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Revision as of 14:47, 28 August 2014


Arkansas state budget

Flag of Arkansas.png
Budget calendar:  Biennial
Fiscal year:  2014
State credit rating:  AA (as of May 2012)
Current governor:  Mike Beebe
Financial figures
GF expenses[1]:  $4.7 billion (estimated for FY 2013)
All funds expenses:  $21.6 billion (estimated for FY 2013)
Spending % change:  Green Arrow Up Darker.svg4.36%[2]
% from federal funding:  34.47%
State debt:  $37,704,936,000
Per capita state debt:  $12,785
Other state budgets
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Policypedia Budget Policy-logo-no background.png
This page contains information about budget processes and policy issues in Arkansas, including:
  • A summary of the budget drafting process
  • Trends in expenditures and revenues
  • Current and past fiscal year budget developments
  • Financial transparency measures

Between fiscal year 2009 and fiscal year 2013, Arkansas's total expenditures increased by approximately $3.5 billion, from $18.1 billion in 2009 to $21.6 billion in 2013. This represents an 19.34 percent increase, outpacing the cumulative rate of inflation during the same period (9.06 percent, calculated using the Consumer Price Indices for January 2009 and January 2013).[3][4]

Budget process

The state operates on a biennial budget cycle. The sequence of key events in the budget process is as follows:[5][6]

  1. Budget instructions are sent to state agencies in May of the year preceding the start of the new biennium.
  2. State agencies submit their budget requests to the governor in July.
  3. Agency hearings are held from August through October.
  4. Public hearings are held from October through December.
  5. The governor submits his or her proposed budget to the state legislature in November.
  6. The state legislature debates the budget from January through April. The budget must be passed by a three-fourths majority.
  7. The fiscal year begins July 1.

Arkansas is one of 44 states in which the governor has line item veto authority.[6]

The governor is required by statute to submit a balanced budget. The legislature is not legally required to pass a balanced budget, but the governor is required by statute to sign a balanced budget.[6]

Expenditures

Definitions

Although each state executes its budget process differently, the National Association of State Budget Officers (NASBO) breaks down state expenditures into four general categories. This allows for comparisons among the 50 states. NASBO's categories are as follows:[7]

  • General fund: "The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state."[7]
  • Other funds: "Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds."[7]
  • Federal funds: "Funds received directly from the federal government."[7]
  • Bonds: "Expenditures from the sale of bonds, generally for capital projects."[7]

2013 expenditures

Breakdown of expenditures in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down expenditures for fiscal year 2013 (comparable figures from surrounding states are provided to give additional context).[7] Figures for all columns except "Per capita expenditures" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita expenditures" have not been abbreviated.

Total state expenditures, FY 2013 ($ in millions)[7]
State General fund Federal funds Other funds Bonds Total Per capita expenditures
Arkansas $4,746 $6,189 $10,447 $203 $21,585 $7,293.77
Louisiana $8,156 $12,311 $8,791 $404 $29,662 $6,412.75
Mississippi $4,699 $8,274 $5,660 $784 $19,417 $6,491.36
Missouri $8,022 $7,209 $7,712 $0 $22,943 $3,795.89
Oklahoma $6,892 $6,516 $7,878 $144 $21,430 $5,565.41
Per capita figures are calculated by taking the state's total expenditures and dividing by the number of state residents according to United States Census estimates.[8]|align="left" colspan="8" | Per capita figures are calculated by taking the state's total expenditures and dividing by the number of state residents according to United States Census estimates.[8]
Source: National Association of State Budget Officers
|}
Source: National Association of State Budget Officers

Expenditures by function

Breakdown of expenditures by function in FY 2012.
Source: National Association of State Budget Officers

State expenditures in Arkansas can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2012 data is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percents, indicating the share of the total budget spent per category.

Expenditures by function, FY 2012 (as percents)[7]
State Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other**
Arkansas 16.3% 16.2% 2.1% 21.4% 2.2% 5.8% 36.0%
Louisiana 18.4% 9.9% 0.6% 26.7% 2.9% 7.1% 34.4%
Mississippi 16.9% 16.8% 5.8% 23.4% 1.8% 7.5% 27.7%
Missouri 22.6% 4.7% 0.7% 35.0% 2.6% 10.4% 23.9%
Oklahoma 16.5% 23.1% 1.0% 23.9% 2.5% 7.2% 25.8%
Source: National Association of State Budget Officers
Note**: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[7]

Expenditure trends

From 2008 to 2012, elementary and secondary education spending fell by 2.4 percentage points, or 12.8 percent, as a share of the budget. Medicaid spending increased rose by just over one percentage point, or 5.4 percent, as a share of the budget. The table below details changes in expenditures from 2008 to 2012.[7][9][10][11][12] Figures are rendered as percents, indicating the share of the total budget spent per category.

