LITTLE ROCK, Ark. — A tax cut could be on the way for Arkansans as lawmakers consider the idea after the state released a new and much larger surplus prediction.
The Department of Finance and Administration (DFA) expects to end the fiscal year with an extra $708 million in the bank. They explained how most of these extra funds come from income and sales taxes, with some of those sales taxes being boosted by inflated prices.
Back in February, the DFA predicted a surplus of $240 million dollars, but last week they updated that number.
As the fiscal year comes to an end in June, DFA spokesperson Scott Hardin expects the state to have millions left over.
"The state has more money in the bank. I know Arkansans may look at that and say, well, what does that mean, for me?" Hardin said, "Arkansans are spending more money across the state, they're buying more products, and they're making more money and paying more taxes on that money, or more than we anticipated."
All of that has brought in more money than the state expected in their 2024 budget, which follows a trend of record funds in recent years, ($945M in 2021, $1.6B in 2022, and $1.2B in 2023).
"You look over the last three years, and you see the three largest surpluses in state history, which is really something considering the state's been in operation for quite some time," Hardin added.
However, where that money goes is now up to state lawmakers like Representative Brian Evans.
"When having conversations with the budget chairs, with additional members of leadership, I just think it's the prudent move for us on behalf of our constituents, the taxpayers of Arkansas to make another cut in their income taxes," he explained.
That's one idea that could be voted on as soon as next month in an expected special session at the capitol.
Evans explained his proposal to cut taxes could bring the current 4.4% rate to close to 4% and could possibly go into effect retroactively at the start of the calendar year.
The remaining funds could add to the state's now record billion-dollar reserve funds, and the rest could be decided in the 2025 legislative session.
"I can see this being a top priority with myself and with Senator Hester, as we respectively tried to lead our chambers," Evans said
The fiscal year wraps up at the end of June and lawmakers expect to meet before then for a special session to vote on an outstanding Game and Fish budget as well as discuss that possible tax cut.
Earlier this month the legislature approved a $6.3 billion budget for 2025, now with an expected future surplus of $763 million.