Capitol Week in Review

The legislature convened the fiscal session and will spend the next month working on a $6.3 billion budget for the fiscal year that begins July 1.

The legislature has always approved conservative budgets, and the balanced budget proposed by the governor is very conservative even by traditional standards.

It calls for growth in state agency spending of only 1.76 percent, compared to traditional growth of about 3 percent in recent years.

The growth amounts to increased spending of about $109.3 million. The majority of that amount, about $65.7 million, would go to the Education Freedom Account program created last year. Also, the governor proposes an increase of $38.2 million in the state’s Public School Fund.

The State Police would get an increase of about $3.8 million for its trooper school, allowing the agency to add 100 troopers.

State-supported institutions of higher education will receive about $781 million this year. The governor proposes to reduce that amount by $2.45 million next year.

In a speech to a joint session of the Senate and House on the first day of the fiscal session, the governor said that her reason for holding down growth in state government is to make room for future tax cuts. She repeated her pledge to responsibly phase out the state income tax.

We are currently in Fiscal Year 2024, which ends on June 30. Forecasters at the state Department of Finance and Administration predict that the state will end the fiscal year with a budget surplus of about $240.5 million.

The proposed surplus for Fiscal Year 2025, which we’ll finalize during this year’s fiscal session, is predicted to be about $376.6 million.

For the most part legislators will consider budget bills. However, there will be efforts to add non-budget bills to the agenda, which is allowed by the state Constitution if two-thirds of both the Senate and House approve a resolution for their introduction.

The Revenue Stabilization Act, which is the Arkansas balanced budget law, is actually considered a non-budget bill because it doesn’t specifically appropriate tax funds. It sets spending priorities and states the purpose of various funds, but it doesn’t have specific dollar amounts as appropriation bills do.

In past fiscal sessions the Revenue Stabilization Act has been introduced and approved without controversy.

This year some legislators have filed resolutions declaring their wish to file bills affecting the regulation of data centers and crypto mines. They would amend Act 851 of 2023, known as the Arkansas Data Centers Act, which defines how local governments may regulate data centers and crypto mines.

People who live near crypto mines have voiced complaints about the constant noise levels, and local communities have expressed concerns about the amount of electric power and water used by the centers.

Senate Resolution 5 would allow legislation to create noise reduction techniques. The proposed legislation also would prohibit certain foreign entities from owning a controlling interest in an Arkansas data center. The prohibitions also would apply to agents of foreign interests.

Seven other Senate resolutions have been filed seeking to allow introduction of bills to further regulate crypto-mines and data centers.