(The Center Square) – Arkansas’ state budget has a surplus of just over $1.1 billion, and one organization would like to see that given back to the taxpayers.
State tax collections for fiscal year 2023 totaled $7.1 billion for the state, which was $126.5 million above forecasted tax collections, according to an economic analysis delivered to the Arkansas Department of Finance and Administration.
Nicholas Horton, founder and CEO of Opportunity Arkansas, which partners with policymakers on various political issues, told The Center Square the surplus is an opportunity for more income tax relief.
“The time is now for state leaders to deliver on their promises of serious, significant income tax relief for working Arkansans,” Horton said. “The longer we wait, the more difficult it will be for this tax relief to happen, as special interests will devise more and more ways to waste the money. In fact, it’s already started. Arkansas has an income tax policy that punishes work — and we are bordered by two states that don’t. We are falling behind and failing to compete.”
Gov. Sarah Huckabee-Sanders signed a bill in April that reduced income tax rates and returned about $100 million to taxpayers. Before taking office in January, Sanders said her goal is to end the state’s income tax entirely.
Horton said the tax relief passed earlier this year was underwhelming.
“Opportunity Arkansas has been vocal about our disappointment with the meager tax cuts that occurred during the regular 2023 session,” Horton said. “But state leaders have a second chance to get this right: the governor should call a special session and pass an additional $250 million (minimum) in income tax relief. This is less than a quarter the surplus but would send a clear message to Arkansans and businesses that the income tax’s days are numbered.”
The DFA said that state tax collections are up in almost every category. Money collected from sales taxes and use taxes increased by $263.6 million over last year, while money collected from corporate income taxes increased by $5.3 million, the fiscal analysis said.
Individual income tax collections decreased by just over 6% from 2022 but still came in at $42.4 million above what was forecast, according to the DFA.
