Panel passes $21.9 million plan for surplus

A package of bills spending $21.9 million of the state’s $126 million surplus on several projects cleared the Legislative Joint Budget Committee on Thursday.

If approved, the money would be used - among other things - to help schools install fiber-optic lines, to reimburse counties for holding state prisoners in their jails and to open prison space for 200 more inmates.

But the committee voted not to spend $10 million on construction projects and maintenance at the state’s five institutions for the developmentally disabled or to give $2 million to the state’s pre-kindergarten program.

The $21.9 million package still must clear the House and Senate before going to Gov. Mike Beebe.

Beebe and legislative leaders said late Thursday afternoon that they’ve effectively agreed to a spending plan for fiscal 2015 that largely mirrors Beebe’s proposed $5 billion general revenue budget.

Beebe proposed increasing state spending by $105 million over current levels and raising spending for education, prisons and human-services programs. Beebe’s budget blueprint factors in $85 million in tax cuts enacted by the 2013 Legislature and up to $89 million in savings from the state using federal funds to purchase private health insurance for low-income Arkansans, according to state officials.

The committee’s action ended two days of haggling among legislative leaders over how much of the surplus to spend in the fiscal session and how much to save for needs that could arise in next year’s regular session.

The surplus is roughly $126 million, including $14 million in interest earnings expected by June 30, 2015, said state budget administrator Brandon Sharp. Altogether, Beebe and 10 lawmakers submitted requests for spending $92.3 million of the surplus on a variety of projects.

House Speaker Davy Carter, R-Cabot, told the budget committee that “it’s pretty nice knowing that we’ve had large surpluses under the pillow, so to speak, for anything that may come up,” during the past few years of tough economic times, and legislative leaders are recommending not spending roughly $100 million of the surplus.

The surplus totaled $299.5 million on June 30 at the end of the last fiscal year, ranking as the fourth-largest in the past 20 years, according to state records. The $299.5 million fell about $110 million short of the largest surplus accumulated at the end of any of the past 20 fiscal years - $409.3 million in fiscal 2007. The 2013 Legislature authorized spending part of the $299.5 million, leaving the state with about $126 million.

The state accumulates a surplus when it collects more in general revenue - which is made up primarily of income and sales and use taxes - than the Legislature and the governor authorize state agencies to spend.

Carter said six of the seven bills spending surplus funds stemmed from requests from Beebe and “they have taken a haircut.”

The bills that cleared the Joint Budget Committee include:

Senate Bill 145 giving $5 million to the state Department of Education’s revolving-loan fund for school buildings for open-enrollment charter schools. Beebe requested $10 million for the fund.

Sen. Jonathan Dismang, R-Searcy, said the state will receive one dollar in matching funds from the Walton Foundation for each state dollar and it’s “felt as though it would be something that we would take advantage of here in the state.”

SB146 giving $5 million to the state Department of Education’s broadband matching grant program to help school districts install fiber-optic lines. Dismang said the state will receive four federal matching dollars for each state dollar allocated. While Beebe requested $10 million for the matching-grant program, Dismang said legislative leaders are urging Beebe “to fill the request in its entirety through existing [General Improvement Funds].”

HB1158 giving $5 million to the state Department of Correction to pay employees for banked holidays that they’ve already worked. Beebe requested $10 million for this purpose.

HB1157 giving $3.7 million to the state Department of Correction to reimburse counties for holding state prisoners in their jails. Dismang said Beebe requested $7.4 million for reimbursing the counties, and “we do feel that we do have an obligation and so does the executive branch, and it will be up to them how they utilize the funds that they have if they fulfill the rest of the $3.7 [million] obligation.”

HB1130 giving $2 million to the state Department of Health for its breast-care program. Dismang said these funds will fix “a loophole that we had created through the private option.”

This one-time funding is designed to bridge the gap for women between 138 percent and 200 percent of the federal poverty level, who are diagnosed with breast cancer and have not enrolled in an insurance plan during open enrollment, said department spokesman Kerry Krell. The Legislature previously allocated funding to Medicaid to cover breast-cancer treatment for women with incomes up to 200 percent of the federal poverty level and the department’s breast-care program covered outreach and screenings, but not treatment, she said.

HB1155 giving $719,873 to the state Department of Correction to finance 14 positions and operating funds to open 200 more prison beds.

HB1156 giving $500,000 to the state Department of Community Correction to reimburse counties for holding state prisoners in county jails. Among other things, the department supervises offenders on probation and parole.

Sen. Joyce Elliott, D-Little Rock, proposed an amendment to Senate Bill 48 to give $2 million of the surplus tothe Arkansas Better Chance pre-kindergarten program. (She had originally requested $7 million.) Joint Budget Committee Co-Chairman Sen. Larry Teague, D-Nashville, said the program is budgeted for $111 million in fiscal 2015.

But the committee’s 20-12 vote in favor of Elliott’s amendment fell nine votes short of the 29 required for approval in the 56-member committee.

Elliott said the committee authorized spending $9 million of surplus funds “on the prison pipeline and it is money we have to spend.

“…We are so much better off if we are addressing the pipeline before it gets started and it is indisputable that pre-k is the major way to do that,” she said.

Rep. John Burris, R-Harrison, who voted against Elliott’s amendment, said legislative leaders’ objective is to keep $100 million in surplus funds in the bank.

Funding for the program “is a big problem that we can’t just fix in a supplemental appropriation in a fiscal session,” he said.

Sen. Bruce Maloch, D-Magnolia, told the budget committee that he won’t ask it to adopt an amendment to Senate Bill 112 to use $10 million of the surplus for construction and maintenance projects at the state’s five institutions for the developmentally disabled.

“We think the $10 million … is something that is needed and it is something that we should do, but just understand that in the confines of a fiscal session it just wasn’t possible,” he said. He promised he’ll continue to seek the money in the future.

The state has human-development centers in Arkadelphia, Booneville, Conway, Jonesboro and Warren. They provide residents with medical care, therapy and other services.

After Maloch dropped the proposal, Sen. Linda Chesterfield, D-Little Rock, urged colleagues to pass it anyway, saying she wasn’t part of the deal brokered by legislative leaders that omitted the request. The committee rejected Chesterfield’s proposal in a voice vote.