The state report on April tax revenue isn't good. Announcing an "unexpected shortfall," Gov. Mike Beebe today announced transfers from reserves to shore up education, medical and other services. The overall forecast for income this budget year, which ends June 30, has been reduced by $41 million. It had been cut back previously.
Here is the April revenue report. Gross collections for the month were $49 million below the same month last year and $41 million below the forecast. Individual income tax collections were down, but income tax withholding from paychecks was up. This could signal fallout from the dreadful 2009 as returns come in and indicate a pickup in 2010. Maybe. Sales tax collections were also up over last year, a measure of consumer spending. Finally, tobacco tax revenue is way up.
There's about $14.6 million left in the rainy day fund, the governor's office says, should the unexpected become routine in months ahead. At some point, budget cuts might become a necessity if that happens, though Beebe contends the economic trend remains positive. Also, a Beebe spokesman notes that all the rainy day money allocated today may not would up being spent by the agencies earmarked for transfers. What the governor has said so far:
Governor Mike Beebe has authorized the release of rainy-day funds and other fund transfers to protect state services after an unanticipated shortfall in April revenue. The anomaly in non-wage revenues, also appearing in other states around the country, has led the Arkansas Department of Finance and Administration to recommend a reduction in the FY2010 budget forecast of $41 million.
"Our overall economic trend remains positive, and if this anomaly had hit a few months ago, we might have been able to make up for it over time," Governor Beebe said. "However, with only two months left in the current fiscal year, we are going to move other money, including rainy-day funds, to prevent any potential cuts in state services. We set aside rainy-day money for this exact type of scenario."
To compensate for the $41 million reduction, $17.3 million will move to the public school fund unspent general revenue from the Education Facilities Partnership Fund. A reallocation of $6.3 million in federal reimbursements will prevent any reduction in Medicaid services. There will then be $17.4 million in rainy-day funds made available to other state agencies and to institutions of higher education to prevent any loss of services.