LITTLE ROCK, Ark. – Three months of good tax returns and several pots of one-time money have left the state with a larger surplus than expected, Arkansas finance officials said Thursday.
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The end of the fiscal year surplus had reached about $191.6 million, state Department of Finance and Administration Director Larry Walther said. That's about $100 million more than projected in the most recent economic forecast, officials said, and about $113 million more than the fiscal year 2014 surplus.
Walther said much of that influx came from unexpected one-time money including a $14.4 million from the Attorney General's office due to a settlement with Standard & Poor's over allegations it misled investors when it rated certain investments. Another one-time source of money was a $51.1 million transfer from surplus at the Arkansas Insurance Department.
"We've had a good year. We're looking at next year," Walther said. "Obviously it's nice to have some money built up ... but you need to be prepared to deal with things, not on a scheduled basis, but there are other things out there that are going to occur."
Walther said one such thing is an income tax cut that's scheduled to go into effect Jan. 1 for people who make between $21,000 and $75,000. He noted that the department has been conservative in its forecasting partly to make sure those cuts would be covered.
DFA staff said most of the one-time money and the surplus overall has already been committed for certain expenditures. After general improvement expenditures and executive branch priorities, State Budget Administrator Duncan Baird said there will be about $38 million in surplus left to spend.
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Walther said increases in sales tax and other tax revenue over the last few months have been encouraging.
Sales and use tax collections increased about 1.1 percent over the entire fiscal year — an increase of about $24.6 million — despite Arkansas needing to refund about $28.7 million in court settlements after a recent Arkansas Supreme Court decision that said the state couldn't tax sand or other materials used in hydraulic fracturing because those materials are considered equipment.
The state coffers also saw a 12 percent increase in corporate income tax and a 2.5 percent increase in individual income tax.