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Budget Hearings Begin in Preparation of Fiscal Session

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March 6, 2020

LITTLE ROCK – The legislature has begun budget hearings in preparation for the 2020 Fiscal Session, which convenes on April 8 and is scheduled to last a month.

On the first day of hearings the governor presented a balanced budget proposal for next fiscal year, and the administration’s official economic forecast for the coming year.

The proposed budget would increase spending from the state’s general revenue fund by 1.5 percent, which is relatively low compared to previous years.

It would result in a surplus of $54 million at the end of the 2021 fiscal year.

Of particular interest to sheriffs and county officials is the governor’s plan to increase reimbursements to county jails for holding state inmates, when state prison units are too full. The current rate is $30 per day per inmate and the governor would increase that to $32.

Other highlights in the law enforcement categories of the budget are the proposal to set up a training school for state troopers for $1 million, and to add $2.5 million for operations of the four crisis stabilization units created last year.

The units are an alternative location for police to take people suffering from a mental health crisis, rather than jail. They are treated and staff make sure they take their medications, which often is not the case if they are taken to a local jail.

The budget proposal would spend $2.6 million to add 175 beds to community correction facilities in Texarkana and West Memphis.

In addition to prisons, the other major spending categories in the state’s general revenue budget include Medicaid, human services, public schools and higher education.

The governor proposes to increase Medicaid spending by 4.98 percent, or $65 million, which is consistent with annual Medicaid increases in the recent past. However, the governor warned legislators to be prepared for larger increases in Medicaid spending next year.

General revenue comes from three main sources – sales taxes, personal income taxes and corporate income taxes.

After sending refunds to taxpayers and fulfilling other financial obligations, the state is projected to have $5.7 billion available in general revenue this year.

Another large category of state government spending is highway construction and maintenance, but it is funded from special revenues and not general revenue. Those special revenue sources are related to transportation, such as taxes on motor fuels and fees paid by heavy trucks.

One of the main issues that legislators will resolve is how much of the anticipated surplus will be put into a “rainy day” fund, or other accounts similar to a household savings account. Some of the surplus could compensate for another reduction in taxes. The legislature has approved about $250 million in annual income tax cuts since 2015.

Some of the surplus will be allocated to highways, so that the state Transportation Department can qualify for matching federal funds.

The number of Medicaid enrollees has dropped by about 50,000 over the past three years. According to the governor, the number of people getting food stamps is at a 15-year low.

The Arkansas legislature has consistently been very conservative in its budgeting. State law requires the governor to present a balanced budget. Under the state Constitution, the legislature has the power to raise revenue and approve spending measures.

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