Oh, what a weeping and wailing and gnashing of teeth when the allotments for various state agencies are announced as another legislative session approaches its end and climax. Which is what happened Friday afternoon. Anticipating a healthy rise in state revenues over the next fiscal year beginning in July, the lion's share of this budget would go to basic services of state government. The public schools, for example. Along with essential health-and-welfare programs that many of Arkansas' people depend on, and, oh, yes, prisons--which have needed greater attention and maybe a whole new approach for some time.
It all sounds like a sound order of priorities even if some of your and our own favorite state programs may not get as much funding as we would like. It's also more evidence of the good judgment and effective leadership of the state's still new governor. Once again Asa Hutchinson is demonstrating that Arkansas voters chose well when they chose him as chief executive.
The beauty of this state's fiscal system is that the hard, sound choices are made almost automatically, and have been since the historic Revenue Stabilization Act of 1945 was adopted under the leadership of Governor Ben Laney, a businessman who recognized that Arkansas' budget had been a mess for years, even decades. So he decided the state needed not only a better approach to financial planning but one that worked without divisive debates and constant changes.
Even now, not just in other states but on the federal level, government budgeting can be a harum-scarum process subject to all kinds of political manipulation and partisan maneuvers. So that when a dangerous deficit appears as if from nowhere, panic ensues. And a special session of the legislative branch may be required to pass a new budget amidst confusion and contention. It's an atmosphere not conducive to calm, deliberate decision-making.
But this state is different. Because it had a governor named Ben Laney who, even as he was inaugurated on January 9, 1945, declared: "Our kaleidoscopic tax laws which have been an outgrowth of patchwork legislation are a challenge to our thinking. We should find a way to channel the tax dollar into a common fund for the benefit and general welfare of our citizenry." And he did. Instead of all that infighting and uncertainty over how Arkansas' tax revenues should be used, simple spending categories were established under the then new Revenue Stabilization Act:
Those categories are generally labeled A, B, and C, with A for essential programs, B for those of less importance but still needed, and C reduced to what is essentially a wish list. As tax revenue flows into the state treasury, any surplus in A is assigned to B, and then any surplus in B flows into C, not that there's usually any. And the whole stair-step, waterfall system works in orderly fashion year after year--despite all the designs and vested interests of politicians.
To quote the Encyclopedia of Arkansas History, "the Revenue Stabilization Act continues to achieve the goals set in 1945, with many outside Arkansas noting that the state maintains a level of services and financial equanimity during economic cycles. As many Arkansas officials have said, while the economic highs are not as high as in other states, neither are the economic lows as low." And stability reigns.
Here is one system of government finance that actually works--and has worked since it began. At a time when so many of us are so unhappy with high-spending politicians, let us pause to honor an approach that does Arkansas proud.
Editorial on 04/01/2015