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With finish line near, legislators take break

Revenue priorities unset, surplus unspent by Michael R. Wickline | March 19, 2023 at 4:00 a.m.

The Arkansas General Assembly is taking a spring break this week from its regular session, but legislative leaders are hoping to lay more groundwork during the week to help reach their goal of completing their work in the regular session by April 7.

In the regular session, the Republican-dominated Legislature has enacted Gov. Sarah Huckabee Sanders' education overhaul legislation that raises the state's minimum teacher salary from $36,000 to $50,000 a year, creates Educational Freedom Accounts to help students attend private schools, parochial schools or to home school, and enacts many other changes in the education system. It's Act 237 of 2023.

The Legislature and Sanders still have to enact a Revenue Stabilization Act that prioritizes the distribution of state general revenue in fiscal year 2024 that begins July 1, and determine what to do with $1.3 billion in unallocated general revenue surplus funds.

Lawmakers also will grapple with whether to refer up to three proposed constitutional amendments to voters in the 2024 general election. Lawmakers also want to complete action on a wide variety of measures.

Sanders spokeswoman Alexa Henning said Friday night that Sanders "signed the biggest, most transformational education reform in the nation into law [on March 8].

"She is pleased to have worked with her partners in the legislature to enact a bold agenda that is delivering on the promises she made," Henning said in a written statement.

"She continues to work with them on passing a budget that reflects the values she has been talking about for the last two years," Henning said. "She is confident that the outcome will prioritize education investments, public safety, and reductions to the income tax."

Regarding the state's Revenue Stabilization Act for fiscal 2024, a Joint Budget Committee co-chairman, Sen. Jonathan Dismang, R-Searcy, said Thursday that "I think at this point I am ready to start digging in and throwing numbers in, even if we're maybe not ready on all levels at this point.

"But I think that it is time to put numbers on paper," he said.

"I think we have a good idea where we are with [educational] adequacy, which is kind of the missing piece, and I'd anticipate some movement," Dismang said. "While we are out for break, I will be working on it and then when we get back ready to start having some real conversations with members."

Dismang said legislative leaders have discussed budget priorities with Sanders' administration.

"I think it is a legislative function to put out RSA and we take that seriously," he said. "So we absolutely will be taking into account some things they'd like to be considered."

For the state's Department of Corrections, "we have got to look in the short term at what it is going to cost to staff up the beds and provide proper staffing levels at our current system," Dismang said.

"The parole reform won't really start having a large impact [until] year three, four, five and on, so it is not as pertinent to what we are doing with this year's RSA," he said.

In November, then-Gov. Asa Hutchinson proposed a $314 million increase in the state's general revenue budget to $6.33 billion in fiscal 2024, starting July 1, 2023, with $200 million of the increased general revenue earmarked for the public schools.

At that time, the former Republican governor said his proposed budget for fiscal 2024 would represent a 5.2% increase over the current budget of $6.02 billion, leaving a projected general revenue surplus of $254.9 million at the end of fiscal year 2024. Considering inflation was more than 8% last year, limiting the growth of the state's general revenue budget to 5.2% reflects conservative budgeting, he said.

The state Department of Education has projected Sanders' education overhaul law, Act 237, will cost $297.5 million, including $150 million in "new money" in fiscal 2024.

Senate President Pro Tempore Bart Hester, R-Cave Springs, said a consensus hasn't been reached yet "where we are all holding hands" on how much state funding is needed to provide an adequate education to public school students.

"It is so close it is almost negligible at this point," he said.

Rep. Lane Jean, R-Magnolia, who is a co-chairman of the Legislative Budget Committee, said that "I am just waiting for the bottom line number for the foundation funding [per student] and I think that's what they are working on."


Sen. Ben Gilmore, R-Crossett, who is working with Rep. Jimmy Gazaway, R-Paragould, on the public safety legislation, reiterated Friday that he expects the legislation to be filed the week after the Legislature returns from its spring break March 27.

Gazaway said Friday "the issue is not that we don't have the policy ready and that the bill is not ready.

"It is. Really now the issue is how much can we devote toward [prison] capacity," he said. "Part of what I think we have understood is that this is a long-term issue. What we'll do this session will likely be the first step in what will be multiple sessions of addressing this issue. The problem with capacity wasn't created overnight and we are not going to solve it overnight."

House Speaker Matthew Shepherd, R-El Dorado, said Thursday he's focused on the long-awaited public safety legislation as well as tax reduction legislation, the state's Revenue Stabilization Act, and proposed constitutional amendments.

He said discussions over the cost of the public safety bill are still ongoing, and "it gets back into working through in some way looking at what else is out there from an RSA perspective."

Hester said Thursday "we know that we have to pay our corrections officers more.

