Budget bills pass joint panel
Most of $109M increase going to vouchers, school fund
The Arkansas General Assembly’s Joint Budget Committee on Tuesday advanced identical bills that would boost Arkansas’ general revenue budget by $109.3 million to $6.31 billion in the next fiscal year that starts July 1.
The committee voted to send Senate Bill 80 by Sen. Jonathan Dismang, R-Searcy, and House Bill 1097 by Rep. Lane Jean, R-Magnolia, to the Senate and House, respectively. The identical bills would amend the state’s Revenue Stabilization Act.
Most of the increased general revenue funding would be earmarked for the Education Freedom Accounts and the state’s public school fund under the bills.
The proposed Revenue Stabilization Act for fiscal 2025 is similar to Republican Gov. Sarah Huckabee Sanders’ proposed general revenue budget that she unveiled March 6. Fiscal 2025 begins July 1, 2024, and ends June 30, 2025. The proposed Revenue Stabilization Act for fiscal 2025 only includes a Category A of $6.31 billion.
Sanders spokeswoman Alex Henning said Tuesday in a written statement that the “Governor proposed a budget that would restrain government spending and also fund vital priorities — like education and public safety.
“She’s excited to see (the Revenue Stabilization Act) clear Joint Budget Committee and looks forward to full House and Senate approval this week,” Henning said.
Legislative leaders said they are aiming for state lawmakers to complete legislative action in this year’s fiscal session — which started April 10 — on Wednesday and Thursday and to return to the state Capitol on May 9
to adjourn.
Dismang, co-chairman of the Joint Budget Committee, said Tuesday the proposed Revenue Stabilization Act for fiscal 2025 largely adheres to what lawmakers put in motion in the 2023 regular session.
“I think it puts us in a good position as we enter the next session, whether that be with the state [employee] pay plan, some inflationary pressures that may exist, and hopefully tax cuts,” he said in an interview.
Senate Democratic leader Greg Leding said Tuesday in an interview that “I think we largely wound up where we expected we would going into this session.
Leding said he is disappointed that lawmakers on the Joint Budget Committee voted to take away $500,000 in state funds from the Arkansas Health Improvement Center but he’s “optimistic they’ll be able to find that money elsewhere.”
Last week, the Joint Budget Committee approved an amendment to Senate Bill 51, which is a University of Arkansas for Medical Sciences’ appropriation bill, to shift $500,000 in state funds earmarked for the Arkansas Center for Health Improvement to create a certified nurse midwife program at UAMS. Senate Bill 51 is now in the state Senate.
In fiscal 2025, the state would accumulate a general revenue surplus of $376.6 million if the state’s general revenue collections meet the state Department of Finance and Administration’s Feb. 1 forecast of $6.68 billion for net general revenue based on the state’s general revenue budget of $6.31 billion in fiscal year 2025.
In its Feb. 1 forecast, the finance department projected a $240.5 million general revenue surplus in fiscal 2024 that ends June 30.
Jean, co-chairman of the Joint Budget Committee, told lawmakers Thursday that the state’s general revenue surplus will probably exceed $400 million at the end of fiscal 2024.
Legislative leaders have said they want to wait until the end of fiscal 2024 before determining whether to cut income taxes further in a special session later this year or want to wait until the regular session starts in January to consider more income tax cuts.
For fiscal 2025, the proposed Revenue Stabilization Act would increase the general revenue for the state’s Education Freedom Accounts by $65.7 million to $97.4 million. Education Freedom Accounts are vouchers designed to help students attend private school, parochial school or home school.
The Education Freedom Accounts were created under Sanders’ signature education initiative dubbed the LEARNS Act, which was enacted in the 2023 regular session.
The LEARNS Act also substantially increased starting teacher pay from $36,000 to $50,000 a year and authorized $2,000 raises for other teachers.
The proposed Revenue Stabilization Act for fiscal 2025 also would increase the state’s general revenue for the public school fund by $38.2 million to $2.48 billion, including a $34.2 million increase in general revenue to $2.44 billion for the state Department of Education’s Division of Elementary and Secondary Education and a $4 million increase in general revenue to $26.8 million for career and technical education.
The proposed act would increase the general revenue allocated to the Division of Arkansas State Police by $3.9 million to $92.5 million in fiscal 2025. The proposal funds an additional Arkansas State Police trooper school.
