State to cut $43M from upcoming year’s budget

LITTLE ROCK — Arkansas is cutting its budget for the coming fiscal year by $43 million, state officials announced Tuesday, days after the governor ordered reductions in this year’s funding for state agencies.

The Department of Finance and Administration lowered its forecast for the state’s revenue for the fiscal year that begins July 1 to $5.4 billion. The reductions will affect programs for about a dozen agencies under a lower priority category of the state’s budget.

“These cuts just reflect the fact that the budget for 2018 will be tight; however, no layoffs are expected and services will go on uninterrupted,” Gov. Asa Hutchinson said in a statement. “I will continue to monitor the budget, as I’ve always done, as we enter a new fiscal year.”

The announcement comes days after Hutchinson said he was cutting $70 million in the state’s current budget to make up for a revenue shortfall. Hutchinson said the agencies would be able to absorb those cuts because of savings generated in the past year and that they also wouldn’t lead to any layoffs.

Arkansas’ sales tax revenue has come in lower than expected, and that sluggishness wasn’t boosted by e-commerce giant Amazon beginning to collect the tax in the state after years of resisting. The state’s sales tax revenue in April, the first month reflecting Amazon’s collection of the tax, totaled $190.2 million but was 411 million below forecast.

Arkansas’ net available revenue for the fiscal year so far totals $4.4 billion, which is

$50 million below the same time last year and

$54 million below forecast.

The cuts affect programs in the “B” category of the state’s Revenue Stabilization Act, which prioritizes funding based on expected revenue. Funding for that category isn’t released until late in the fiscal year.

Lawmakers are nearing the end of a threeday special session that has included an effort to set aside more money that can be tapped for budget shortfalls. The state Senate approved a measure directing more than $102 million in unused tobacco settlement funds to the long-term reserve, a move Hutchinson says is needed to improve Arkansas’ bond rating.

Some lawmakers questioned the reserve fund idea, noting Hutchinson proposed it after announcing the budget shortfall for this year.

“It’s the timing of all this that I think unnerves a lot of us…If this is approved, there’s a general belief this money’s going to be spent,” Democratic Sen. Keith Ingram, the Senate minority leader, said Tuesday morning.