By Rob Moritz
Arkansas News Bureau

LITTLE ROCK — Despite higher tax collections in February, Arkansas’ chief financial officer said Tuesday he does not see the state’s economy or tax collections improving any time soon.

Net available general revenue last month totaled $207.3 million, an increase of $16.4 million, or 8.6 percent, over February a year ago and $41.5 million — 25 percent — above forecast for the month.

However, Richard Weiss, director of the state Department of Finance and Administration, said February’s income tax collections consisted largely of a one-time “windfall” of income taxes paid on the severance packages of laid off workers.

Another one-time factor, he said, was cigarette sellers stocking up before a 56-cent per pack increase in the state cigarette tax took effect March 1.

“We’re above forecast, but all on things that are not going to cause us to revise our forecast for the year,” Weiss said.

DF&A has no plans to change the current revenue forecast, which predicts slower growth but enough to absorb the 1-cent reduction in the state sales tax on groceries Gov. Mike Beebe has proposed, Weiss said. The food tax cut would cost the state about $30 million annually.

Weiss said he expects next fiscal year to be tighter due to a continuing economic slowdown and job losses.

“We’re looking at a really troubled 2010,” he said. “Clearly, this (February windfall) is coming at a loss of next year.”

Still, Beebe, who successfully pushed a 50 percent reduction in the sales tax on groceries two years ago — from 6 percent to 3 percent, said he would not back off his push for another penny reduction this year.

“I’m in good shape on that,” the governor said. “I’m confident we can do it. We were all concerned about declining revenues, and that’s why we cut only a third.”

The governor hopes to eventually eliminate the food tax altogether, as he promised in his 2006 gubernatorial campaign.

Senate Bill 88 by Sen. Bobby Glover, D-Carlisle, which would reduce the tax by 1 cent, has already passed the Senate and is awaiting consideration in the House Revenue and Taxation Committee, along with variety of other tax exemption and tax cut proposals.

Weiss said Tuesday he has urged the committee not to approve any of the tax measures, except the grocery tax cut.

The committee chairman, Rep. John Lowery, D-El Dorado, said he has noted Weiss’ recommendation.

“I, for one, and the committee, I think, is considerate of that,” Lowery said. “But I think it’s also fair to say that in this economy, there’s some members here, there’s members of the House, that are not opposed to the grocery tax per se, but that might not be their top priority.”

Lowery said there “may be some other bills here that we have to consider, such as exemptions on electricity and natural gas for manufacturers. … If they want to discuss those and bring them out of the committee, then certainly we’ll consider them.”

He said he expects SB 88 to be considered by the House tax committee next week.

In February, individual income tax collections totaled $200.7 million, an increase of $12.4 million over a year ago and $21.4 million above forecast for the month, DF&A reported. Corporate income taxes totaled $3.3 million, down about $300,000 from a year ago and fractionally below forecast.

Gross receipts collections totaled $170.3 million last month, or 3 percent above forecast.

Through the first eight months of the fiscal year, revenue totaled $3.5 billion, $95.4 million ahead of last year and $82.6 million above the forecast.

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Reporters John Lyon and Doug Thompson contributed to this report