Legislature Approves General Revenue Budget of $6.3 Billion
LITTLE ROCK – The Senate has passed a balanced budget for state government for next fiscal year, clearing the way for completion of the 2024 session.
The budget calls for general revenue spending of $6.31 billion in Fiscal Year 2025, which begins on July 1.
That is an increase of only 1.76 percent over current general revenue spending. The legislature has always been fiscally conservative, and the 2025 budget is one of the most conservative in recent history.
In Arkansas the balanced budget law is called the Revenue Stabilization Act. The bulk of state general revenue comes from three major sources. They are the state sales tax, the state individual income tax and the state corporate income tax.
General revenue is distributed to public schools, institutions of higher education, corrections, the State Police, health care programs and human services programs.
Growth in general revenue will be an estimated $109.3 million from this fiscal year to next. Under the governor’s proposed budget, public education from kindergarten through twelfth grade will receive the majority of that increase. Legislators are increasing the amounts available under the Education Freedom Account program that provides financial help to parents who choose to send their children to a private school rather than to a public school.
Public elementary and secondary schools will receive about $2.4 billion next year.
The Department of Human Services will receive about $1.8 billion in state funds. However, its spending authority is much higher because it receives so much in federal matching funds.
For example, the state contributes about 29 percent for Medicaid spending in Arkansas while the federal government pays for the remaining 71 percent.
The Division of Correction is budgeted to received $536 million. It operates state prisons. The Division of Community Correction monitors inmates on parole and runs re-rentry programs for inmates just out of prison. It is budgeted to receive $105 million next year.
The fund for reimbursing county jails that hold state inmates will remain stable at $25.7 million. The state is working to open space for about 3,000 additional beds, and when that happens the backlog of state inmates in county jails should lessen.
The State Police are budgeted to get a 4.4 percent increase, from $88.6 million to $92.5 million.
Under next year’s Revenue Stabilization Act, institutions of higher education will get a decrease in state aid of $2.45 million. This year they are receiving about $781.3 million and next year they’re budgeted to receive about $778.8 million.
Four-year universities will receive $628.6 million in state support and two-year colleges will receive $117.1 million.
Some state agencies receive special revenues and their budgets are not included in general revenue category. An example is the Department of Transportation, whose revenue comes from motor fuels taxes, fees on large trucks and federal highway funds.
The state is projected to end next fiscal year with a surplus of about almost $400 million, after ending the current fiscal year with a surplus of about $240 million. The amount of the budget surplus allows legislators to seriously consider further tax cuts.