Flush with cash

Arkansas leaders ponder what to do with huge surplus

Arkansas could be sitting on a $1 billion general revenue surplus as the fiscal year ends on June 30. That’s well up from the $600 million the state had projected and built into the next state budget.

What should happen to that money? Who should decide?

Chalk the state’s good fortune up to better-than-expected economic performance, according to Gov. Asa Hutchinson, who recently acknowledged this “great news.”

He has begun to ponder a special session of the state Legislature before this year, which happens to be the last of his eight years in the office, is out. The idea is getting mixed reviews from state lawmakers, who only closed down the 2022 fiscal session a matter of weeks ago.

But there is some fairly strong interest in sending at least part of that money back to taxpayers in the form of a tax cut, most likely as an accelerated reduction of the state’s income tax.

The Hutchinson administration has been chipping away at income tax reform for years now, but there are also some bigger ticket items that could be addressed with this extra money in the state’s general fund.

Arkansas just recently received a master plan for the development of broadband statewide, a long-sought objective and one with a projected $550 million price tag. That’s what it could take to extend access to Arkansas households without high-speed internet. For the record, the state has been chipping away at this challenge, too, but it’s an expensive proposition.

Extending broadband is hardly the only possible use of the surplus money, but it’s a big one and the state might actually be in position to move fairly quickly toward that particular goal.

Given the experience of these pandemic years, when a lot of Arkansas families struggled with inadequate or nonexistent internet service to work or study at home, there should be ready support for such an undertaking.

It is an election year, after all, and some of the sitting lawmakers are in the middle of campaigns.

“Whenever you look at options for this money, I certainly will work with the Legislature and listen to them, and we will make a joint decision as to the steps that need to be taken,” Hutchinson said on Friday.

The governor and representatives of the Bureau of Legislative Research and the state Department of Finance and Administration reported the swelling surplus at a news conference.

By the end of this month, the state expects to have collected $300 million more in general revenue than the finance department had projected. By the time the fiscal year ends on June 30, the number should surpass the $1 billion mark.

The earliest the governor would consider calling a special session, he said, would be in mid- or late summer. Even then, he’s not sure there will be a consensus for one.

That will be past the primary elections and potential runoffs, although there will still be some yet-to-be-decided general election contests remaining for legislative seats.

It will also be closer to the changing of the guard in the statehouse. The nominees for the next governor of Arkansas will be set, with Hutchinson’s likely successor narrowed down to just a couple of people. Hutchinson is term-limited and couldn’t run for reelection.

The widely held expectation is that Sarah Huckabee Sanders, the enormously well-funded Trump protégé, will be the Republican nominee — and Hutchinson’s likely successor.

Chris Jones, the former executive director of the Arkansas Regional Innovation Hub, is favored for the Democratic nomination but trails far behind Sanders in fundraising.

Notably, she didn’t bother to show up for a recent debate among gubernatorial candidates sponsored by the Arkansas Press Association. And she hasn’t been all that forthcoming about her plans, should she become governor. But you’ve got to figure she’d rather control what happens to that growing surplus than let Hutchinson lead the decision-making.

That doesn’t mean the former White House press secretary, whose earlier work was primarily in the background of political campaigns, should be the decision-maker.

Hutchinson, on the other hand, arguably earned that right in the more than seven years he’s had at the helm of state government, including the time spent amassing the surplus.

As he has reminded the Legislature and the rest of Arkansas, Hutchinson still has the better part of a year left in his final term and there’s still important work to do.

“I want to finish my last year as governor strong,” he said in a Sunday statement as he prepared for a trip to New Hampshire for a speaking engagement.

While Hutchinson may not be eligible for reelection, he’s clearly keeping his options for a presidential bid open .

How he manages a billion-dollar surplus in the waning days of his governorship could be an important part of the record he has to offer.