Beebe backs 'rainy day fund' for Ark. budget

By The Associated Press

Arkansas should set aside some of its surplus as a "rainy day fund" the state can tap in case of financial problems, Gov. Mike Beebe said Friday.

With two weeks to go until he presents his balanced budget proposal to legislators, Beebe said he wants to set aside some surplus money to help the state in case the nation's financial crisis hits the state's revenues.

"If we are hit by the national economy, if you don't have a rainy day fund and you don't have some of that money accumulated and put back to be able to meet some essential services ... you've either got to raise taxes or conversely you've got to cut those services out," Beebe said on his monthly call-in radio show. "What I'm trying to do at this juncture is I want it put back as a rainy day if things get like they claim they're likely to get."

The state already has $259.5 million available in the state's General Improvement Fund - a surplus typically used to fund one-time projects. Beebe did not say how much of the surplus he'd like to set aside for the fund.

The governor has already said he hopes to continue a reduction in the state's sales tax on groceries, which was cut in half by lawmakers last year. Beebe indicated Friday that an additional tax cut may be in conjunction with the reserve fund proposal.

"I think we ought to have some more tax relief but I think we also ought to have some rainy day fund money for these contingencies when the economy gets this bad," Beebe said.

Earlier this month, lawmakers began fall budget hearings in preparation for the legislative session that begins in January. Both the balanced budget proposal and forecast for the next two-year budget cycle are expected to be released Nov. 13.

For more information see Saturday's Arkansas Democrat-Gazette.