SPRINGDALE -- The newly minted state budget could mean a cut of up to $600,000 to the nonprofit Community Clinic of Northwest Arkansas out of a total budget of $6.5 million, director Kathy Grisham said Thursday.
Community health centers operate in areas lacking other providers or have high percentages of people who lack insurance and have health problems. Patients pay fees that vary according to income. There are 12 such centers in Arkansas. Community Clinic is the second largest, seeing about 177,000 patients last year.
At the very least, a planned expansion into Fayetteville is now uncertain, Grisham said. The $4.9 million cuts to the health centers' grants were part of the Legislature's Revenue Stabilization Act, the law which controls state spending.
The act also cut $1 million in grants to libraries around the state.
"There was no real discussion of this," Grisham said of the health center cuts. "I found out about it in the middle of last week, and everywhere we turned we were told this was a done deal."
Northwest Arkansas lawmakers are hoping the money is replaced through a $40 million reserve fund controlled by the governor, said state Sen. Uvalde Lindsey, D-Fayetteville. If the Northwest delegation presents a united front to the governor in support of restoring the grant, they stand a good chance of swaying the governor, Lindsey said.
The cut doesn't take effect until the next fiscal year, which begins July 1.
"I think that's possible, and there's also efforts to get some general improvement money on this," said Sen. Jim Hendren, R-Sulphur Springs, of the reserve fund. "General improvement" money is state money left over at the end of the fiscal year, such as unspent fund balances at state agencies. Both Hendren and Lindsey are members of the legislative Joint Budget Committee.
The decrease in grant money funded a $10 million cut to the state capital gains tax. A reduction in the gains tax was already approved and scheduled to take effect in July, but the governor then proposed a $100 million state income tax cut. The Senate Revenue and Tax Committee balked at passing a $100 million income tax cut and keeping the scheduled $10 million capital gains cut, so it withdrew the capital gains cut.
"That would have sent an horrendous message to business, that we'll promise you tax cuts but can pull the rug out from under you," said Rep. Charlie Collins, R-Fayetteville. Capital gains are profit that an investor makes when he sells an asset for a price that is higher than the purchase price.
Collins and other members of the House worked to restore the capital gains cut, as originally scheduled. The cut puts Arkansas in line with capital gains tax rates in nearby states, he said.
When the House passed a bill putting the capital gains tax back on, the Senate insisted other budget cuts be found to pay for it, Hendren said.
"The conservatives over at the Senate said, 'OK. If you're going to do this, you're going to come up with the cuts to pay for it,'" he said.
That wasn't easy, both he and Collins said. Spending for public education and health care required increases, and money for higher education wasn't cut at the governor's insistence.
"I wouldn't say there was a quid pro quo, but as you can see we were $6 million short on what we needed to pay for capital gains and the cuts were $4.9 million for the health centers and $1 million for libraries," Lindsey said.
Both he and Hendren said the governor wanted the cuts to come out of grants rather than the operating budgets of state agencies, which were already facing a 1-percent across-the-board cut in the governor's budget.
Doug Thompson can be reached by eamil at [email protected].
A Section on 04/03/2015