"We know that we got to do truth-in-sentencing," he said. "The reality is on the truth-in-sentencing is how much are we going to do. The governor's office wants to see some more mental health [programs] in there, so we are really working towards that. These are issues that we all agree on."


Jean said Thursday there has been nothing settled yet on an income tax cut.

"[But] I am smart enough to know this, the two things [Gov. Sanders] ran on was education and tax cuts," he said.

"Now it may be one-tenth of 1% or two-tenths of 1%, but there will be a tax cut coming out of this session because those are the two main things she ran," Jean said. "Hey, I know enough about politics I know that those two things are going to happen. Everything else can fall through the woodwork."

Shepherd said "I wouldn't say there's necessarily a number per se about what those tax cuts would entail."

"I think there's ongoing discussions about the reduction, of what those reductions look like as far as off the top rate is primarily where the discussion looks like," he said.

The state's top individual income tax rate is 4.9%. The state's' top corporate income tax rate is 5.3%

State Department of Finance and Administration spokesman Scott Hardin said that "While we don't have a formal revenue impact for a reduction of the top rate to 4.7%, we do know the following based on previous research: Between 4.9% and 4.0%, the reduction of each tenth of a percent represents approximately $50 million in revenue."


Sanders announced Wednesday that she will not support a broad-based pay plan increase in state government's employee classification and compensation bill.

In a letter to state Transformation and Shared Services Secretary Joseph Wood, the governor wrote that Arkansas taxpayers should not be saddled with the $80 million price tag for such a proposal that doesn't consider the strategic needs in education, public safety, health care and corrections.

"Today, I am directing the Department of Transformation and Shared Services to review and rework the existing classification and compensation structure of the state," Sanders wrote in her letter. "Arkansas should not have more state employees per capita than all our surrounding states. It's long past time to reduce the size and scope of government, identify efficiencies, and responsibly phase out the income tax."

John Bridges, executive director of the Arkansas State Employees Association, said Thursday that " we are very discouraged to learn that Governor Sanders has declined to implement the reevaluation of the state employees' pay plan, which is estimated to cost $41 million" in general revenue.

"It has been seven years since the last time the salary ranges for state employees have been adjusted and our members have been anxiously awaiting the announced revised pay plan, which was developed after a comprehensive study by the Office of Personnel Management," he said in a written statement.

"We hear from agency managers that the failure to update the pay plan has made it difficult to recruit and retain talented employees, especially when the pay is already much lower than private business," Bridges said. "We look forward to working with Governor Sanders to find solutions that will fit with her strategic priorities while recognizing the hard work of 23,000 state employees all over the state."

The state's unallocated general revenue allotment reserve balance is $1.34 billion, according to Hardin. The state's catastrophic reserve fund balance is $1.36 billion, he said, and the state's restricted reserve fund balance is $55.37 million.

In addition, the state Department of Finance and Administration's Nov. 10 forecast projects a general revenue surplus of $598.1 million at the end of fiscal 2023.


Monday will be the 71st day of the 94th General Assembly's regular session.

The Arkansas House and Senate have approved a resolution for the chambers to recess that started Thursday with lawmakers returning on March 27 as well as a resolution to extend the regular session beyond 60 days and to recess April 7 or at an earlier date agreed upon by the House and Senate.

It would require a three-fourths vote of the 100-member House of Representatives and the 35-member Senate to extend the regular session beyond April 7.

April 7 would be the 89th day of the regular session, April 14 would be the 96th day of the regular session, April 21 would be the 103rd day of the regular session, and April 28 would be the 110th day of the regular session.

The regular session lasted 118 days in 2021 and was 30 days longer than the 88-day regular session in 2019. The regular session lasted 86 days in 2017 and 82 days in 2015.

As April 7 approaches, Shepherd said Thursday that House members would have to be flexible and may have to meet on Fridays to consider legislation.

So far, the House and Senate haven't met on a Friday throughout this year's regular session.

Shepherd told reporters he believes it's still possible to wrap up the regular session in April.

"But every day that goes by obviously makes it more of a challenge," Shepherd said.

Hester said "the goal is April 7th.

"We are going to keep our desk open through the week of spring break so members can still file bills so that when we show up Monday next week we can go to work," he said.

Some lawmakers doubt it's realistic to wrap up the regular session on April 7.

Sen. Linda Chesterfield, D-Little Rock, said she is not confident lawmakers can complete their business by April 7.

Legislative leaders "seem to be very confident that that's going to happen," she said. "I am still waiting on a budget, and we haven't done [the Revenue Stabilization Act].

"Perhaps leadership has something going that I don't know about, but they continue to say it's going to be April 7th, so I am hopeful that they are telling us the truth," Chesterfield said.

Information for this article was contributed by Will Langhorne of the Arkansas Democrat-Gazette.

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