LITTLE ROCK – Arkansas government ended its year on Wednesday with a $72.9 million surplus, according to the state’s monthly revenue report.

The good news is tempered by the fact that $64 million of the surplus came from one-time money that was shifted to the state’s general fund, plus other new revenues.

Still, the net revenues of $3.599 billion, or 10.7 percent revenue growth over 2003, was viewed as good news by Richard Weiss, Department of Finance and Administration director.

Weiss’ agency endured months of skepticism from lawmakers concerned that tax collections wouldn’t grow enough to support the state’s budget. DF&A is responsible for making the revenue forecast, which the Legislature uses to build the state’s biennial budget.

DF&A’s forecasters were nervous, as well, and as late as March, Weiss warned Gov. Mike Huckabee that budget cuts were a possibility before the June 30 fiscal year end.

“The economy was just really kind of sputtering along with fits and starts, and it wasn’t until the last two months that I think things have really firmed up and we’ve really seen some growth in the tax collections from good economic times,” Weiss said.

The budget numbers also include new revenues from higher tobacco taxes, $45.2 million; the repeal of the Working Taxpayer Credit, $18.6 million; and proceeds from a 3 percent income tax surcharge, $39.9 million. Those changes were adopted in 2003 to make up for a projected budget deficit.

The $64 million won’t be around next year and the income tax surcharge will be phased out if state revenue growth rises enough.

Weiss speculated that some people may wonder why taxes were raised in light of the $72.9 million surplus. But he said the cost of education reforms will demand every spare dollar.

He also said state budget officials are projecting a possible $90 million deficit in 2006 because of the state’s obligations to pay for court-ordered education reforms.

For the just-ended budget year, individual income taxes totaled $1.97 billion, an increase of $140.9 million, or 7.7 percent above last year. The total was $39.6 million, or 2 percent, above forecast.

Gross receipts, which consist of the sales and use taxes, 10 percent mixed drink tax, and the alcoholic beverage excise tax, totaled $1.8 billion. That’s an increase of $87.4 million, or 5.1 percent above last fiscal year and $16.7 million above forecast.

Corporate income tax collections totaled $238.1 million, an increase of $11.9 million or 5.3 percent compared to last year, and $17.1 million or 7.7 percent above forecast.