Arkansas lawmakers send governor’s general revenue budget bill, increasing spending 1.76% to $6.31 billion

The Arkansas Senate and House of Representatives voted Thursday to send Governor Sarah Huckabee Sanders identical bills that would increase the state’s general revenue budget by $109.3 million to $6.31 billion in the coming fiscal year.

Before the Senate and House of Representatives went into recess for this year’s budget session, the Senate voted 33-0 to approve House Bill 1097 by state Rep. Lane Jean, R-Magnolia, and the House voted 88-1 to approve passage of Senate Bill 80. by State Sen. Jonathan Dismang, R-Searcy. State Rep. Austin McCollum, R-Bentonville, voted against SB80.

SB80 and HB1097 would amend the state’s Revenue Stabilization Act for fiscal year 2025, which begins July 1, 2024, and ends June 30, 2025.

With “our partners in the Legislature,” Sanders said, “we have continued to advance our commitments to the people of Arkansas – chief among them is slowing the growth of government,” during this budget session year.

The state’s general revenue budget will increase by 1.76% in fiscal year 2025 — less than an average of 3% per year in recent years — and that’s half the current inflation rate, Sanders said at a news conference in the House chamber from the governor.

“At the same time, we continue to make critical investments in public safety and education,” the Republican governor said.

“And we are paving the way to lower taxes in the future and ultimately responsibly eliminate our state income tax so Arkansans can keep more of their hard-earned money,” she added.

The state would post a general revenue surplus of $376.6 million in fiscal year 2025 if the state’s general revenue revenues meet the Feb. 1 Department of Finance and Administration forecast of $6.68 billion for net general revenues , based on the state’s 2025 fiscal year 2025 general revenue budget of $6.31 billion.

In the Feb. 1 forecast, the Finance Department projected a general revenue surplus of $240.5 million in the 2024 budget year ending June 30.

“With two months left in the 2024 budget year, (Treasury and Administration Secretary Jim) Hudson is confident the state revenue surplus will exceed $400 million,” Finance Department spokesman Scott Hardin said Thursday.

Senate President Pro Tempore Bart Hester, R-Cave Springs, told reporters that he suspects that if the state’s general revenue surplus exceeds $300 million or $400 million at the end of the 2024 budget year, the Legislature will hold a special session in August will consider cutting income taxes. or September. He said he hopes the income tax cuts can be retroactive to January 1, 2024.

“What we’re not interested in is putting ourselves in a position where we’re cutting back on essential services for the people of Arkansas,” he said Thursday.

Asked about plans for a special session later this year to consider tax cuts, House Speaker Matthew Shepherd, R-El Dorado, told reporters: “I wouldn’t say at this point that there is any significant discussions are ongoing.

“I think what has been said in the past by House and Senate leadership and the governor’s office is that we wanted to get a little further down the road this year and see if there might be an opportunity for a special session later this summer or early fall to potentially approve an additional income tax cut,” he said. ‘That’s my hope. That is my expectation.’

The Revenue Stabilization Act measures – SB80 and HB1097 – would increase general revenue for the state’s Education Freedom Accounts by $65.7 million to $97.4 million in fiscal year 2025. Education Freedom Accounts are vouchers designed to help students attend private school, parochial school or homeschool.

Sanders’ signature education initiative — the LEARNS Act, which became law during the 2023 regular session — created the Education Freedom Accounts. The LEARNS Act also increased pay for beginning teachers from $36,000 to $50,000 per year and authorized a $2,000 raise for other teachers, among other things.

SB80 and HB1097 would also increase the state’s general revenue for the public school fund by $38.2 million to $2.48 billion, including a $34.2 million increase in general revenue to $2.44 billion for the Department of Primary and Secondary Education of the Ministry of Education and an increase of $4 million. in general revenues to $26.8 million for career and technical education.

Sanders said the state will provide educational freedom to more families than ever in Arkansas history and pay the highest salaries for beginning teachers in the country, after taking into account the cost of living.

Tippi McCullough of Little Rock, the Democratic leader of the House of Representatives, said in an interview: “I know the governor says this was one of the smallest percentage increases in the budget ever in terms of additional spending, but this is still still the largest budget ever.”

