State legislators pass budget bills

’15 plan called ‘conservative’

Rep. Jeff Wardlaw (left), D-Warren, and Rep. Jim Nickels, D-Sherwood, shake on it Tuesday after the House passed an appropriation bill for the state Board of Examiners in Counseling.
Rep. Jeff Wardlaw (left), D-Warren, and Rep. Jim Nickels, D-Sherwood, shake on it Tuesday after the House passed an appropriation bill for the state Board of Examiners in Counseling.

The Arkansas House and Senate on Tuesday handily approved identical measures that would raise state general-revenue spending by $109 million to $5 billion in the fiscal year starting July 1.





RELATED ARTICLES

http://www.arkansas…">Legislators ask cost of raising teachers’ payhttp://www.arkansas…">Counseling board executive director will resign earlierhttp://www.arkansas…">State-created weight-loss program in reviewhttp://www.arkansas…">Calendar

The Senate also sent Democratic Gov. Mike Beebe an appropriation measure that includes a sales-tax exemption for sand used in oil and gas wells that a deputy director for the state Department of Finance and Administration has called unconstitutional.

On the 30th day of this year’s fiscal session, the House voted 90-8 to approve House Bill 1159 to distribute $5 billion in general revenue to state agencies in fiscal 2015 - a budget that largely mirrors the proposal Beebe unveiled in January.

With Sen. Bryan King, R-Green Forest, dissenting, the Senate voted 34-1 to approve an identical bill - Senate Bill 147.

Legislative leaders said they expect the House and Senate to take final action on the two bills this morning - with each chamber passing the other’s measure - before recessing; they’ll return one day next week.

The public schools, human-services programs and prisons will receive most of the increased general revenue under the measures.

The proposed general-revenue budget factors in $85 million in reduced general revenue from tax cuts enacted by the 2013 Legislature and savings up to $89 million from the use of federal funds to purchase private health insurance for the poor, state officials said.

Rep. John Burris, R-Harrison, who is running to succeed departing Sen. Johnny Key, R-Mountain Home, in this year’s election, told his colleagues in the House that he’s proud of the “very conservative budget” passed Tuesday.

“To put it frankly, I don’t think all of us appreciate [this budget] as much as we should. We talked about the growth - less than 2 percent,” he said. “This is less than 2, and that’s a good thing.”

Burris said the greater part of the spending increase is for the public schools, and the tax cuts enacted in 2013 will help reduce growth in state spending.

“It’s a very conservative budget that we should all be proud of … that did right by the citizens and did right by state government,” said Burris, who is an architect of the law under which the state is using federal funds to purchase private health insurance for low-income Arkansans. This year, the Legislature authorized the use of $915 million in federal funds for the “private option” in fiscal 2015.

But Rep. David Meeks, R-Conway, who was one of the eight who voted against House Bill 1159 - all of whom voted against funding the private option this year - said the budget is conservative but funding for the private option “is unsustainable.”

He said he wished he had spoken up during the session about a shortage of funding in the state’s foster-care system.

“Our foster-care system is in desperate need of more money to be pumped into it,” Meeks said. “They are short a lot of workers. They have some huge caseloads.It’s one of the things I would challenge everyone in here to go home and take a look at the foster-care system, and see if we can come up with more money to shore up that because of our children. We need to do a better job of protecting them.”

SB147 and HB1159 divide the projected general revenue into A, B, B1 and C categories with the first approximately $4.9 billion going to the A category; the next $51 million to the B category; the next $5.2 million to the B1 category; and a final $12 million to the C category. The four categories total $5 billion - up from the current budget of $4.9 billion.

The state’s top spending priorities are placed in Category A, and lower spending priorities are placed in the other categories under the Revenue Stabilization Act.

Funding to Category B only flows after Category A has been fully funded. Category C gets money last.

The general-revenue forecast for fiscal 2015 fully funds categories A, B and B1, and tax collections beyond that - if they materialize - could cover Category C.

