Arkansas state budget (2009-2010)

Note: This article was last updated in 2010. Click here for more recent information on state budgets and finances.

Arkansas's fiscal office reported that the state met its $4.4 billion budget for fiscal 2010 with $23.7 million left over. In FY 2010, gross tax collections totaled $5.43 billion, a decrease of $130.7 million, which was 2.4% less than the previous year. Lawmakers did so by tapping its newly established “rainy day” fund and unspent educational facilities fund.

According to January 2010 reports the state of Arkansas collected $20.9 million less in tax revenues than estimated for the month of December 2009. Total state revenues for 2009 were $54.9 million below predictions. State tax revenue from July through December 2009 totaled $2.58 billion, 3% below 2008 levels and 1.9% below predictions. The drop in revenues led to an announcement by Gov. Beebe that if revenues continued to fall, $100 million would be cut from the 2010 state budget.

In January 2010, Gov. Beebe said he intended to cut the state's budget by $106 million, or 2.4%, after the state's Department of Finance and Administration said that the state's revenues came in below forecast in the last quarter of 2009. At the same time, the state lowered its estimate of income in fiscal year 2011 by 0.4 percent, a reduction of $19.4 million from the forecast the government issued in December 2009.

Arkansas's unemployment rate increased to 7.7% in December 2009, a three-tenths of a percentage increase from November. Compared to December 2008, Arkansas saw a 2% increase in 2009. The national unemployment rate for December was 10%.

The state weathered the 2009 state budget storm better than most states due to its conservative budgeting system. FY 2010’s $4.6 billion budget estimated a $75 million deficit to be filled by Arkansas’ recently established “rainy day” fund. The Arkansas State Legislature set aside $100 million of surplus to cover FY 2010. Fifty-four percent of the state’s revenue was from income taxes and 38% from sales/use taxes. 42% ($1.9 billion) of state spending was on public schools, 25% ($1.1 billion) on health/human services, and 16% ($730 million) on higher education.

The 2010-2011 budget did not include cost-of-living increases for state employees.

Federal stimulus

Arkansas received approximately $220 million from H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.

Arkansas was one of a handful of states with a balanced budget, and public education was the top budget priority in the state. Because the state's eduction budget was balanced, Gov. Beebe's administration said it was not clear whether the state would be permitted to use the $90 million in federal funds for education for other school purposes. Without many teachers facing layoffs, the state instead would use the money for a variety of one-time costs, including buildings, roofs, heating and air conditioning equipment, and school laboratory equipment. “My preliminary reading of this bill is you’ve got to use this money to keep from firing teachers, or rehiring teachers who have been fired, and we didn’t do any of that,” Beebe said.

Arkansas was set to receive $129 million in federal funds for Medicaid.

The state borrowed more than $300 million from the federal government to fund its unemployment insurance fund. It was still unknown how the state would repay that money and that was likely to be a major budget issue in January's legislative session.

Budget background

See also: Arkansas state budget and finances

Arkansas’s Revenue Stabilization Law (Act 311 of 1945) requires the state to designate budget funding to be prioritized into three categories: A, B-1, and B. FY 2010 budget funded all A level budgets 100% with partial funding for B level budgets at 54%. New programs must start in the B category. This innovative model has been credited with keeping the state’s budget deficits low and manageable during difficult times.

Arkansas voters approved on November 4, 2008 a constitutional amendment for annual legislative sessions and appropriations no longer than one fiscal year effective in 2009. Previously, Arkansas’s legislature met and budgeted on a biennial basis. Annual budgets began in FY 2010.

The budget schedule requires the governor to submit his budget to the legislature in November before it convene. The legislature meets January to April (January 12 to May 1 in 2009) and needs a three-fourths majority to pass the budget. The fiscal year begins July 1 and ends June 30.

Accounting principles

See also: Arkansas government accounting principles

The Arkansas Division of Legislative Audit is responsible under the Legislative Joint Audit Committee (A.C.A. 10-3-407) for independent auditing of state and local entities.

Audit reports are published on the division’s website.

Credit rating	Fitch	Moody's	S&P
Arkansas	NR	Aa2	AA

The Institute for Truth in Accounting (IFTA) rated Arkansas “timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – the annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA did not consider Arizona’s CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis did not include significant liabilities for the pension plans and for other post employment benefits, such as health care. Arkansas’s Department of Finance and Administration, Office of Accounting, is responsible for filing the CAFR.

Budget transparency

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

Economic stimulus package

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

According to preliminary reports, Arkansas is expected to receive:

• $325.5 million for state infrastructure projects
• $26 million was directed to transportation-enhancement projects and metropolitan planning projects
• $117.7 million was obligated to "shovel-ready projects"
• $7 million for Head Start
• $1 million for the national school lunch program
• $444 million for K-12 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

Government tools

The following table is helpful in evaluating the level of transparency provided by the state on budget and spending related activities. Arkansas did not have a specific state spending and transparency database as of 2009, but it did provide spending information on its government website:

Criteria for evaluating spending databases

State database	Searchability	Grants	Contracts	Line item expenditures	Dept./agency budgets	Public employee salary
Arkansas Department of Finance and Administration		P				P

• The website has a search function.
• State contracts are posted. Current bids and potential awards are listed.
• Grant programs are listed, but specific information on them is not.
• The budget by agencies is available and posted by line-item.
• Public employee salaries are not available. Pay schedules are posted.

Economic stimulus transparency

• The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the nation. Of that $787 billion stimulus package, it was estimated that 69%, or over $541 billion, would be administered by state governments.

• Arkansas was expected to receive an estimated $2.1 billion.

Public employee salary information

See also: Arkansas state government salary

See also

• Arkansas government sector lobbying
• Arkansas public pensions
• Arkansas state government salary
• Arkansas state budget and finances

External links

• Arkansas Department of Finance and Administration
• State Budget Solutions, Arkansas
• Arkansas Governor 2009-2011 proposed budget (dead link)
• Model transparency legislation from the American Legislative Exchange Council is available at this link.
• Arkansas Policy Foundation
• Arkansas Government spending

Additional reading

• The City Wire, "December jobless rate up to 7.7% in Arkansas," January 22, 2010
• Associated Press, "Gov. Beebe Agrees to Cut Arkansas Budget by $106M," January 11, 2010
• The City Wire, Arkansas’ budget issues less severe than most states, August 1, 2010