Under the proposed act, the general revenue for the Department of Corrections’ Division of Correction would increase by $536,285 to $434.8 million and by $571,631 to $105.3 million for the department’s Division of Community Correction in fiscal 2025.
The general revenue allocation for county jail reimbursement would remain at $25.7 million in fiscal 2025. The Legislature has approved House Bill 1086 that would appropriate $4.2 million more to the state Department of Corrections for reimbursing counties for holding state inmates in county jails and fund the appropriation with $4.2 million in state surplus funds in fiscal 2024 that ends June 30.
The state Department of Human Services’ general revenue allocation would increase by $4.4 million to $1.83 billion under the proposed act, including a $3.6 million increase to $57.4 million for county operations. State officials said most of the increased general revenue for the Department of Human Services stems from the transfer of the Temporary Assistance for Needy Families program from the state Division of Workforce Services.
Under the proposed act, the state Department of Health’s general revenue allocation would increase by $108,724 to $81.9 million in fiscal year 2025.
The proposed act would reduce the total general revenue allocation to the state’s institutions of higher education by $2.4 million to $778.8 million, including a $1.8 million reduction to $628.6 million for the four-year institutions, an $848,319 reduction to $117.1 million for the two-year institutions and a $241,699 increase to $33 million for the technical colleges.
The proposal also would allocate $4.5 million in general revenue to fund a sustainable building maintenance revolving loan program for the state’s higher education institutions in the coming fiscal year.
Under the proposed Revenue Stabilization Act, the University of Arkansas, Fayetteville’s general revenue budget would increase by $387,468 to $134.5 million and the University of Arkansas at Pine Bluff’s general revenue budget would increase from $26.1 million to $27.7 million.
Under the proposal, the general revenue budgets at the following four-year institutions would decline by following amounts:
■ $892,398 to $56 million at University of Central Arkansas.
■ $741,960 to $36.3 million at Arkansas Tech University.
■ $539,714 to $60 million at the University of Arkansas at Little Rock.
■ $429,507 to $21 million at the University of Arkansas at Fort Smith.
■ $390,716 to $62.1 million at Arkansas State University in Jonesboro.
■ $382,676 to $18.8 million at Henderson State University.
■ $340,750 to $16.6 million at the University of Arkansas at Monticello.
■ $71,151 to $16.8 million at Southern Arkansas University.
The recommended general revenue allocation for several four-year institutions was reduced as a result of the state’s overall higher education productivity model declining by .14% this year and it’s the first time the model has declined, Nick Fuller, assistant director of finance at the state Department of Education’s Division of Higher Education, told lawmakers last month.
The higher education productivity model is based on a three-year rolling average, and “this year is the first year that we have a full year of the covid impact in that comparative, so we had the big dip in the students on the campuses in general [a few years ago],” Fuller said.
The University of Arkansas at Medical Sciences’ general revenue allocation would stay flat at $93 million, and the UA Division of Agriculture’s general revenue would remain at $65.8 million in fiscal 2025 under the proposed Revenue Stabilization Act.
SB80 and HB1097 also would amend the Infrastructure Investment and Jobs Grants Matching Set-Aside in the Restricted Reserve Fund to provide for matching funds for the Infrastructure Investment and Jobs Act as well as “the Inflation Reduction Act, the CHIPS Act and other infrastructure and certain projects that are majority federally funded” in a sum not to exceed $200 million. There is $194.8 million remaining in this Restricted Reserve Fund set-side account, said Scott Hardin, a spokesman for the state Department of Finance and Administration.
The Joint Budget Committee on Tuesday endorsed SB80 and HB1097 after a motion to suspend the rules to allow Sen. John Payton, R-Wilburn, to propose an amendment to the bills to provide $2 million in state surplus funds to senior centers fell 10 votes short of the required 38 votes. Twenty-eight lawmakers on the Joint Budget Committee voted to suspend the rules, and five lawmakers on the committee voted against suspending the rules.
Afterward, Dismang said “we all recognize the need” of senior centers, and the state has plenty of state restricted reserve funds.
The overall balance in the state’s Restricted Reserve Fund is $2.05 billion, including $710.6 million in the Arkansas Reserve Fund established in legislation enacted in the September special session, Hardin said. The state’s Catastrophic Reserve Fund balance is $1.5 billion, he said.