Budget has $133M rise in spending

General-revenue proposal builds state rainy-day fund

State general-revenue spending would increase by $133 million to $5.18 billion in the fiscal year starting July 1 under a proposed budget that legislative leaders released Friday afternoon.

Most of the increase would go to the state's public schools, human services programs and prisons under the proposed Revenue Stabilization Act, which would distribute state general revenue to state agencies and programs in fiscal 2016.

The proposed general-revenue budget is similar to the one Republican Gov. Asa Hutchinson unveiled two months ago.

"We put together a very good budget," said House Speaker Jeremy Gillam, R-Judsonia.

"We meet the needs of the state. I think we've done it in an orderly fashion, so the members will have a couple of days to look over it, and we'll run it in [the Joint Budget Committee] on Monday and go from there," Gillam said Friday afternoon.

He said he's aiming to finish with it and the rest of the legislative business by Thursday, which will be the 81st day of the session.

The latest proposed general-revenue budget factors in a $6 million state general-revenue reduction in fiscal 2016 resulting from legislation that will restore capital-gains tax cuts repealed earlier in this session. The proposed budget also creates a $4.3 million rainy-day fund.

Act 22 -- enacted earlier this session to reduce income tax cuts for Arkansans with taxable incomes between $21,000 and $75,000 a year and repeal certain capital-gains income tax cuts enacted in 2013 -- already is projected to reduce state general revenue by $22.9 million in fiscal 2016.

But the budget blueprint doesn't include a proposed reduction in income taxes on veterans retirement benefits that some lawmakers, including state Sen. Missy Irvin, R-Mountain View, and Lt. Gov. Tim Griffin have sought.

"There really was no way to get there in this session," said Senate President Pro Tempore Jonathan Dismang, R-Searcy. "It will remain a priority in the future."

The budget calls for several program cuts to free up rainy-day funds while also making up for the revenue lost because of the capital-gains tax cut. The biggest reductions include a $4.95 million cut in the state Department of Health for grants to community health centers, and a $2.5 million reduction to the Arkansas Science and Technology Authority for Accelerate Arkansas grants, state officials said

"It's very tight and it's very lean," Dismang said about the proposed budget.

The governor could use rainy-day funds to help make up for the grant programs that are cut under the proposed budget if that's needed, he said.

The proposed budget would increase state general-revenue spending to the Public School Fund by $49.5 million to $2.16 billion in fiscal 2016 based on the state's existing general-revenue forecast and by $3 million more if the state collects more than forecast. The educational facilities partnership program would get a $7 million increase in state general-revenue spending to $41.8 million if the state collects more general revenue than forecast.

The budget blueprint would increase state general-revenue spending to the state Department of Human Services by $80.2 million to $1.33 billion in the next fiscal year. The department's Aging and Adult Services Division would be cut by $1.1 million to $16.5 million.

The Department of Correction would get a $14.3 million increase in state general revenue to $336.6 million and the state Department of Community Correction would get a $1.7 million boost to $78.6 million under this proposal. County jail reimbursements would increase from $16.4 million to $27.8 million.

The state Department of Health would receive a $6.4 million cut to $78.8 million, the state Department of Economic Development would be cut by $1.4 million to $10.6 million, while the state Department of Career Education would get a $1 million increase to $4.7 million.

The state's two- and four-year colleges and technical institutes would receive the same amount that they are getting in the current fiscal year: $733.5 million.

Hutchinson said his proposed budget released in January "reflected my priorities, including increased funding for K-12 education, Corrections and Medicaid, and stable funding for higher education."

"In addition, I proposed 1 percent cuts to most state agency budgets," the governor said Friday in a written statement.

"The changes made in the Revenue Stabilization bill since my budget are necessary in order to balance the budget and take into account the restoration of the capital gains exclusion as well as the impact of other policy changes from the session, including increased funding for pre-K. I worked with legislative leadership to determine which changes would be made in the final budget," Hutchinson said.

In addition, Dismang said legislators have agreed to set aside $20 million for General Improvement Fund projects for lawmakers, with the House and Senate receiving $10 million each. The governor would have another $20 million that he can spend on the projects that he wants to fund.

Davis said the governor wants to use $3 million in General Improvement Funds to increase pre-kindergarten funding enrollment and boost funding for the program in the future.

Metro on 03/28/2015

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