State budget report reveals $16M revenue drop driven by natural gas prices
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The Arkansas Department of Transportation (ARDOT) reported a budget surplus of $3.2 million, or 5.2 percent under budget, through October 2023, during a meeting held on December 8, 2023. This positive financial outlook comes despite challenges in revenue streams, particularly from natural gas severance taxes, which have significantly decreased compared to last year.
Chief Engineer Patrick McGowan highlighted that while operational expenses exceeded the budget by $4.6 million, this was attributed to seasonal factors. The maintenance and operations categories showed a combined surplus of $3.7 million, with maintenance under budget by $2.1 million and operations by $1.6 million. However, administrative costs were reported to be over budget.
In terms of revenue, motor fuel taxes increased by $2.8 million, while registration fees also saw a rise. Overall, traditional revenue sources were up by 1.2 percent compared to the previous year. However, the department is facing a significant downturn in natural gas severance revenue, which has dropped from an average of $5.9 million per month last year to approximately $800,000 this year, largely due to falling natural gas prices.
The meeting also addressed broader economic trends, with sales tax revenues showing a slight decline of 0.2 percent statewide. This downturn has prompted ARDOT to adopt a more conservative approach in budgeting, anticipating a potential revenue shortfall of $12 to $15 million for the year.
In addition to financial updates, the meeting included discussions on federal funding. Chief of Administration Kevin Thornton reported that the federal fiscal year 2024 began under continuing resolutions, with funding extended until January 19, 2024. Ongoing disagreements in Congress regarding spending levels have delayed the approval of a comprehensive appropriations bill.
The meeting concluded with an update on the implementation of efficiency recommendations from the Arkansas Legislative Council, aimed at improving ARDOT's operational effectiveness. As the department navigates these financial and legislative challenges, the focus remains on maintaining essential services and planning for future revenue stability.
Chief Engineer Patrick McGowan highlighted that while operational expenses exceeded the budget by $4.6 million, this was attributed to seasonal factors. The maintenance and operations categories showed a combined surplus of $3.7 million, with maintenance under budget by $2.1 million and operations by $1.6 million. However, administrative costs were reported to be over budget.
In terms of revenue, motor fuel taxes increased by $2.8 million, while registration fees also saw a rise. Overall, traditional revenue sources were up by 1.2 percent compared to the previous year. However, the department is facing a significant downturn in natural gas severance revenue, which has dropped from an average of $5.9 million per month last year to approximately $800,000 this year, largely due to falling natural gas prices.
The meeting also addressed broader economic trends, with sales tax revenues showing a slight decline of 0.2 percent statewide. This downturn has prompted ARDOT to adopt a more conservative approach in budgeting, anticipating a potential revenue shortfall of $12 to $15 million for the year.
In addition to financial updates, the meeting included discussions on federal funding. Chief of Administration Kevin Thornton reported that the federal fiscal year 2024 began under continuing resolutions, with funding extended until January 19, 2024. Ongoing disagreements in Congress regarding spending levels have delayed the approval of a comprehensive appropriations bill.
The meeting concluded with an update on the implementation of efficiency recommendations from the Arkansas Legislative Council, aimed at improving ARDOT's operational effectiveness. As the department navigates these financial and legislative challenges, the focus remains on maintaining essential services and planning for future revenue stability.
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