Bills that would boost the state’s general-revenue budget by $109 million, to $5 billion, sailed through the Legislature’s Joint Budget Committee on Friday with nary a question.
The state House of Representatives later approved an appropriation bill granting a sales-tax exemption for sand used for oil and gas wells with no debate before lawmakers departed Friday morning to head home for the weekend.
The measures distributing general revenue to state agencies largely mirror Gov. Mike Beebe’s proposed budget for fiscal 2015, which starts July 1, and are the product of negotiations between Beebe and legislative leaders.
The public schools, human-services programs and prisons would receive most of the increased general revenue in fiscal 2015 under Senate Bill 147 and House Bill 1159.
But the measures would cut the general-revenue budget for the University of Arkansas for Medical Sciences by $14.5 million to $79.4 million. Beebe had proposed a $7.6 million cut in UAMS’ budget with the expectation that the school would have fewer expenses because it would see fewer uninsured patients as a result of the federal Patient Protection and Affordable Care Act.
Beebe and the chairmen of the Joint Budget Committee said UAMS could get $7 million more in state aid through rainy-day funds under these bills with the approval of the governor and the Legislative Council or the Joint Budget Committee. But the school would have to demonstrate that the assistance was truly necessary.
“I think it is a way for the Legislature to verify that they need the money, and we hope their costs won’t be as high because of the private option and some of those things,” said Joint Budget Committee Co-Chairman Sen. Larry Teague, D-Nashville. The private option is a state program that uses federal Medicaid dollars to purchase private health insurance for low-income Arkansans.
“But if they need the money, we want it to be there for them,” Teague said.
UAMS officials believe that the institution’s hospital will break even, and “our concern is with the university side of our institution and whether we will have sufficient funding to support our education and research missions,” said UAMS Chancellor Dan Rahn.
“Federal cuts in research dollars in the National Institutes of Health budget and the effects of sequestration have hit us hard. A cut in our state appropriation introduces another challenge,” he said in a written statement, adding the proposed cut would mean only 7 percent of UAMS’ budget comes from the state in the next fiscal year.
“While we hope we won’t have to, staff reductions and salary cuts are among the steps we may have to consider,” Rahn said.
The bills still must clear the House and Senate before Beebe can act on them.
SB147 and HB1159 divide the projected general revenue into A, B, B1 and C categories with the first approximately $4.9 billion going to the A category, the next $51 million to the B category, the next $5.2 million to the B1 category and a final $12 million to the C category. The four categories total $5 billion - up from the current budget of $4.9 billion.
The state’s top spending priorities are placed in Category A, and lower spending priorities are placed in the other categories under the Revenue Stabilization Act.
Funding to Category B only flows after Category A has been fully funded. Category C gets money last.
The general revenue forecast for fiscal 2015 fully funds categories A, B and B1, and tax collections beyond that - if they materialize - could cover category C.
The proposed budget factors in $85 million in reduced general revenue from tax cuts enacted by the 2013 Legislature and savings up to $89 million from the use of federal funds to purchase private health insurance for the poor, state officials said.
The bills would fund 1 percent cost-of-living raises for most state employees and set aside $19 million in rainy day funds, including up to $7 million for UAMS and up to$2 million for the state’s Department of Health and Department of Human Services for community health centers and mental-health centers, said Brandon Sharp, the state’s budget administrator.
Under these measures, the Public School Fund providing state aid for school districts would increase by at least $65 million to $2.1 billion, which would be in the A category.
The Public School Fund could receive up to an additional $12 million if the state receives that much more in tax collections than forecast.
The Human Services Department would get a nearly $27 million boost in general revenue to $1.3 billion in fiscal year 2015 under these bills. The department’s Medicaid program would get a nearly $32 million increase in state general revenue to $922.1 million.
The bills would give the Department of Correction a $3.1 million increase in general revenue to $316.1 million and increase county jail reimbursement payments by $7 million to $16.4 million in fiscal 2015.
The Department of Higher Education would get a $3.1 million increase to $40 million for grants and scholarships that aren’t financed by the state lottery in fiscal 2015. The increased support will allow the department to provide aid to the current class of students attending out-of state-medical schools and to students with a parent who had been killed or disabled in the line of duty in the military or law enforcement. It also would allow the department to offer these scholarships to new students in the fall, said department Director Shane Broadway.
The measures would cut general revenue for state universities by nearly $11 million to $581.1 million with UAMS bearing the brunt of that cut.
The University of Arkansas at Fayetteville’s general revenue budget would increase by $1.1 million to $120.9 million and Arkansas State University-Jonesboro’s budget would be boosted by $531,104 to $59 million.
The University of Central Arkansas’ general revenue budget would increase by $467,527 to $53.1 million; the University of Arkansas at Little Rock’s would increase by $498,920 to $60.7 million; and Arkansas Tech University’s would increase by $275,791 to $32.2 million.
These measures would boost the general revenue budget for the state’s 17 two year colleges by $500,000 to $111.9 million and freeze the general revenue budget for the five technical colleges at $33.5 million.
HOUSE ACTION
The House approved a batch of funding bills, including a measure that exempts sand used in oil and gas wells from the state sales tax.
Officials for the state Department of Finance and Administration have objected to an amendment added by Sen. Jonathan Dismang, R-Searcy, to House Bill 1048, the appropriation bill for the agency’s Revenue Services Division, to create the exemption that it estimates would reduce state tax revenue by $5.1 million a year.
The House passed the measure, along with 11 other funding bills, by a vote of 84-0 without discussion.
It failed to pass an appropriation bill for the state Board of Examiners in Counseling by a vote of 57-7. The bill required 75 votes to pass the 100-member chamber and 36 members did not vote.
Rep. Jim Nickels, D-Sherwood, said he was expecting the bill to come up for a vote Tuesday, and asked the House to wait until he and Sen. Bruce Maloch, D-Magnolia, had discussions with the board to pass the appropriation.
Joint Budget Committee Co-Chairman Rep. Duncan Baird, R-Lowell, said the same measure will be voted on Tuesday in the House.
Information for this article was contributed by Sean Beherec of the Arkansas Democrat-Gazette.
Front Section, Pages 1 on 03/08/2014