Correction: The Arkansas Legislature will return next March 19 to complete its business and formally adjourn this year’s fiscal session. This article reported an incorrect date.
The Arkansas Legislature wrapped up its fiscal session Wednesday, sending Gov. Mike Beebe measures that would distribute $5 billion in state general revenue to state agencies. Lawmakers also completed action on legislation spending $21.9 million in surplus funds.
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One of the appropriation bills includes an amendment to exempt sand used in oil and gas wells from the state sales tax. Beebe said he believes the amendment was passed in a way that violates the state constitution, but he declined to say whether he would veto the provision.
Wednesday was the 31st day of the state’s third-ever fiscal session. The House and Senate recessed after a morning session, but will return March 20 to formally adjourn.
The fiscal session is required by Amendment 86 to the Arkansas Constitution. Voters overwhelmingly passed the fiscal session amendment in 2008. The Legislature meets in regular session in odd-numbered years and in a shorter fiscal session in even-numbered years.
The first and second fiscal sessions, in 2010 and 2012, both lasted 25 days, according to records in the Bureau of Legislative Research.
Legislative leaders and Beebe called the 2014 session a success.
House Speaker Davy Carter, R-Cabot, said he’s proud of the bipartisan way House members worked together to address tough issues. The House has 51 Republicans, 48 Democrats and one Green Party member.
“We aggressively dealt with health care, in my opinion, the best way of anybody else in the country and tackled a lot of other issues,” he said.
Legislators spent most of the fiscal session haggling over whether to reauthorize the use of federal funds to buy private health insurance for low-income Arkansans - called the private option. Private-option backers needed a three-quarters supermajority in both chambers to advance the measure.
Beebe, a Democrat, said the Republican-controlled Legislature did a “good job.”
“Obviously, I am pleased with the private option. I am pleased with the budget. I am pleased with their leadership,” he said.
The Senate approved the private-option measure in a single vote, with 27 senators voting for it. But it took five votes in the House before the private-option measure passed with 76 representatives favoring it.
Passage of the measure means Arkansas can accept $915 million in federal aid under the Patient Protection and Affordable Care Act and spend it on health care.
It also cleared the way for the Legislature this week to approve a $5 billion general revenue budget that increases state spending by $109 million over current levels in fiscal 2015.
In the fiscal session, legislation also passed a law that allows Beebe to forgo calling a special election this year to fill the lieutenant governor position. Springdale Republican Mark Darr resigned from that post Feb. 1. A new lieutenant governor will be selected in the November general election and will be sworn in in January.
Senate President Pro Tempore Michael Lamoureux, R-Russellville, said “the fight over the private option took up all the effort and time and [the $5 billion budget for fiscal 2015] got less time than it probably [deserved].
“Maybe it provided more deference to the governor’s budget than this same group would have given under a different set of circumstances,” he said.
In a 34-0 vote, the Senate sent to Beebe House Bill 1159 - which distributes $5 billion in general revenue in the fiscal year that starts July 1. The budget closely mirrors what Beebe proposed in January.
In an 87-8 vote, the House sent to Beebe SB147, which is identical to HB1159. Eight representatives, who voted against funding the private-option program, voted against HB1159 and SB147 Tuesday and Wednesday.
The measures factor in $85 million in state general revenue reductions from tax cuts enacted during the 2013 General Assembly and up to $89 million in state general revenue savings resulting from the infusion of $915 million in federal Affordable Care Act funds, officials said.
Most of the general revenue spending increases will go to public schools, prisons and human-services programs.
Rep. Terry Rice, R-Waldron, said he’s disappointed that the Legislature reauthorized funding for the private option.
“We have to let the facts speak for themselves on the private option on the costs and how it works,” he said. “We have grown government. … I would like to see us get more efficient.” SURPLUS
In a 34-0 vote, the Senate on Wednesday sent two bills to Beebe to spend $8.7 million of the surplus funds.
The Senate approved HB1158 to give $5 million to the state Department of Correction to pay employees for banked holidays that they’ve already worked, and HB1157 which gives $3.7 million to the Department of Correction to reimburse counties for holding state prisoners in county jails.
The House on Wednesday sent two bills to Beebe to spend $10 million of the surplus.
In a 93-0 vote, the House approve SB145 to give $5 million of the surplus to the Department of Education’s revolving-loan fund for school buildings for open-enrollment charter schools. The state will receive $1 in matching funds from the Walton Family Foundation for each state dollar, according to state officials.
In a 93-0 vote, the House also approved SB146 giving $5 million to the Education Department’s broadband matching-grant program to help school districts install fiber-optic lines. The state will receive four federal matching dollars for each state dollar allocated, according to state officials.
The measures, approved by both chambers, are now ready for the governor’s signature.
These bills are part of an agreement that legislative leaders reached last week on seven bills to spend $21.9 million of the surplus on several projects and to leave roughly $100 million of the projected surplus of $126 million in the bank for possible future needs.
In addition to that agreement, HB1159 and SB 147 includes a provision to designate $3 million of surplus funds as rainy-day funds. The Legislative Council’s approval would be required for Beebe to spend the rainy-day funds. Joint Budget Committee Co-Chairman Rep. Duncan Baird, R-Lowell, and state budget administrator Brandon Sharp said some of that money could be used to conduct a feasibility study for a new prison.
SALES-TAX CUT
At least one portion of a bill this session faces a potential line-item veto.
The Senate sent to Beebe an appropriation bill for the state Department of Finance and Administration’s Revenue Services Division that had an amendment added to it that grants a sales-tax exemption. Beebe said the amendment is “clearly unconstitutional.”
“The question is am I going to do something about it or am I going to let the court do something about it,” he told reporters.
Beebe, who was the state’s attorney general from 2003-07, said he expects a legal challenge by private lawyers if the measure becomes law.
Asked if he intends to veto the amendment, Beebe said, “I’ll let you know when and if I do it.”
The amendment proposed by Sen. Jonathan Dismang, R-Searcy, that would exempt sand used in oil and gas wells from the state sales tax. State law already exempts manufacturing equipment that is used to extract oil and natural gas.
Only appropriation legislation can be considered during a fiscal session, unless two thirds of the House and the Senate agree to hear a fiscally unrelated matter. Dismang didn’t have permission from two-thirds of the House and Senate to introduce his proposal.
Dismang has maintained that his amendment doesn’t really alter the law but simply clarifies the legislative intent of an existing law. A Pulaski County circuit judge has already ruled that Arkansas law doesn’t allow the state to assess that tax.
Dismang said Wednesday that a court would have ruled that the amendment is unconstitutional.
“Someone would have to challenge it. I am not certain who that would be,” he said.
But Beebe said, “If you want to do a bill other than a budget bill … in a fiscal session, you are supposed to go get a resolution and two thirds of both bodies to approve a resolution to take up a substantive [bill].
“When the people passed [the constitutional amendment to require] fiscal sessions and when that rule was put in and when that law was done that way, they never thought, ‘Oh, let’s go undo what we intended and let folks just in special language do a substantive bill and call it an appropriation.’ I mean it defies logic,” he said.
“What is going to happen, if they are not careful, they are going to abuse special language to the point that people are going to (or the legislators themselves are going to) say there is too much abuse in special language [and] we need to stop it.”
Officials with the state Department of Finance and Administration have estimated that the amendment would reduce state-tax revenue by about $5.1 million a year. Dismang said the state isn’t going to be getting that money anyway in light of the court ruling against the tax. State officials said they plan to appeal the lower-court ruling.
Front Section, Pages 1 on 03/13/2014