Thursday, July 7, 2011

Week In Review

State Capitol Week in Review

LITTLE ROCK – Thanks mainly to very conservative budgeting, Arkansas state government ended its fiscal year on June 30 with a surplus of about $94 million.

State budget officials said the surplus was also evidence of a slow economic recovery. State revenue is a good indicator of the health of the Arkansas economy because taxes have not gone up. That means any increase in tax revenue is caused by an increase in economic activity rather than by higher tax rates.

In fact, in the regular legislative session earlier this year lawmakers reduced state taxes by about $35 million annually.

It was the state's first surplus in three years. Legislative leaders and the governor agreed that although the surplus is good news it is not cause to create any new spending programs. The governor suggested that the surplus be used to shore up the state's Medicaid program, which is expected to run a budget shortfall within the next two years.

The surplus is in the state's general revenue fund, the main source of discretionary spending by legislators. There are other sources of state revenue that go for dedicated purposes, such as motor fuels taxes that are spent on highway maintenance and construction. Another example is the money from a settlement with major cigarette manufacturers that pays for a variety of state health programs.

The main sources of the general revenue fund are state sales taxes, individual income taxes and corporate income taxes. Last fiscal year the net total in the state's general revenue fund was about $4.57 billion. That amount represents about $94 million more than the legislature authorized in spending.

Arkansas is one of 46 states where the fiscal year runs from July 1 to June 30. We have just begun Fiscal Year 2012.

Since last year state and local governments across the country have laid off about 350,000 government workers because of declining revenues. Many states are struggling to pay for increases in Medicaid costs, which are going up in part because people have lost their jobs and become eligible for Medicaid services and in part because the Baby Boomer generation is getting older and requiring more medical care.

Campaign Against Speeding

From July 10 through 16 the State Police will step up enforcement of traffic laws against speeding in a campaign labeled "Obey the Sign or Pay the Fine."

The director of the State Police said that speeding greatly reduces a driver's ability to steer safely around other vehicles and any dangerous obstacles in the road. It also lessens a driver's ability to negotiate an unexpected curve.

"Speeding translates to fatalities on Arkansas roadways," he said.

Speeding is a factor in about a third of all fatalities caused by traffic accidents. County and city law officers will participate in the anti-speeding effort.

Lottery Scholarships

About 70,000 college students have applied for an Academic Challenge Scholarship for the coming school year. The scholarships are funded with proceeds from the state lottery.

Last year 58,000 students applied and about 31,000 were awarded a lottery scholarship. The popularity of the new state lottery is believed to have increased awareness of the availability of Academic Challenge Scholarships. They will be worth $4,500 for freshmen at four-year universities and $2,225 for new students at two-year colleges.

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