LITTLE ROCK — The Arkansas Department of Finance and Administration reported Tuesday that state revenue last month exceeded expectations by over 28 million dollars, indicative of a strong economy.
The DFA said that in November, sales tax collections alone were $17 million above forecast.
For example, sales tax collection on motor vehicles was 14.6 percent higher in November 2023 than in November last year.
“Those vehicles are really moving off the lots, versus November 2022, which is a great sign for the economy,” DFA Spokesperson Scott Hardin said.
Through the first five months of this fiscal year, Arkansas is about $144 million above forecasted revenue. The DFA says that the economic growth is in line with other positive indicators, such as Arkansas’ low unemployment rate, lower than the national average, and many other factors contributing to the state’s strong economy.
“We’ve got a record amount in reserve funding. You know, people are moving here. We’ve got strong job growth, we’ve got wage growth, we’ve got income tax collection that’s extremely strong. Overall, we’re just moving along and seeing a really healthy state economy that is setting records,” Hardin said.
And it’s not just the strength of the private sector, the DFA also credits the conservative way in which Arkansas balances its budget.
“There are states that can spend and borrow—we’re not one of those, we spend the money we have. As we collect money, we then distribute it out to agencies. So, agencies can’t spend on credit, they spend what we have,” Hardin said.
But there’s a catch…the positive economic performance ultimately belies a longer-term decline from unsustainable growth attributed to COVID-era federal stimulus money.
“If you look back, you had so much federal stimulus money flowing through this economy, throughout the United States. The $1,200, $1,500 stimulus checks that people were getting, you had all the federal money being injected into the economy—so we know that that was not sustainable,” Hardin said.
“This is sort of the beginning of our forecasted period of weakness in the U.S. and state economies. So, it’s good to see this create a buffer for us going into what is predicted to be a slowdown,” said DFA Economist John Shelnutt.
“What we’re doing now is we’re planning against what we know is really back to normal to some degree, but even with that, we’re still exceeding [expectations], so yeah, we’re well prepared,” Hardin said.
According to the DFA, Arkansas tends to do better during recessions than the national average and ultimately, the state is in very good shape financially.