State income drops | Arkansas Blog

Thursday, July 2, 2009

State income drops

Posted By on Thu, Jul 2, 2009 at 9:43 AM

Even allowing for a one-time accounting oddity, state revenue was way down in June compared with both the same month a year ago and the forecast.

Gross state revenue in June was down 8.2 percent below last year and 5.7 percent below forecast. Net -- amount remaining after mandatory transfers off the top to certain state funds -- was down 11.4 percent year-to-year and 4.5 percent below forecast.

State Finance and Administration Director Richard Weiss isn't ready to panic. He notes: 1) the state met its overall forecast for the year, which ended June 30; 2) the monthly forecast for June had not been adjusted downward to reflect evidence months ago that it was overly optimistic; 3) forecasts for the new year, which began July 1, are much more modest -- growth of less than 1 percent for the year.

Weiss said weak sales taxes and income taxes "are a concern," but merely relfect the national reality. He said economists still believe at least modest improvement in the national economy will occur by the end of the year.

Fingers crossed. The budget contains no reserve or cushion should the economy not meet expectations.

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