Arkansas revenue decline largely a timing effect, DFA says after revised forecast

State fiscal analysts told the Arkansas Legislative Council on May 20, 2025, that April general revenue collections have fallen from the previous year and that the Department of Finance and Administration has issued a revised revenue forecast largely attributable to deferred federal tax deadlines and macroeconomic factors.

Carlo Silva, a staffer with the Bureau of Education Research, told the council the monthly report shows gross general revenues of $6.8 billion, a year‑to‑date decline of $361.5 million — “that’s around 5% decline,” he said — and net general revenues of $5.4 billion, a decline of $224.7 million, about 3.9% year to date. Silva described the differences between the earlier forecast and year‑to‑date collections and noted the agency issued a new forecast after those figures were compiled.

The Department of Finance and Administration’s secretary, Jim Hudson, told members the change in collections is driven in part by an executive action extending tax filing and payment deadlines following a disaster declaration. “It’s not a net loss of revenue. It’s just more of a timing effect of it,” Hudson said, explaining that estimated corporate and individual payments normally due June 30 can be pushed into July and thus into fiscal 2026. He said the department reduced its projected revenues for fiscal 2026 and 2027 because of macroeconomic indicators and analysts’ trimmed GDP growth estimates, but that the immediate drop in collections reflected timing from the deadline shift and forecasting volatility in corporate collections.

Lawmakers asked whether the delayed filing and payment dates represented a permanent shortfall. Representative Meeks and Senator Hammer sought clarification about whether the deferred due dates would cause a sustained revenue reduction; Hudson and several legislators answered that the extension affects the fiscal year in which payments are recorded rather than the total amount ultimately collected, but they cautioned that final effects will be clearer after the extended deadlines expire and additional months of data are available. Hudson said August and September collections should provide a truer picture.

Several members also asked about a reported increase in fines, penalties and court costs listed in the packet. Representative Bentley and Senator Rice requested details about a 56% increase; Hudson said DFA had not changed enforcement posture and that the rise likely reflected the resolution of several cases and that the agency would report back with specifics.

Why it matters: The revised forecast required by statute and issued in May alters the administration’s outlook for the next two fiscal years and could affect budget planning and allocations as lawmakers prepare the biennial budget. DFA staff emphasized that the timing shift from extended deadlines will move some revenue into fiscal 2026, while macroeconomic uncertainty prompted downward adjustments to growth projections.

What’s next: DFA officials told the council staff and members they will provide further documentation of the revised forecast and follow up on the fines and court‑costs question. Lawmakers said they will review the full forecast report and monitor collections in August and September to assess the longer‑term impact on the state’s fiscal picture.