Expenditures from 2008 to 2012 (as percents)
Year Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other**
2012 16.3% 16.2% 2.1% 21.4% 2.2% 5.8% 36.0%
2011 17.2% 15.8% 2.2% 21.1% 2.2% 5.2% 36.3%
2010 17.2% 15.3% 2.2% 20.0% 2.1% 4.9% 38.2%
2009 17.7% 16.8% 2.1% 19.7% 2.2% 5.1% 36.4%
2008 18.7% 16.3% 2.2% 20.3% 2.3% 5.8% 34.5%
Change in % -2.4% -0.1% -0.1% 1.1% -0.1% 0% 1.5%
Source: National Association of State Budget Officers
Note**: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[7]

Revenues

2013 revenues

Breakdown of general fund revenue sources in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down general fund revenues by source in fiscal year 2013 (comparable figures from surrounding states are also provided to give additional context).[7] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, FY 2013 ($ in millions)[7]
State Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
Arkansas $2,125 $3,144 $431 $39 $475 $6,214 $2,099.77
Louisiana $2,853 $2,685 $340 $386 $1,839 $8,103 $1,751.82
Mississippi $1,887 $1,480 $463 $145 $763 $4,738 $1,583.98
Missouri $1,872 $5,489 $415 $0 $307 $8,083 $1,337.32
Oklahoma $2,087 $2,114 $452 $15 $936 $5,604 $1,455.37
Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates for 2013.[8]
Source: National Association of State Budget Officers

Revenue trends

The table below details the change in revenue sources in the general fund from 2009 to 2013.[7][9] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, Arkansas ($ in millions)[7][9]
Year Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
2013 $2,125 $3,144 $431 $39 $475 $6,214 $2,099.77
2012 $2,111 $2,895 $435 $31 $451 $5,924 $2,008.25
2011 $2,056 $2,739 $392 $19 $468 $5,674 $1,930.91
2010 $1,966 $2,579 $424 $13 $448 $5,430 $1,858.14
2009 $2,081 $2,706 $383 $11 $380 $5,561 $1,924.59
Change in % 2.11% 16.19% 12.53% 254.55% 25.00% 11.74% 9.10%
Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates.[8][13]
Source: National Association of State Budget Officers

State budgets by year

Fiscal year 2014

DocumentIcon.jpg See budget bill: HB 1024

Arkansas state budget -- 2014
Arkansas State Legislature
Text:HB 1024
Legislative history
Introduced:January 14, 2014
House:January 22, 2013
Vote (lower house):94-0-6
Senate:January 23, 2013
Vote (upper house):33-0-2
Governor:Mike Beebe
Signed:January 29, 2013

The fiscal year 2014 "General Appropriation Act" for the executive, judicial and legislative branches of state government was enacted into law on January 29, 2013.[14]

A variety of other appropriation bills were passed in 2013 for fiscal year 2014. A summary of these bills may be accessed here.

Fiscal year 2013

See also: Arkansas state budget (2012-2013)

Fiscal year 2012

See also: Arkansas state budget (2011-2012)

Fiscal year 2011

See also: Arkansas state budget (2010-2011)

Fiscal year 2010

See also: Arkansas state budget (2009-2010)

Historical spending

State budget historical spending below was compiled by the National Association of State Budget Officers. Figures reflect the reported "Total Expenditures" in Table 1. Figures for all columns are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000).[7][10]

Historical state budget spending in Arkansas ($ in millions)
Fiscal year General Fund Other funds Federal funds Bonds Budget totals
Total % of Budget Total % of Budget Total % of Budget Total % of Budget
2011-2012 $4,582 22.1% $9,693 46.9% $6,278 30.3% $135 0.7% $20,688
2010-2011 $4,453 21.9% $8,932 43.9% $6,819 33.5% $143 0.7% $20,347
2009-2010 $4,223 21.2% $8,716 43.8% $6,894 34.6% $89 0.4% $19,922
Averages: $4,419.33 22% $9,113.67 45% $6,663.67 33% $122.333 1% $20,319
General Fund: The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state.
Other funds: Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds.
Federal funds: Funds received directly from the federal government.
Bonds: Expenditures from the sale of bonds, generally for capital projects.

