Thursday, February 4, 2010

Week In Review

State Capitol Week in Review

LITTLE ROCK – The fiscal session of the Arkansas legislature will be historic for a couple of reasons. It is the first time ever for Arkansas lawmakers to convene in a legislative session dedicated entirely to writing budgets.

The fiscal session also will be remembered because the state agency budgets adopted by the legislature will be some of the most conservative in memory. That is saying something because the Arkansas legislature has always budgeted very conservatively.

As recently as the 2007 regular session, state government had a surplus of hundreds of millions of dollars as a result of conservative budgeting, even after the legislature lowered the grocery tax by half and enacted other tax cuts amounting to $200 million a year.

Of the surplus, about $456 paid for structural and capital improvements in public school facilities throughout Arkansas. Those facilities improvements were a large factor in making education funding equitable and adequate, and thus in convincing the Supreme Court to bring a long-running school funding lawsuit to an end.

The surplus also helped state agencies avoid cuts in services when the economy went flat and tax revenues tapered off.

Now legislators meet in a historic fiscal session with the surplus committed and with this year's revenue falling below forecasts. Since Arkansas state government operates under a balanced budget law, agencies must cut back on spending in tough times in order to balance budgets.

Our balanced budget law, called the Revenue Stabilization Act, prioritizes spending. When budget cuts are necessary, programs in low-level categories are eliminated or scaled back.

So far this fiscal year the state has cut about $206 million from the general revenue fund, the largest discretionary spending account controlled by lawmakers. Those cuts will bring this year's general revenue budget to an estimated $4.3 billion.

During the fiscal session legislators will vote on appropriations for next fiscal year, which will begin on July 1. The administration has proposed a general revenue budget of $4.478 billion. If the economy does not rebound and tax revenues lag, that amount will be reduced so that state expenditures do not exceed income.

The voters of Arkansas approved a constitutional amendment in November, 2008, that requires the legislature to convene in fiscal sessions in even-numbered years. Regular sessions will continue to convene in odd-numbered years.

The fiscal session will last 30 days, unless extended by a 75 percent vote of each chamber. The fiscal session cannot be extended any more than 15 days, so the longest fiscal session allowable is 45 days. The first fiscal session is expected to be for 30 days with no extensions needed.

There is a mechanism for filing bills other than appropriations. However, it is difficult and nobody expects more than a couple of non-budget bills to be placed on our calendar. One is a renewal of the Revenue Stabilization Act and the other would set the amounts for lottery scholarships at $5,000 a year for students at four-year universities and $2,500 a year for students at two-year colleges.

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