- Associated Press - Tuesday, July 5, 2016

LITTLE ROCK, Ark. (AP) - Arkansas ended its fiscal year with a $177.4 million surplus, state finance officials announced Tuesday, as Republican Gov. Asa Hutchinson used the boost in revenue to argue for further cuts in the state’s income tax rate.

The state Department of Finance and Administration said Arkansas’ net available revenue for the fiscal year that ended June 30 totaled $5.3 billion, which was $117.3 million more than the previous fiscal year. Arkansas had ended the previous fiscal year with a $191.6 million budget surplus.

Hutchinson said the latest surplus vindicated his decision to push for a $102 million income tax cut that lawmakers approved last year and that took effect on Jan. 1. He said he expected to call for more income tax cuts when the Legislature convenes next year.

“I think from that you can say the sky has not fallen because we had a tax cut, but that as we expected it helps our economy to grow, and the income tax collections increased,” Hutchinson said at a news conference. “So in essence we had more money for state services.”

The state’s revenue was helped by income tax collections after refunds, with the state paying less than expected. Arkansas’ individual income tax collections totaled $3.1 billion, which was $40.2 million below the previous fiscal year and $16 million above forecast. When factoring in tax refunds, the net income tax collections were $82.1 million above forecast.

Corporate income tax collections totaled $486.7 million, which was $6.4 million below the previous fiscal year and $17.7 million above forecast. When factoring in refunds, corporate tax collections were $27 million more than forecast. The state’s sales tax collections totaled $2.2 billion, which was $92.2 million above the previous fiscal year and $15.4 million below forecast.

Hutchinson didn’t say how much of an income tax cut he’ll propose next, but indicated it’ll likely be lower than what was approved last year. He said he wanted as much of the surplus as possible to be set aside in case of an economic slowdown, but said some of the money may be needed for one-time needs.

Senate President Jonathan Dismang said he also would prefer that much of the surplus be set aside, but said he also wanted to see if it was possible for the state to pay off any debts or bonds early with the funds.

“I think it’s important for our economic well-being to make sure when the next economic downturn occurs we’re well prepared,” Dismang, a Republican from Beebe, said.

Hutchinson is likely to face resistance to additional tax cuts from Democrats, who have complained the reductions have come at the expense of other state needs. House Minority Leader Michael John Gray noted state employees didn’t get a cost-of-living raise in the budget this year, and that the state’s pre-kindergarten program hasn’t received a funding increase in several years.

“I think we need to make sure we have our priorities right,” Gray, a Democrat from Augusta, said.

___

Follow Andrew DeMillo on Twitter at www.twitter.com/ademillo

LOAD COMMENTS ()

 

Click to Read More

Click to Hide