State debt

According to a January 2014 report by the nonprofit organization State Budget Solutions, Arkansas had a state debt of over $37 billion. Its state debt per capita was $12,785. The report revealed that state governments faced a combined $5.1 trillion in debt, 33 percent of annual gross state product. The obligation amounts to $16,178 per capita in the nation. A bulk of the state debt -- 79 percent -- was linked to unfunded public pensions.[15][16]

Total state debt in Arkansas[17]
Type Totals U.S. rank
Total state debt $37,704,936,000 36
Per capita debt $12,785 33
State and other fund expenditures $14,275,000,000 42

Public pensions

See also: Arkansas public pensions and Arkansas public employee salaries

A 2012 report from the Pew Center on the States noted that Arkansas's pension system was funded at 75 percent at the close of fiscal year 2010, below the 80 percent funding level experts recommend. Consequently, Pew designated the state's pension system as cause for "serious concern."[18]

Taken together, the funding ratio for the state's pension systems decreased from 74.20 percent in fiscal year 2010 to 71 percent in fiscal year 2012, a decrease of 3.2 percentage points, or 4.31 percent. Likewise, unfunded liabilities increased from approximately $6.5 billion in fiscal year 2010 to more than $8 billion in fiscal year 2012.[19][20][21][22][23][24]

Credit ratings

States sometimes sell general obligation bonds to investors in order to finance large-scale undertakings (e.g., road construction and other public works projects). Credit rating agencies, such as Standard and Poor's, assign grades to states, evaluating their ability to pay the principal and interest on such bonds. Standard and Poor's grades range from AAA, the highest available, to BBB, the lowest. Generally speaking, a higher credit rating indicates lower risk for an investor, which in turn lowers costs for taxpayers.[25]

The table below lists the Standard and Poor's credit rating for Arkansas from 2001 to 2012 (grades from surrounding states are provided for additional context).[25]

S&P credit ratings from 2001 to 2012
Arkansas Louisiana Mississippi Missouri Oklahoma
2012 AA AA AA AAA AA+
2011 AA AA AA AAA AA+
2010 AA AA- AA AAA AA+
2009 AA AA- AA AAA AA+
2008 AA A+ AA AAA AA+
2007 AA A AA AAA AA
2006 AA A AA AAA AA
2005 AA A AA AAA AA
2004 AA A+ AA AAA AA
2003 AA A+ AA AAA AA
2002 AA A AA AAA AA
2001 AA A AA AAA AA

Federal aid to state budget

See also: Federal aid to budgets in the 50 states

The chart below notes how much of the state’s general revenues come from the federal government. Figures were calculated by dividing each state’s federal intergovernmental revenue into its general revenue. The number in the rightmost column indicates the state's ranking in relation to the rest of the nation (e.g., if "1," the state receives the highest percentage of federal funding in the nation). Figures from neighboring states are included to provide additional context.[26]

State governments receive aid from the federal government to fund a variety of joint programs, such as Medicaid. Federal aid varies considerably from state to state. For example, Mississippi received approximately $7.7 billion in federal aid in 2012, which accounted for more than 45 percent of the state's general revenues. By contrast, Alaska received roughly $2.9 billion in federal aid in 2012, just under 20 percent of the state's general revenues.[26]

Federal aid to state budgets in 2012
State Federal aid as % of general revenue Total federal aid National rank
Arkansas 34.47% $5,900,988,000 21
Louisiana 43.95% $11,136,334,000 2
Mississippi 45.35% $7,725,294,000 1
Missouri 39.42% $10,440,927,000 5
Oklahoma 35.54% $7,363,043,000 15

Stimulus

According to Recovery.gov, the official government website for the Recovery Accountability and Transparency Board, under the American Recovery and Reinvestment Act, Arkansas received $2,097,950,000.00 in federal funding between February 2009 and June 2013.[27]

Budget transparency

Transparency evaluation
Arkansas spending database
Searchability Y
600px-Yes check.png
Grants P
Partial.png
Contracts P
Partial.png
Line item expenditures N
600px-Red x.png
Dept./agency budgets Y
600px-Yes check.png
Public employee salaries P
Partial.png
Last evaluated in 2012.
See also: Evaluation of Arkansas state website and Constitutional provisions regarding reading of bills

Arkansas does not have a constitutional provision providing a period of legislative review before the legislature can vote on a budget bill.

Arkansas launched its official, statewide spending database online on July 6, 2012. It can be accessed here here.

Government tools

The table to the right is helpful in evaluating the level of transparency provided by the state on budget matters and spending activities.