“I’m not sure: a lot of the money now goes to private schools that don’t have a lot of accountability yet,” she said. “We have some well-paid staff. We haven’t done enough for the people who feed our children at school.”

The $109.3 million, or 1.76%, increase to $6.31 billion in the state’s fiscal year 2025 general revenue budget will be the smallest increase since fiscal year 2022, state data show.

In fiscal year 2022, which ended June 30, 2022, the state’s Revenue Stabilization Act was reduced by $50.4 million, or 0.85%, to $5.84 billion based on state data. The state government reported an overall revenue surplus of $1.628 billion at the end of fiscal year 2022.

In fiscal year 2025, SB80 and HB1097 would also increase general revenue allocated to the Division of Arkansas State Police by $3.9 million to $92.5 million in fiscal year 2025. The proposal funds an additional Arkansas State Police troop school State Police.

“We will put more state troopers on our roads and ensure we give them the tools and training they need to keep our communities safe,” Sanders said.

Under the measures, general revenues for the Department of Corrections’ Division of Correction would increase by $536,285 to $434.8 million in fiscal year 2025 and by $571,631 to $105.3 million for the department’s Division of Community Correction .

The general allocation of revenue for county jail reimbursement would remain at $25.7 million in fiscal year 2025. The Legislature and Governor enacted Act 117 to appropriate an additional $4.2 million to the state Department of Corrections to reimburse counties for holding state prisoners in county jails and fund the appropriation by 4 $.2 million in state surpluses in the 2024 budget year ending June 30.

The state Department of Human Services’ general revenue allocation would increase by $4.4 million to $1.83 billion under the bills, including a $3.6 million increase to $57.4 million for county operations. State officials said most of the increased general revenue for the Department of Human Services comes from the transfer of the Temporary Assistance for Needy Families program from the state Department of Workforce Services.

The bills would also reduce the total general revenue allocation to state institutions of higher education by $2.4 million to $778.8 million, but also allocate $4.5 million in general revenue to fund a sustainable program for ongoing loans for the maintenance of buildings for the state higher education institutions in the coming years. fiscal year.

In total, the fiscal year 2025 measures would increase the general revenue budget of the University of Arkansas at Pine Bluff from $26.1 million to $27.7 million in fiscal year 2025, with an increase from $2 million to $5.8 million dollars for the university’s land grant matching program.

Under the same bills, the University of Arkansas and Fayetteville general revenue budget would increase by $387,468 to $134.5 million and the University of Arkansas at Medical Sciences general revenue allocation would remain the same at $93 million.

The measures would also modify the infrastructure investment and jobs grants matching the set-aside in the restricted reserve fund to provide matching funds for the Infrastructure Investment and Jobs Act, as well as for “the Inflation Reduction Act, the CHIPS Act and other infrastructure and certain projects funded largely by the federal government” in an amount not to exceed $200 million.

There remains $194.8 million in this restricted Reserve Fund account, Hardin said.

The total balance in the state’s Restricted Reserve Fund is $2.05 billion, including $710.6 million in the Arkansas Reserve Fund established in legislation passed during the September special session, Hardin said. The state’s Catastrophic Reserve Fund balance is $1.5 billion, he said.

Hester said, “We stuck to the (general revenue) budget” and “we have a lot of reserves right now and a lot of money in reserves.”

He said every lawmaker needs water and sewer projects in their legislative district, “so I’m really going to push to spend some surplus money on water and sewer projects across the state.”

Legislative leaders said lawmakers will return to the Capitol on May 9 to adjourn the budget session, which began on April 10. May 9 will be the 30th day of this year’s budget session, the state’s eighth budget session.

The state’s shortest budget session lasted 17 days in 2020, when the Covid-19 pandemic emerged, with the House of Representatives meeting at the Jack Stephens Center at the University of Arkansas in Little Rock. Most lawmakers wore masks and spread out to keep the recommended distance between them.

The state’s longest budget session lasted 38 days in 2014, the last year Mike Beebe, a Democrat, served as governor and the second year since Republicans gained majority control of the Legislature for the first time since Reconstruction.

Information for this article was contributed by Josh Snyder of the Arkansas Democrat-Gazette.