Jul 6, 2023 - Business

Arkansas banks another billion in 2023

Data: Arkansas Department of Finance and Administration; Chart: Axios Visuals
Data: Arkansas Department of Finance and Administration; Chart: Axios Visuals

Arkansas closed fiscal 2023 with the second-highest revenue surplus in its history: $1.16 billion.

  • The numbers were reported yesterday morning by the Department of Finance and Administration.

Why it matters: The money is used to pay for state government, infrastructure, education, public assistance, corrections, Medicaid and transportation.

Context: The state ended fiscal 2022 with a record surplus of nearly $1.63 billion under former Gov. Asa Hutchinson's administration.

  • This year's surplus is a result of a stronger-than-expected economy and conservative forecasting, state economic forecaster John Shelnutt and state Department of Finance and Administration Secretary Larry Walther, told the Arkansas Democrat-Gazette.

By the numbers: Sales and use taxes collected during the year were $3.41 billion, up about 8.25% from $3.15 billion at the end of 2022.

  • Individual income taxes brought in $3.91 billion, down more than 6% from $4.17 billion a year earlier.
  • Corporate tax collections were $842.5 million, up 0.6% from 2022.

What they're saying: "The Governor promised and delivered on cutting taxes so Arkansans would see more of their paycheck and the state would remain competitive in attracting businesses and more jobs," Alexa Henning, spokesperson for Gov. Sarah Huckabee Sanders, told Axios via email.

  • "She will continue working to responsibly phase out the state income tax and being financially sound and strong helps keep us moving in that direction."

Flashback: A tax cut in August reduced the top individual income tax rate to 4.9%, the lowest in state history at the time. The reduction was retroactive to Jan. 1, 2022.

  • Sanders signed Act 532 in April, which further reduced the top income tax rates to 4.7% for individuals and 5.1% for corporations.

What we're watching: Though the fiscal session of the Arkansas Legislature is months away, Sanders and lawmakers may soon begin making cases for how the surplus will be spent.

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