Arkansas state budget (2008-2009)

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State Information


Unlike most states, Arkansas was in "relatively good shape" and was not expected to have a budget gap for fiscal year 2009. However, reports predicted a $146 million deficit for fiscal year 2010.[1] Former Rep. Keven Anderson lauded Gov. Mike Beebe for maintaining a "fairly conservative budget" and the continued maintenance of rainy day funds, which Anderson noted will prevent the increase of taxes during tough economic times.[2] Despite budget cuts throughout the country, Gov. Beebe called for increased funding for education and noted that saved funds would help cover gaps in Medicaid and the prison system. However, the governor noted that Arkansas was not necessarily out of the woods; in fact, it was expected that the economy of northwest Arkansas might get worse due to a slowdown in growth.[2]

Impact of budget woes

See also: State budget crisis, 2009-2010
  • Due to a slowdown in tax revenues the University of Arkansas saw a $5 million less than what was budgeted for 2008. However, according to state figures, FY 2010's budget was expected to restore half of what the university lost in the past fiscal year.[3]
  • In 2008 the governor asked all state departments to submit to a 7 percent budget reduction. The Community Corrections Department chose to slash residential treatment over layoffs. It cut the $3 million program in half.[4] However, officials said that revision of the recommended budget and inclusion of incoming federal stimulus dollars could mean the continued funding of a number of programs that had been considered for possible reduction or elimination.[5]
  • For the first time since August 2008 Arkansas saw an overall rise in the state's economic index; however, the index still remained relatively low. Creighton University economics professor Ernie Goss said, "Over the past year, the state's transportation equipment industry has been battered by the global recession. This will be the turnaround industry for Arkansas." February 2009's index was 29.3 compared to January's 25.8. A figure greater than 50 represents economic growth in the next three to six months.[6]

Budget background

The Arkansas fiscal year begins July 1 and ends June 30; however, the biennial period is a two year period that usually begins July 1 of the odd-numbered year and ends June 30 of the next odd-numbered year. Effective January 1, 2009 the state legislature was required to meet every year on the second Monday in January. Additionally, a bill other than an appropriation bill may be considered in a fiscal session if two-thirds of the members of both the House and the Senate approve consideration of the bill. However, before the budget is considered by both houses, first the state's agencies must make individual recommendations to the governor, who proceeds to review the requests along with estimated revenue data for the upcoming biennium or fiscal year.[7][8]

Budget figures

The following table provides a history of the state's expenditures and gross domestic product (GDP).

Fiscal year Expenditures (billions) GDP (billions)
2000 $15.4[9] $64.3[9]
2001 $16.3[9] $66.0[9]
2002 $12.2[9] $66.8[9]
2003 $15.5[9] $75.7[9]
2004 $16.3[9] $82.1[9]
2005 $17.2[9] $86.1[9]
2006 $18.5[9] $90.9[9]
2007 $19.8[9] $95.4[9]
2008 $21.3[9] $100.1[9]
2009 $22.9*[9] $105.1*[9]
  • NOTE: The figures for FY 2009 had not yet been finalized at the time this data was compiled.

The state of the economy


Gov. Mike Beebe 2009 State of the State Address

As of 2009:

  • According to state officials, the Health Department was in need of additional revenue due to increases in medical care, staff recruitment and pharmacy services. Additionally, the state department saw an increase in patients that didn't pay for services because they weren't covered by insurance and weren't eligible for Medicaid or Medicare.[10]
  • According to state officials, state revenues were $41.5 million over budget in February 2009. Chief Financial Officer Richard Weiss said the projections for 2009 would hold steady, which officials said made it likely that Governor Beebe's proposed $0.01 cut to the state's grocery tax could be supported.[11] However, despite increased revenue, Weiss said February 2009's numbers consisted mainly of income tax paid on severance packages of laid off workers.[12]
  • Net available revenues totaled $207.3 million, $16.4 million above last year and $41.5 million above forecast. Gross general revenues totaled $396 million, $20.7 million above last year and $30.2 million above forecast.[11]

Proposed actions

Governor Mike Beebe

Arkansas was anticipated to have a $310 million surplus for FY 2009. The governor recommended that $4 million go toward reimbursing county jails and maintaining in-home health services. However, in order to reduce deficits in the FY 2010 budget, Beebe recommended using no more than $60 million from the surplus for education, Medicaid and prisons. The total FY 2010 budget was estimated at $4.47 billion. In total, Beebe recommended $4.3 million in supplemental appropriations.[10]

