State revenue forecast to rise $129.9 million

Arkansas Gov. Mike Beebe, left, watches as Arkansas Department of Finance and Administration Director Richard Weiss hands out copies of updated revenue forecasts in the press room at the Arkansas state Capitol in Little Rock, Ark., Monday, Dec. 2, 2013.
Arkansas Gov. Mike Beebe, left, watches as Arkansas Department of Finance and Administration Director Richard Weiss hands out copies of updated revenue forecasts in the press room at the Arkansas state Capitol in Little Rock, Ark., Monday, Dec. 2, 2013.

Gov. Mike Beebe’s administration Monday projected a $129.9 million increase in state general revenue to $6.333 billion in the fiscal year starting July 1.

The state also lowered, slightly, its revenue estimates for fiscal 2014.

Beebe said the state Department of Finance and Administration’s forecast for a 2.1 percent increase in the state’s gross general revenue in fiscal 2015 is conservative and projects “slow, slow” economic growth in the state.

“Nothing is too conservative,” the Democratic governor told reporters when asked if the forecast is too conservative.

Joint Budget Committee Co-Chairman Rep. Duncan Baird, R-Lowell, said the finance department’s projection for fiscal 2015 “is pretty much in line with my expectation” and “nothing really jumped out.”

The finance department projected an increase of $96.9 million, or 2 percent over the revised fiscal 2014 estimates,to $5.040 billion in net general revenue available for state agencies to spend in fiscal 2015. The new estimate figures in the effects of $85.2 million in tax cuts and other tax policy changes enacted by the Legislature.

Tax refunds and some specific government expenditures, such as court-mandated desegregation expenses, come off the top of gross general revenue, leaving a net amount that agencies are allowed to spend.

Beebe said his proposed fiscal 2015 budget - once he completes it - will steer a “big chuck” of the projected $96.9 million increase in net available general revenue to the public schools.

The governor said he’ll give state agency officials time to comment before finalizing it.

“Agency input is just going to [the finance department] this month. I think I know where [the proposed budget] is, but we give everybody a chance to have a fair trial before we hang ‘em,” Beebe joked to reporters.

“I have strong ideas of what the proposed budget will be, [but it is not done and it depends on other things, including whether or not the forecast changes and including what justification exists from the agencies in their requests,” Beebe said. He declined to provide details on his ideas for his proposed budget.

The Legislative Council and Joint Budget Committee are scheduled to hold budget hearings Jan. 14-16 in advance of the fiscal session, which starts Feb. 10, according to the General Assembly’s web site. They are scheduled to hear about Beebe’s proposed budget for fiscal 2015 on Jan. 14.

In remarks to reporters Monday about the proposed state budget, Beebe didn’t discuss whether the Legislature will reauthorize the use of federal funds to purchase private health insurance through a health exchange for uninsured Arkansans in the 2014 fiscal session.

Last month, Beebe warned that the Legislature will either have to repeal tax cuts that it enacted earlier this year or trim state government budgets if it rejects federal funding for the so-called “private option.”

“This is not an alarm, folks. It’s arithmetic,” the governor told college officials last month.

Reauthorizing the use of federal Medicaid dollars for the program will require at least 75 votes in the 100-member House and 27 votes in the 35-member Senate. Earlier this year, the Legislature narrowly approved funding the private option for fiscal 2014.

Beebe spokesman Matt DeCample said later Monday that Beebe’s proposed budget for fiscal 2015 is being built assuming that the private option remains intact.

The governor “recognizes that re-authorization is not a sure thing, and knows that work will be needed to keep the necessary votes in place,” said DeCample.

In what Baird called a minor change, the finance department Monday also cut its forecast for gross general revenue by $24.7 million in fiscal 2014 and its projection for net available general revenue for state agencies to spend by $13.8 million in fiscal 2014. That means the state will have $13.8 million less in surplus revenue and will still be able to fully fund the state budget for fiscal 2014 with a $18.9 million rainy day fund set aside, state officials said.

As a result, the department is now projecting gross general revenue of $6.203 billion in fiscal 2014 - a $10.5 million decline from fiscal 2013 - and net available general revenue of $4.943 billion in fiscal 2014- a $83.2 million decline from fiscal 2013.

State officials said the state’s surplus of $299.5 million from fiscal 2013 resulted from a onetime surge of state tax revenues resulting from taxpayers paying taxes earlier to avoid federal tax increases.

“We think with all the refunds we are going to be putting out based on that, and what happened with the federal [government] shutdown [it] is going to put us right on target, right on forecast, but nothing above that,” said Richard Weiss, director of the state Department of Finance and Administration.

Beebe added the state’s gross general revenue and net general revenue last month have fallen short of the state’s forecast.

Weiss said the finance department will issue its revenue report for November’s tax collections today.

Front Section, Pages 1 on 12/03/2013

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