LITTLE ROCK, Ark. – One day after releasing an initial January revenue report, Arkansas officials are now lowering the revenue forecast for the fiscal year, attributing the change to tax cuts.
The Department of Finance and Administration moved the anticipated 2024 fiscal year surplus from $423 million to $240 million in the report revision, with the primary reason for the drop being the 2023 tax cuts going into effect.
The new $240 million forecast is very conservative, officials said.
DFA spokesperson Scott Hardin said the difference is that the surplus will stay with taxpayers.
“The tax cuts passed in the special session will result in hundreds of millions of dollars remaining with Arkansans versus being paid to the state,” Hardin said. “While the anticipated revenue surplus is now lower, it is due to that money remaining in the pockets of hard-working Arkansans. Refunds to individual taxpayers surpassed $800 million last year, a significant increase from 2022.”
Act 532 was signed into law in April 2023, lowering personal and corporate income taxes by an estimated $186 million.
The 2023 tax cut and a subsequent downward adjustment in projected surplus came after three consecutive years of the largest surpluses in the state’s history, of $945 million in 2021, $1.6 billion in 2022 and $1.1 billion in 2023.
The Arkansas legislature and Gov. Sarah Huckabee Sanders will ultimately determine how the budget surplus is used. Previous surpluses had been placed into emergency funds, with a portion used to invest in state resources and services.
The state fiscal year runs from July 1 to June 30.