Grocery-tax cut in Beebe's budget proposal

Posted: November 15, 2012 at 9:33 a.m.
Updated: November 15, 2012 at 10:14 a.m.

— Gov. Mike Beebe is proposing a reduction in the state’s grocery tax that would be triggered if the state’s budget obligations in several key areas decline over a six-month period.

Finance officials on Thursday said Beebe is calling for reducing the state’s grocery tax from 1.5 percent to 1/8th percent. The cut would eliminate all but a portion of the sales tax that was approved by voters as part of a constitutional amendment.

The tax cut would be triggered if deductions in several key areas decline by at least $35 million for six consecutive months. The deductions include the state’s desegregation obligations and payments for certain bonds.

The tax cut was part of a $4.9 billion general revenue budget proposal for next year that Beebe’s administration detailed to lawmakers.

Beebe’s budget proposal calls for increasing state spending by $180 million. The state Department of Human Services, which manages the state’s Medicaid program, would get the largest share of the budget increase, with Beebe proposing $98 million in additional funding for the agency.

Human Services has detailed a series of cuts it will have to make in the state’s Medicaid program, including removing thousands of seniors from nursing home care, to plug a $138 million shortfall the program faces even with the additional money.

Beebe proposed increasing money for public schools by $49 million. The governor also called for setting aside $10 million for a “rainy day fund” that the state can tap in financial emergencies.

Read tomorrow's Arkansas Democrat-Gazette for full details.