Multi-measure budget transparency profile

The Institute of Government and Public Affairs at the University of Illinois created a multi-measure transparency profile for Arkansas, which measured state transparency as of September 2011 using indicators from a range of organizations. These indicators measured both website transparency and other recognized facets of governmental transparency. In addition, IGPA presented four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.[28][29]

IGPA devised a budget transparency index based on information available from the National Association of State Budget Officers. Arkansas tied for 33rd in the nation with 11 other states, earning four out of eight possible points.[29]

Arkansas - IGPA score for budget process, contents and disclosure
Budget transparency indicator Yes or no?
Performance measures
{{{1}}}
"Generally Accepted Accounting Principles" budget Y
600px-Yes check.png
Multi-year forecasting N
600px-Red x.png
Annual cycle N
600px-Red x.png
Binding revenue forecast
{{{1}}}
Legislative revenue forecast N
600px-Red x.png
Nonpartisan staff N
600px-Red x.png
Constitution or statutory tax/spend limitations Y
600px-Yes check.png
TOTAL 4

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.[29]

Accounting principles

See also: Arkansas government accounting principles

The Division of Legislative Audit, under the Legislative Joint Audit Committee, is responsible for the independent auditing of state and local entities.[30]

Contact information

Physical address:
Arkansas Department of Finance and Administration; Office of Budget
1509 W. 7th St., Room 402
Little Rock, AR 72201
Telephone: 501-682-1941
Fax: 501-682-1086

Mailing address:
PO Box 3278
Little Rock, AR 72203

See also

External links

Additional reading

References

  1. Refers to General Fund spending. Typically in state budgets the General Fund is spending that is most directly controlled by state legislators.
  2. This figure is derived by calculating the percent difference between the prior two years' spending levels according to the National Association of State Budget Officers.
  3. Bureau of Labor Statistics, "CPI Detailed Report Data for February 2014," accessed April 9, 2014
  4. InflationData.com, "Cumulative Inflation Calculator," February 28, 2014
  5. National Conference of State Legislatures "State Experiences with Annual and Biennial Budgeting," updated April 2011
  6. 6.0 6.1 6.2 National Association of State Budget Officers "Budget Processes in the States, Summer 2008," accessed February 21, 2014
  7. 7.00 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10 7.11 7.12 7.13 7.14 7.15 National Association of State Budget Officers "State Expenditure Report, 2011-2013," accessed February 21, 2014
  8. 8.0 8.1 8.2 8.3 United States Census Bureau, "Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2013," accessed February 26, 2014
  9. 9.0 9.1 9.2 National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
  10. 10.0 10.1 National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
  11. National Association of State Budget Officers, "State Expenditure Report, 2009," accessed February 24, 2014
  12. National Association of State Budget Officers, "State Expenditure Report, 2008," accessed February 24, 2014
  13. United States Census Bureau, "Vintage 2009: Annual Population Estimates," accessed February 26, 2014
  14. Arkansas State Legislature, "HB1024," accessed April 17, 2014
  15. State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  16. Washington Examiner, "EXography: Unfunded public employee pensions drive state debts skyward," January 21, 2014
  17. State Budget Solutions "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  18. "Widening Gap Update: Arkansas," June 18, 2012
  19. Arkansas Public Employees Retirement System, "Actuarial Valuation and Experience Gain/(Loss) Analysis," June 30, 2012
  20. Judicial Retirement System, ""Actuarial Valuation and Experience Gain/(Loss) Analysis," June 30, 2012
  21. State Police Retirement System, "Actuarial Valuation and Experience Gain/(Loss) Analysis," June 30, 2012
  22. Teacher Retirement System, "2012 Comprehensive Annual Financial Report," accessed October 30, 2013
  23. State of Arkansas, "2012 Comprehensive Annual Financial Report," accessed October 30, 2013
  24. Local Police and Fire Retirement System, "Compiled Annual Actuarial Valuations Report as of December 31, 2012," accessed October 30, 2013
  25. 25.0 25.1 Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2012," July 13, 2012
  26. 26.0 26.1 United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014
  27. Recovery.gov, "Stimulus Spending by State," accessed February 21, 2014
  28. Institute of Government and Public Affairs at University of Illinois, "Home page," accessed February 21, 2014
  29. 29.0 29.1 29.2 Institute of Government and Public Affairs at University of Illinois, "Budget Transparency Profiles - All 50 States," September 2011
  30. Arkansas Legislative Joint Audit Committee, "Legislative joint Auditing," accessed October 9, 2009