The Arkansas House of Representatives and Senate on Monday approved identical versions of the state's proposed Revenue Stabilization Act that would increase the general revenue budget by $175.1 million to $6.02 billion in the fiscal year starting July 1.
Most of the increase in the general revenue budget would go to the public schools and human service programs under the proposal for fiscal 2023 in Senate Bill 101 and House Bill 1117.
The Senate voted 35-0 on Monday afternoon to approve SB101, sending it to the House for further action. The House voted 95-1 on Monday afternoon to send HB1117 to the Senate for further action. The Joint Budget Committee had voted to recommend House and Senate approval of the bills Monday morning.
Afterward, Gov. Asa Hutchinson said the approval of the measures shows there is broad support for the proposed general revenue budget and spending priorities.
"The spending bill reflects our mutual priorities of support for law enforcement and investment in education," the Republican governor said in a written statement.
Afterward, a Joint Budget Committee co-chairman, state Rep. Lane Jean, R-Magnolia, said: "Well, when it's 95 to 1 it feels good.
"I think people pretty much knew what all was in it and knew the process and didn't have a lot of questions this time, wasn't a lot of battles," he said in an interview. "I think most people are generally pleased with what we're doing, and we've still got a good surplus, so I think people are pretty happy with the budget process this year."
House Democratic leader Tippi McCullough of Little Rock said Democrats worried about authorizing the use of $1 million in state rainy-day funds for state grants to crisis pregnancy centers under Senate Bill 102 that cleared the House last week, and "some of us were concerned about the extra money spent on the prison addition in Calico Rock."
"But for the most part there wasn't -- you know except for just a few issues like that -- not a lot to you know adamantly throw our hands up against or anything," she said in an interview.
Today is the 23rd day of the fiscal session. House and Senate leaders said the House and Senate plan to recess today.
Senate Pro Tempore Jimmy Hickey, R-Texarkana, said he wants to wait several days to determine whether there is a need to correct any potential errors in bills before the Senate plans to adjourn next Tuesday. House Speaker Matthew Shepherd, R-El Dorado, said he is tentatively planning on the House adjourning next Tuesday.
GOVERNOR'S PROPOSAL
SB101 and HB1117 would increase the state's general revenue budget by 2.9 % in fiscal 2023.
On Jan. 11, Hutchinson proposed a $194.6 million, or a 3.3 %, increase in the state's general revenue budget to $6.04 billion in fiscal 2023. The governor's proposal envisioned leaving a $174.4 million general revenue surplus at the end of fiscal 2023.
Legislative leaders said the proposed Revenue Stabilization Act mostly mirrors Hutchinson's proposed general revenue budget other than a smaller proposed increase for the state's Medicaid program and a reduction in the allocation for the state's performance fund.
The identical proposed Revenue Stabilization Acts would transfer $150 million from the general revenue allotment reserve fund to the various improvements and projects set aside in the restricted reserve fund, but the bills don't list any projects.
Legislative leaders said the $150 million in the restricted reserve fund could pay for a proposed prison expansion, state funds to match federal funds for a new veterans home in Northwest Arkansas, the public safety equipment grant fund, projects at the Arkansas School for the Deaf and Arkansas School for the Blind, and/or assistance for the Arkansas National Guard Foundation. The Legislative Council's approval will be required to tap funds requested by the governor for these projects.
Last month, Hutchinson said the Department of Finance and Administration conservatively estimates a $500 million general revenue surplus at the end of the fiscal 2022 on June 30.
Priorities for general revenue funding of programs are set in the Revenue Stabilization Act, which is enacted every year by the Legislature and the governor and keeps the state from deficit spending. The state's two largest sources of general revenue are individual income taxes, and sales and use taxes.
The proposal would create two categories for spending priorities in fiscal 2022: A and B.
Category A, the highest priority, would be allocated $5.685 billion. Category B would be allotted $338.5 million.
Legislative leaders said the state's general revenue forecast for fiscal 2023 would fully fund both Category A and Category B in the proposed Revenue Stabilization Act.
The measure would increase the general revenue allocation for the public school fund by $69.6 million, or 3%, to $2.32 billion in fiscal 2023, according to Bureau of Legislative Research records. The proposal also would increase the general revenue allocation by $28.5 million for the educational facilities partnership program to $70.3 million.
Both increases are in concert with the educational adequacy recommendations made by the House and Senate education committees.
The proposed Revenue Stabilization Act also would increase the general revenue allocation for the Department of Human Services by $46.3 million, or 2.5%, to $1.82 billion, according to Bureau of Legislative Research records. Hutchinson initially proposed a $66.3 million increase for the department to $1.84 billion.
The proposal would increase the general revenue allocation for the Department of Human Services' grants account, including Medicaid, by $23.5 million, or 1.7%, to $1.39 billion, Bureau of Legislative Research records show. Hutchinson initially proposed a $43.5 million increase in the general revenue budget for grants to $1.41 million.
Senate Bill 54 would set aside the first $37.6 million of funding allocated to the Department of Human Services' grant account to be used for Hutchinson's plan to reduce the waiting list of developmentally disabled people. The bill cleared the House on Monday
In mid-December, Hutchinson unveiled his plan to provide services by June 2025 to the 3,204 people on the state's waiting list for people with intellectual and developmental disabilities who want to stay in their homes and communities.
According to Bureau of Legislative Research records, the proposed Revenue Stabilization Act would increase the general revenue allocation for colleges and universities by $12.9 million, or 1.6%, to $775.6 million in fiscal 2023.
JAILS, STATE POLICE
The measure would increase the general revenue allocation for county jail reimbursement by $6.4 million to $25.7 million. The $6.4 million increase would be for raising the rate that counties are reimbursed for holding state inmates from $32 to $40 per day for each inmate, Bureau of Legislative Research records show.
The proposal also would increase the general revenue allocation for the Division of Correction by $3.8 million, or 1%, to $378.9 million in fiscal 2023.
The measure also would increase the general revenue allocation for the Arkansas State Police by $7.4 million, or 10.5%, to $78.1 million in fiscal 2023 to help bolster the salaries of state troopers.
The state's Performance Fund would be allocated $10 million in fiscal 2023, down from Hutchinson's proposal to allocate $16 million to the fund, Hickey said.
The Performance Fund is to be used to cover shortfalls in personnel expenses and may only be used by state agencies funded with general revenue, said finance department spokesman Scott Hardin.
In the Dec. 7-9 special session, the Republican-dominated Legislature enacted individual income and corporate tax rate cuts that state officials project will eventually reduce general revenue by nearly $500 million a year by fiscal 2026.
The tax cuts are projected to reduce general revenue by $135 million in the current fiscal 2022 and $307 million in fiscal 2023.
If the state taps its catastrophic reserve fund, formerly called the long-term reserve fund, during certain periods, that would forestall individual income and corporate income tax rate cuts in the future under the laws enacted in the special session. The state's catastrophic reserve fund totals about $1.2 billion.