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State Capitol Week in Review

            LITTLE ROCK – The legislature began budget hearings in preparation for the fiscal session that convenes in April.

            Legislators focused on budget request from the “Big Six,” which is a shorthand reference to institutions of higher education, the Public School Fund for schools that teach kindergarten through grade 12, the Department of Human Services, the Department of Health, the Department of Correction and the Department of Community Correction.

            The Human Services Department administers the Medicaid program. The Correction Department operates state prison units and the Department of Community Correction is in charge of probation and parole, transitional housing for inmates and drug courts.

            The “Big Six” receive the state portion of their income mainly from the general revenue fund, which is state government’s largest discretionary fund. The major sources of general revenue are individual and corporate income taxes and sales taxes.

            The Highway and Transportation Department is one of the largest state agencies, but its income comes mainly from special revenues, such as motor fuels taxes and fees on large trucks. Special revenues come from taxes that are designated for specific purposes, such as gas taxes for highway projects and the one-eighth of a cent sales tax approved by Arkansas voters to fund conservation programs.

            The governor proposed a balanced budget for next fiscal year, which will begin on July 1. When taking into account budget surpluses, the governor’s balanced budget forecasts growth in the state’s general revenue of 2.7 percent over the current year.

Growth of 2.7 percent would mean that the state collects about $106.8 million more in general revenue, bringing the total general revenue budget for Arkansas to $5.3 billion next year. 

When the current fiscal year ends on June 30, general revenue collections will be an estimated $5.2 billion.

Combined with unspent budget surpluses, revenue growth next year will mean that the state will have an additional $142.7 million to spend. In the governor’s proposed budget, the Human Services Department (DHS) would receive the bulk of that additional revenue, about $112 million. The Medicaid program, which is in DHS, would get much of that.

Also, the Division of Children and Family Services would get a substantial boost in its budget. It operates foster care, adoption services, child welfare and investigations of abuse and neglect. Its share of state general revenue would increase from $71 million to $92 million.

The Correction Department would get an increase of about $4 million in general revenue, bringing its share of general revenue from $337 million to $341 million.

The Public School Fund would be increased by $23.7 million, from $2.164 billion to $2.188 billion. School districts collect local property taxes, but aid from the state is their major source of revenue.

Institutions of higher education would not get any additional state funding under the governor’s proposed budget. They receive $734 million in state appropriations and that amount would not change next fiscal year.

Under the state Constitution, the legislature has power to appropriate tax revenue and no money shall be drawn from the state treasury unless specifically authorized by an appropriation approved by the legislature. In past fiscal sessions the legislature has enacted about 300 separate appropriations to pay for the operations of state government.