and use tax and subsequent increase to vending machine decal fees and corporate franchise taxes, according to DFA.
Revenues from June, the last month of FY22, were also up from the previous year. Sales and use tax collections were $285.9 million, an 11.3% increase over the same period last June. Corporate income tax collections increased 16.1% from June 2021 to $133.5 million.