News from the South - Arkansas News Feed

Arkansas tax revenue dips, prompting adjustments in forecasts

Published

2 months ago

May 22, 2025

arkansasadvocate.com – Antoinette Grajeda – 2025-05-22 12:53:00

by Antoinette Grajeda, Arkansas Advocate
May 22, 2025

Arkansas’ chief financial officer on Thursday attributed a $374.2 million decrease in net available revenue for the current fiscal year to a tax deadline extension due to severe weather and tax cuts in recent years.

Members of the Arkansas Legislative Council questioned Department of Finance and Administration Secretary Jim Hudson about a revised general revenue forecast released Wednesday that projects Fiscal Year 2025 net available revenue will reach $6.526 billion, a 5.4% decrease from FY 2024.

The FY 2025 surplus is expected to be $214.8 million, more than three times less than the $698.4 million surplus in FY 2024.

Because the governor issued executive orders authorizing the extension of the deadline for individual and corporate income tax payments to July 31, some of the revenue originally expected for FY 2025, which ends on June 30, will now shift to FY 2026, Hudson said.

“It’s not a net loss of revenue, it’s just more of a timing effect of it. So we’ll see some leakage of revenue both on the personal side and the corporate side out of FY 25 into FY 26,” Hudson said. “We’ve done some estimating on that, but we really don’t know how many people will take advantage of that yet.”

Arkansas governor signs tax, appropriation bills after special legislative session ends

In a May 21 letter to the ALC chairs, Hudson said the revenue decline compared to FY 2024 is also expected because of the impact of individual and corporate income tax rate reductions passed in two special sessions of the 94th General Assembly.

State lawmakers in September 2023 approved legislation to cut the top corporate income tax rate from 5.1% to 4.8% and the top individual income tax rate from 4.7% to 4.4%. The rate changes took effect on Jan. 1, 2024.

The General Assembly approved another round of cuts in June 2024 that lowered the top corporate income tax rate from 4.8% to 4.3% and the top individual income tax rate from 4.4% to 3.9%, retroactive to Jan. 1, 2024. The tax cuts went into effect immediately upon the governor’s signature.

Year-to-date, net available revenues have declined by $224.7 million from the same time last year, resulting in collections that are $52.2 million over forecast at that point, according to the new DFA report.

Sales and use tax collections have also been marginally below forecast and individual income taxes have been above forecast primarily due to estimated payments. Corporate income tax collections are below forecast, according to the report.

“Corporate collections are notoriously volatile, they’re even more so I’d say right now just given the number of tax cuts that we’ve done with some retroactive effect, so there could be a forecasting component to this,” Hudson said.

DFA’s report, which was released Wednesday as required by state law, included revised forecasts for FY 2026 and FY 2027. Net available revenues are expected to reach $6.679 billion, an increase of 152.8 million above FY 2025. The projected FY 2026 surplus is $185.1 million.

FY 2027 net available revenue is expected to reach $6.88 billion, an increase of $201.3 million above FY 2026.

The revised projections are lower than the Nov. 14, 2024 forecast, which predicted $6.794 billion in net available revenue for FY 2026 and $6.997 billion for FY 2027. The adjustments are “largely attributable to shifts in economic conditions,” according to the May 21 report.

The revenue forecast is based on S&P Global Market Intelligence’s baseline economic forecast, according to the report. The S&P, one of three major stock market indexes, has had a volatile year as the market reacts to threats by President Donald Trump to levy steep tariffs.

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“There’s a lot of speculation about the impact of tariffs, where the economy’s going,” Greenbrier Republican Rep. Stephen Meeks said Thursday. “…is any of that driving the need and is there anything looking forward that we need to be concerned about revenues coming into the state?”

Hudson responded that reductions made to the revenue forecast were “almost entirely driven by macroeconomic considerations.” Tariffs are a big component of forecasting, but Hudson noted it’s more the perception of the potential impact of tariffs that’s affecting the market instead of actual tariffs because many have been paused, he said.

Earlier this month, the United States and China agreed to lower steep tariffs for 90 days, States Newsroom reported. U.S. tariffs on Chinese goods dropped to a universal 10% baseline from the 145% Trump imposed in April. A 20% emergency tariff announced in February on all products because of illicit fentanyl chemicals in China remained in place.

The back and forth on tariffs has caused uncertainty, which the market hates, Hudson said. However, the state’s chief financial officer said he believes “the potential upside from tariffs could be significant” for Arkansas if the result is trade agreements that are more favorable to the U.S. than they are today.

“I think particularly for Arkansas, if our agri exports — we get access to certain foreign markets that we’re currently closed off to, that could be a significant benefit to the state,” he said. “But at this point, we don’t know what the actual long-term benefits will be. Because of the uncertainty, analysts have reduced the projected growth; we’re following suit.”

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Arkansas Advocate is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Arkansas Advocate maintains editorial independence. Contact Editor Sonny Albarado for questions: info@arkansasadvocate.com.

The post Arkansas tax revenue dips, prompting adjustments in forecasts appeared first on arkansasadvocate.com

Note: The following A.I. based commentary is not part of the original article, reproduced above, but is offered in the hopes that it will promote greater media literacy and critical thinking, by making any potential bias more visible to the reader –Staff Editor.

