Between the lines

Governor faces GOP trouble

Gov. Asa Hutchinson couldn't even get his budget plan announced before some Republicans in the Legislature were undermining his proposal.

The state's new Republican governor may not get much of a honeymoon with this bunch of lawmakers.

Budgets have two fundamental halves: revenue and spending.

The budget the governor announced on Tuesday proposes more funding for public schools, Medicaid and prisons and ponders cuts elsewhere in the $5.2 billion budget that would take effect July 1.

The part being undermined is the revenue side of the equation, which could lead to more dramatic cuts in spending later.

Forget the spending plans for a minute and concentrate on where the state's money will come from.

Remember, first and foremost among the Hutchinson administration's objectives is a middle-class income tax cut that is supposed to provide something close to $100 million in tax relief annually. That means at least $100 million less in revenue.

That proposal actually won approval last week in the state Senate, which also repealed planned cuts in the capital gains taxes that were supposed to be effective this year. The repeal of the earlier cuts effectively made the larger income tax cut more palatable.

There are still questions about why lower-income Arkansans would get no benefit, but helping the middle class does appeal to most legislators.

Meanwhile, Hutchinson asked the lawmakers to continue the "private option." The request is coupled with plans to overhaul health care based on recommendations of a new state task force, but it would extend through 2016 the program that buys private health insurance for qualifying Arkansans with federal Medicaid dollars.

It is a pivotal part of the overall state budget. Without those federal dollars, the state would be paying more to fund Medicaid needs in Arkansas and have less for other purposes.

What the governor proposed would make sure the federal Medicaid funds keep coming while his task force looks for longer-term health care reform.

Hutchinson's plan won support from backers of the private option and even from some of its foes. The latter group likened the plan to winding down the program they've fought in the past.

It seemed like a strong start.

That was last week.

By Monday, there were obstacles.

A House of Representatives committee seemed bound and determined to blunt the repeal of the capital-gains tax cuts, discussing an amendment to the larger income tax cut bill that is the cornerstone of the Hutchinson agenda.

"Any amendment offered on the House side will need to be considered based upon its budget impact," Hutchinson said on Monday, as he prepared to release his budget plan for fiscal 2016 on Tuesday.

Here's the problem. Some lawmakers insist on referring to repeal of the capital gains tax cuts, approved in 2013 and due to be effective this year, as a tax hike.

Repeal of that proposal, aimed at relief for higher-income citizens, makes the middle-class tax cuts easier. While other lawmakers agree with Hutchinson that the middle-class cuts would serve the greater good, some want both.

It's all part of the budget-balancing act lawmakers must do every year.

Another obstacle to Hutchinson's plans came from several senators who signed on to a bill that would repeal the private option at the end of this year, not the end of 2016 as Hutchinson proposed.

The leader of that effort is Sen. Linda Collins-Smith, R-Pocahontas, an anti-tax lawmaker and a strong opponent to the private option. If there are enough senators of that ilk, they can block reauthorization of the private option that Hutchinson has requested. In the process, they'll unhinge his proposed budget.

Again, reauthorization of the private option requires a three-quarters vote of both the House and the Senate. That's a difficult threshold in any case and particularly when the issue is as controversial as the private option.

Never mind that more than 213,000 Arkansas people are enrolled in the program and dependent on the insurance they likely would not have without it.

Just a handful of state senators could deny them that coverage, even for the brief time that Hutchinson has proposed to keep it in place.

Collins-Smith has six other senators signed on to sponsor her bill to repeal the private option. Just two more in the 35-member Senate are all that would be needed to block any bill that would extend the private option.

And that's just the Senate side of the equation. Who knows how stout the opposition to the private option will be in the House, where the Republican majority includes plenty of private option foes?

This is not going to be an easy session. Gov. Hutchinson mapped out a reasonable start, but he has his hands full trying to lead this Legislature where he wants it to go.

Brenda Blagg is a freelance columnist and longtime journalist in Northwest Arkansas. Email her at [email protected].

Commentary on 01/28/2015

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