The bills would fund 1 percent cost-of-living raises for most state employees and set aside $22 million in rainy-day funds, including $3 million from the state’s surplus, said budget administrator Brandon Sharp.

Under these measures, the Public School Fund providing state aid for school districts would increase by at least $65 million to $2.1 billion, which would be in the A category. The Public School Fund could receive up to an additional $12 million if the state receives that much more in tax collections than forecast.

The state Department of Human Services would get a nearly $27 million boost in general revenue to $1.3 billion in fiscal year 2015 under these bills. The department’s Medicaid program would get a nearly $32 million increase to $922.1 million.

The bills would give the Department of Correction a $3.1 million increase in general revenue to $316.1 million and increase county jail reimbursement payments by $7 million to $16.4 million.

The measures would cut general revenue for state universities by nearly $11 million to $581.1 million with the University of Arkansas for Medical Sciences bearing the brunt of that cut. They would cut the general-revenue budget for UAMS by $14.5 million to $79.4 million, but UAMS could get $7 million in rainy day funds if the governor and the Legislative Council or Joint Budget Committee approve a request for these funds.

The Senate and House on Tuesday approved several other measures to spend $21.9 million of the state’s surplus.

With Sen. Linda Chesterfield, D-Little Rock, dissenting, the Senate voted 32-1 to approve SB145 to give $5 million of the surplus to the Department of Education’s revolving-loan fund for school buildings for open-enrollment charter schools. The state will receive $1 in matching funds from the Walton Foundation for each state dollar, according to officials.

In a 34-0 vote, the Senate approved SB146 giving $5 million to the Education Department’s broadband matching-grant program to help school districts install fiber-optic lines. The state will receive four federal matching dollars for each state dollar allocated, according to state officials.

The Senate sent to the governor HB1155 to give $719,873 of the surplus to the state Department of Correction to finance 14 positions and operating funds to open space for 200 more prisoners as well as HB1156 to give $500,000 to the Department of Community Correction to reimburse county jails for holding state prisoners. Among other things, the department supervises offenders on probation and parole.

The Senate also sent to the governor HB1130 to give $2 million to the state Department of Health for its breast care program.

The House approved HB1158 to give $5 million to the Correction Department to pay employees for banked holidays that they’ve already worked. HB1157 gives $3.7 million to the Correction Department to reimburse counties for holding state prisoners in their jails. The measure cleared the House.

The projected surplus is about $126 million, including $14 million in interest earnings by June 30, 2015, according state officials. Legislative leaders have said they’re leaving a surplus of roughly $100 million for future needs.

TAX EXEMPTION

In other business Tuesday, the Senate voted 34-0 to send Beebe House Bill 1048, an appropriation for the Department of Finance and Administration’s Revenue Services Division.

The appropriation includes an amendment proposed by Sen. Jonathan Dismang, R-Searcy, that would exempt sand used in oil and gas wells from the state sales tax.

Dismang has maintained that his amendment clarifies legislative intent, after a Pulaski County circuit judge ruled that state law doesn’t allow the state to assess that tax to one company that sued. State law already exempts manufacturing equipment used to extract oil and natural gas.

But Tim Leathers, deputy director of the finance department, has repeatedly called the amendment unconstitutional and said the state plans to appeal the lower-court ruling,

He’s noted that Arkansas’ Constitution requires a two thirds vote of the House and Senate for a nonappropriation bill to be introduced in a fiscal session.

Leathers has estimated the amendment would reduce state-tax revenue by about $5.1 million a year - an estimate that Dismang has disputed in light of the lower-court ruling.

Asked whether Beebe would use a line-item veto to block the amendment, Beebe spokesman Matt DeCample replied, “No comment on the potential for a line-item veto until the governor takes action on the bill.”

Dismang said he’ll wait to see what action Beebe takes before deciding whether to ask the Legislature to override a possible veto, adding his amendment has bipartisan support in the Legislature.

Front Section, Pages 1 on 03/12/2014

Upcoming Events