Republicans

Republicans throughout the state said that they were opposed to the governor's cigarette tax that was expected to take effect March 1, 2009. "Raising taxes while we have a $300 million surplus is the wrong thing to do," House Republican leader Bryan King said prior to the approval of the cigarette tax. "This tax-and-spend governor needs to understand that we don't need to raise taxes."[13]

Democrats

Some Democrats said that although the federal economic stimulus package might have helped "plug some holes" in the state's budget, they were wary of the funds. Rep. Bruce Maloch said, "I think the government that's closest to the people can best decide how to spend the money and how to best stimulate the economy. The package is geared more toward the Californias and Ohios and Michigans ... the ones that have the huge deficit problems." Sen. Shane Broadway recommended that the state use the funds to fund infrastructure and equipment rather than on-going projects because the funds would not last forever, he said.[14]

Economic stimulus package

Arkansas was expected to receive approximately $2.1 billion from the $787 billion economic stimulus package. According to White House officials, the stimulus bill was estimated to create or save 31,000 jobs.[15] Gov. Beebe said that a state-run website was being created to track Arkansas' use of the federal stimulus money. "This is your money — and your leaders should be held accountable for how it is managed," he said.[16]

According to preliminary reports, Arkansas was expected to receive:[17][18]

  • $325.5 million for state infrastructure projects
  • $26 million for transportation-enhancement projects and metropolitan planning projects
  • $117.7 million for "shovel-ready projects"
  • $7 million for Head Start
  • $1 million for the national school lunch program
  • $444 million for kindergarten through 12th grade school modernization, renovation or repair
  • $857,000 for senior meal programs
  • $39.2 million to fund state government energy technology research and development programs
  • $730 million for Medicaid

Budget transparency

See also: Arkansas Freedom of Information Act

As of 2009, Arkansas had no statewide, official spending database online. However, the Department of Finance and Administration has created a statewide contracts procurement website.[19]

HB 1053, known as "The Open Checkbooks in Government Act," would have created an online database of state expenditures. HB 1053 died in committee.[20]

Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases
State database Searchability Grants Contracts Line item expenditures Dept./agency budgets Public employee salary Exemption level
None n/a n/a n/a n/a n/a n/a n/a

Economic stimulus transparency

  • The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the country. Of that $787 billion stimulus package, it was estimated that 69%, or over $541 billion, would be administered by state governments.[21]
  • Arkansas was expected to receive an estimated $2.1 billion.[15]

Public employee salary information

See also: Arkansas state government salary

See also

External links

References

  1. Center on Budget and Policy Priorities,"State budget troubles worsen," February 10,2009
  2. 2.0 2.1 Northwest Arkansas' News Source,"State makes best of tough times," February 15,2009
  3. The Morning News,"Beebe: higher education first in line for budget restoration," February 11,2009
  4. Today's THV,"Judge Fears Crime Could Rise Due To Budget Cut," February 21,2009
  5. Winfield Courier,"Secretary says revised budget will keep prison open," March 3,2009
  6. Associated Press,"Mid-America survey state by state glance," March 2,2009
  7. State of Arkansas,"Budget Process," accessed March 3,2009
  8. State of Arkansas,"Office of Budget," accessed March 3,2009
  9. 9.00 9.01 9.02 9.03 9.04 9.05 9.06 9.07 9.08 9.09 9.10 9.11 9.12 9.13 9.14 9.15 9.16 9.17 9.18 9.19 US Government Spending,"Arkansas State and Local spending," accessed March 3,2009
  10. 10.0 10.1 Northwest Arkansas' News Source,"Beebe: Fill budget gaps with expected surplus," February 9,2009
  11. 11.0 11.1 WXVT,"Ark. revenues up almost $42M in February," March 3,2009
  12. Arkansas News,"Revenue report holding, fiscal officer says," March 3,2009
  13. Associated Press,"Ark. GOP tries combative style against tobacco tax," February 9,2009
  14. Associated Press,"Federal stimulus offers hope, confusion in Ark.," February 23,2009
  15. 15.0 15.1 Associated Press,"Stimulus estimates for Arkansas range from $2.1 billion to $4 billion," February 23,2009
  16. Baxter Bulletin,"Gov. Mike Beebe:Web site to track stimulus money," February 28,2009
  17. Associated Press,"Arkansas to get $351.5 million for infrastructure," February 25,2009
  18. Arkansas Matters,"Arkansas' Share of Stimulus Package," February 23,2009
  19. Arkansas Procurement Website
  20. Arkansas Legislature, Status of HB 1053
  21. National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009