Political Bias Rating: Centrist

This content presents a factual and balanced overview of Arkansas’ state budget situation, focusing on budget forecasts, tax changes, and economic conditions without visible partisan commentary or rhetorical framing. It objectively reports statements from government officials, legislative actions involving tax cuts, and economic uncertainties, aiming to inform readers rather than persuade toward a political perspective. The article relies on official data and quotes from both government and legislative representatives, indicating a neutral stance typical of centrist reporting.

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News from the South - Arkansas News Feed

Grant Hardin used black marker & soup can to create disguise that allowed his escape

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July 10, 2025

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SUMMARY: Grant Hardin, a convicted murderer, rapist, and former police officer, escaped a medium-security prison in Arkansas using a disguise he crafted from kitchen materials. He dyed a shirt with a black marker, fashioned a makeshift badge from a soup can, Bible cover, and button, and used an apron as a bulletproof vest. The escape, lasting 12 days in the woods, revealed serious staff failures: a kitchen worker let Hardin unsupervised for over an hour, and a guard left a gate open unattended. Two prison employees were fired, but lawmakers remain unsatisfied. Hardin’s threat level was reportedly too low for his offenses, prompting ongoing investigations.

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Re-live the Beatles epic 1964 tour stop in Cincinnati

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July 10, 2025

Staff Editor

www.youtube.com – 40/29 News – 2025-07-10 09:35:38

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News from the South - Arkansas News Feed

US Education Department to revive student loan interest for borrowers in SAVE program

Published

2 days ago

July 9, 2025

Staff Editor

arkansasadvocate.com – Shauneen Miranda – 2025-07-09 16:06:00

by Shauneen Miranda, Arkansas Advocate
July 9, 2025

WASHINGTON — Interest accrual on the debt of nearly 7.7 million student loan borrowers enrolled in the Saving on a Valuable Education plan will resume Aug. 1, the U.S. Education Department said Wednesday.

The Biden-era income-driven repayment plan better known as SAVE saw legal challenges from several GOP-led states beginning in 2024, creating uncertainty for borrowers who were placed in an interest-free forbearance amid that legal limbo.

The SAVE plan, created in 2023, aimed to provide lower monthly loan payments for borrowers and forgive remaining debt after a certain period of time.

In February, a federal appeals court upheld a lower court injunction that blocked the SAVE plan from going into effect. The department said Wednesday that it’s instructing its federal student loan servicers to start charging interest Aug. 1 to comply with court orders.

When the SAVE plan forbearance ends, “borrowers will be responsible for making monthly payments that include any accrued interest as well as their principal amounts,” the department said in a written announcement.

“For years, the Biden Administration used so-called ‘loan forgiveness’ promises to win votes, but federal courts repeatedly ruled that those actions were unlawful,” Education Secretary Linda McMahon said in a statement alongside the announcement.

“Congress designed these programs to ensure that borrowers repay their loans, yet the Biden Administration tried to illegally force taxpayers to foot the bill instead,” she added.

McMahon said her department is urging borrowers under the SAVE plan to “quickly transition to a legally compliant repayment plan.”

“Borrowers in SAVE cannot access important loan benefits and cannot make progress toward loan discharge programs authorized by Congress,” she said.

‘Unnecessary interest charges’

Mike Pierce, executive director of the Student Borrower Protection Center, blasted the department’s decision in a statement Wednesday.

“Instead of fixing the broken student loan system, Secretary McMahon is choosing to drown millions of people in unnecessary interest charges and blaming unrelated court cases for her own mismanagement,” he said.

“Every day, we hear from borrowers waiting on hold with their servicer for hours, begging the government to let them out of this forbearance, and help them get back on track — instead, McMahon is choosing to jack up the cost of their student debt without giving them a way out.”

The agency has taken heat for its sweeping actions in the months since President Donald Trump took office as he and his administration look to dismantle the department.

The department is also mired in a legal challenge over some of its most significant efforts so far, including laying off more than 1,300 employees earlier this year as part of a reduction in force effort, an executive order calling on McMahon to facilitate the closure of her own agency and Trump’s proposal to transfer some services to other federal agencies. These actions have been temporarily halted in court.

Meanwhile, President Donald Trump signed a massive tax and spending cut bill into law last week, part of which forces any borrower under the SAVE plan to opt in to a different repayment plan by July 1, 2028, or be automatically placed in a new, income-based repayment plan.

The post US Education Department to revive student loan interest for borrowers in SAVE program appeared first on arkansasadvocate.com

Political Bias Rating: Center-Right

This article presents the developments around the federal student loan SAVE plan primarily through a critical lens toward the Biden administration’s policies, emphasizing legal challenges and statements from Education Secretary Linda McMahon, a Trump appointee, who frames the administration’s actions as unlawful and fiscally irresponsible. It includes critical commentary from conservative officials and frames the Biden-era policies as politically motivated. Although it also quotes critics of the Education Department’s decision, the overall tone and source choices suggest a center-right leaning, reflecting skepticism of progressive loan forgiveness policies while focusing on legal and fiscal accountability.