By Rob Moritz
Arkansas News Bureau
LITTLE ROCK — State revenues fell $17.8 million short of projections last month, the state fiscal office reported today, but budget officials were optimistic the economy would begin to improve early next year.
Richard Weiss, director of the state Department of Finance and Administration, blamed the bulk of the shortfall on “a timing issue” with corporate income tax collections and said he expects the state to make up the difference in December.
“We know that we’re going to receive some settlements on audits of various companies we factor into next month’s numbers,” Weiss said. “So you’re going to see a huge fluctuation between this month’s corporate collections and our forecast and next month.”
Corporate income tax collections totaled $10 million in October, an $18.7 million decrease from last year and $3.9 million below forecast for the month.
Along with the drop in corporate tax receipts, the state also saw drops in individual income and sales tax collections.
The October revenue report comes on the heels of the Beebe administration’s $100 million cut in the state budget because of an expected shortfall in revenues.
The cut means a 2.2 percent reduction of the overall budget, with the departments of Correction, Community Correction and Health and the state police taking the largest hits.
State agencies had until today to submit to DF&A their plans for cutting their budgets.
“This is an early read on our new forecast and we need to watch it for a couple months to see what’s going on. If we see a continued decline in these things, there may need to be another budget cut,” Weiss said.
“Again, there are good signs of recovery in some sectors and there’s a lot of concern about job loss and when jobs are going to start to return,” he added. “There’s a lot of uncertainty, but again all of our information … still says there’s going to be a turnaround and recovery happening next calendar year, in the first two quarters of the calendar, which would be the last part of our fiscal year.”
Gov. Mike Beebe revealed the nearly $18 million shortfall to reporters Monday and said the drop in corporate income taxes would rebound within the next few months.
“That’s really in an area that we know is going to catch up pretty quick,” the governor said Monday.
Net available revenues in October totaled $313.5 million, 5.4 percent below the monthly forecast and down $39 million, or 11.1 percent, from October 2008, DF&A reported.
Gross receipts, mostly from sales tax revenue, totaled $163.1 million, a $15 million drop from last year and $6.9 million, or 4.1 percent, below forecast.
Individual income tax collections brought in $191.3 million, a $4.9 million drop from last year and $3.4 million below forecast.
“I wish we had a better report, but in this day and age it’s not bad,” Weiss said.
