$5.6B state budget on way to governor

Two bills sail; special session up next

Sen. Larry Teague (left), D-Nashville, greets Sen. Terry Rice, R-Waldron, on the Senate floor Friday. Teague, co-chairman of the Joint Budget Committee, thanked his colleagues for their work after the Senate passed the final budget bill of the fiscal session.
Sen. Larry Teague (left), D-Nashville, greets Sen. Terry Rice, R-Waldron, on the Senate floor Friday. Teague, co-chairman of the Joint Budget Committee, thanked his colleagues for their work after the Senate passed the final budget bill of the fiscal session.

The Arkansas House and Senate voted Friday to send Gov. Asa Hutchinson measures that would distribute nearly $5.63 billion in general revenue to state programs in the coming fiscal year.

The general-revenue budget would increase by $172.8 million in fiscal 2019, which starts July 1, under the identical bills -- House Bill 1137 and Senate Bill 122.

Today is the 27th day of the fiscal session that started Feb. 12. Legislative leaders said they intend to return to the Capitol on Monday afternoon -- the 29th day -- to adjourn the fiscal session. The previous four fiscal sessions have ranged from 25 days in 2010 to 38 days in 2014.

"I appreciate the General Assembly's quick action on all appropriation bills in the fiscal session," Hutchinson said Friday in a written statement.

Hutchinson also announced that he intends to issue the call for a special session starting at 9 a.m. Tuesday to address a number of matters, including legislation relating to highway funding and pharmacy reimbursement.

Both budget bills easily passed.

With Sen. Bryan King, R-Green Forest, dissenting, the Senate on Friday morning voted 29-1 to send HB1137 to the governor.

The House voted 90-3 to send SB122 to the governor with Republican Reps. Kim Hammer of Benton, Josh Miller of Heber Springs and John Payton of Wilbur voting against it.

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The Revenue Stabilization Act also would set aside $64 million in what the Republican governor considers surplus revenue with $48 million earmarked for a newly created restricted reserve fund and $16 million to help match federal highway funds. The restricted reserve fund could be used with a three-fifths vote of either the Legislative Council or Joint Budget Committee.

The restrictive reserve fund is being created in case of an economic downturn or for future tax cuts, said Hutchinson spokesman J.R. Davis.

"The fact that the governor specifically set out a plan that did not spend all the revenue coming in gives us a cushion because we would like to be able to utilize that in the future for income tax reductions or tax reductions for the people of Arkansas at the directive of" the Legislature's tax overhaul task force, said Senate President Pro Tempore Jonathan Dismang, R-Searcy.

"I think we are in a good spot. It's a conservative budget and we took care of the needs of the state," Dismang said in an interview.

Under HB1137 and SB122, the Department of Human Services' general-revenue budget would grow by $142.7 million to $1.668 billion in fiscal 2019. That includes a $137.8 million increase, to $1.251 billion, to the Medicaid program and a $7.3 million increase, to $123.9 million, for the Children and Family Services Division.

Among other things, general revenue for two- and four-year public colleges would increase by $12 million, to $745.6 million, with $9.4 million of the increase to implement the new higher-education productivity-based funding formula. The other $2.6 million increase would go to Eastern Arkansas Community College, for a total of $8.4 million. The college merged with Crowley's Ridge Technical Institute.

To kick off the fiscal session, Hutchinson signaled that he wants the Legislature in 2019 to cut the state's top individual income tax rate from 6.9 percent to 6 percent, which he projected would reduce general revenue by about $180 million.

In 2015, the Republican-controlled Legislature enacted Hutchinson's plan to cut individual income taxes by $100 million a year for Arkansans with taxable income between $21,000 and $75,000 a year.

In 2017, lawmakers followed that with another income tax cut that will reduce revenue by $50 million a year. That cut affects people with taxable income below $21,000 a year, starting Jan. 1, 2019.

In his weekly radio address released Friday, Hutchinson said that "this week, we saw state government at its best when state legislators approved next year's state budget, which included spending authority for the Division of Medical Services, the agency that oversees Arkansas' Medicaid and Arkansas Works programs."

Arkansas Works, using Medicaid dollars, provides private health insurance for about 285,000 low-income Arkansans.

Senate Bill 30, signed into law by Hutchinson on Thursday, grants $8.2 billion in spending authority to the Medical Services Division in the coming fiscal year.

"The vote was the final piece of business for the General Assembly as lawmakers wrapped up the fiscal session [and] until the final vote, many doubted the appropriations bill would pass," the governor said.

"Not only did both houses pass the bill, but each passed on the first vote. Legislators from both parties rallied to do what is best for their state," Hutchinson said. "This was an important vote for working Arkansans who need help to cover their health insurance premiums. It is also important for taxpayers because we put in place reforms that combine government assistance with personal responsibility."

A federal government official on Monday signed a waiver to allow the state to require some of the 285,000 people enrolled in the Arkansas Works program to work, go to school or perform volunteer services 80 hours a month. Arkansas is the third state to win approval of such a requirement.

The Arkansas Works program is projected to cost the state about $135 million and the federal government about $1.95 billion in fiscal 2019.

King tweeted on Friday that "to continue still unsustainable increases to Medicaid while not properly funding corrections is not adequately protecting citizens.

"But big insurance/Medicaid cronies were taken care of at taxpayer expense," he said. Last month, a legislative panel rejected King's plan to turn Arkansas Works into a fee-for-service program.

HB1137 and SB122 would increase the Department of Community Correction's general revenue budget by $1.7 million to $87.9 million and the Department of Correction's budget by $3.5 million to $353.1 million, as well as increase general-revenue assistance for reimbursing county jails for housing state inmates by $4 million, to $18.2 million in fiscal 2019.

In January, Hutchinson announced his request for federal and state funding for the Medicaid program during fiscal 2019 will be about $478 million lower than what he had first planned thanks to efforts to reduce Arkansas Medicaid spending and enrollment.

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Rep. Charlie Collins, R-Fayetteville, checks his phone Friday shortly after the state House adjourned for the day.

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A Section on 03/10/2018

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