State-proposed fiscal '18 budget put at $5.49B

Total up by $163M; funding would rise for DHS services

Arkansas' general revenue budget for fiscal 2018 would be $5.49 billion, a $163 million increase over the current fiscal year, according to a proposal released by legislative leaders Monday night.

The proposed budget, resulting from negotiations among legislative leaders and Gov. Asa Hutchinson, would increase the state Department of Human Services' general revenue funding in fiscal 2018 to $1.55 billion -- an increase of nearly $113 million over the fiscal 2017 budget. Fiscal 2018 starts July 1.

The proposed state budget also would set aside $15.8 million for the so-called rainy-day fund, used by the governor for emergencies, special needs and priorities that aren't included in the general revenue budget.

The proposed budget was unveiled by legislative leaders after the Senate twice failed to get the 27 votes required for the Human Services Department's Division of Medical Services' $8.3 billion appropriation, which includes spending authority for the state's version of Medicaid expansion that's called Arkansas Works. That appropriation includes state and federal funds.

Afterward, Senate Republican leader Jim Hendren of Sulphur Springs said he's confident that the Senate will get enough votes to approve the Medical Services appropriation.

"When it's 6:30 at night and after a long day, it's hard to get three-fourths of your people in their seats," he said.

The budget proposal -- called the Revenue Stabilization Act -- would divide the total general revenue budget into Category A of $5.364 billion -- up from the current $5.333 billion -- and Category B of $131.5 million. The budgeting act, passed near the end of every legislative session, prioritizes spending. Programs in Category A are funded before those in Category B.

The forecast revenue for fiscal 2018 would fully fund Categories A and B, said a Joint Budget Committee co-chairman, Sen. Larry Teague, D-Nashville.

Teague said he expects the Joint Budget Committee to consider approving the proposed Revenue Stabilization Act on Wednesday, and the House and Senate to consider it in the following days.

"I think the plan is to go home Monday, unless we are still voting on Medical Services [appropriation]," he said. Monday would be the 85th day of the 91st General Assembly's regular session.

House Speaker Jeremy Gillam, R-Judsonia, said he did not expect there to be much of fight over how the money would be doled out under the proposal.

"You get into a robbing Peter to pay Paul with a budget this tight. I don't anticipate very many members wanting to go down that road, based on conversations we've had with them," he said.

Although general revenue collections have lagged behind the forecast during the first eight months of fiscal 2017, Teague said, "Our people and their people still think by June 30 we are OK. In fact, we're a little up. I just hope they are right."

In recent years, the Legislature has approved income tax cuts. In 2015, the Legislature enacted Hutchinson's income rate cuts for Arkansans with taxable incomes between $21,000 and $75,000. The cuts were projected to reduce state revenue by about $100 million in fiscal 2017. This year, another cut was enacted for Arkansans making less than $21,000 in taxable income; it's projected to reduce revenue by $25 million in fiscal 2019 and then $50 million every year after.

Under the proposed fiscal 2018 Revenue Stabilization Act, the Department of Human of Services' grants general revenue budget, including Medicaid, would increase by $75 million to $1.14 billion and the department's Division of Children and Family Services' budget would increase by nearly $27 million to $118.2 million.

Also in the Human Services Department, the administrative budget would increase by $4.8 million to $20.9 million; the Behavioral Health Services' budget would increase by $4.5 million, to $86.9 million; and the Division of Youth Services' budget would increase $1.3 million, to $49.1 million.

In other departments, the Department of Correction would receive an increase of nearly $11 million, to $351 million, and the Department of Community Correction would get a $9 million increase, to $87.7 million.

The public school fund -- which provides money to public schools -- would increase by $6 million over the current budget to $2.194 billion. The public school fund gets money from other sources.

Budgets for public two- and four-year colleges would remain flat at $733 million.

Division of Medical Services

On Monday night, the Senate twice failed to get the required 27 votes to approve the Division of Medical Services' $8.3 billion appropriation. The 35-member Senate initially voted 19-1 on Senate Bill 196 and later voted 20-1 on the bill.

Sen. Bryan King, R-Green Forest, who is the only senator who voted against the appropriation, said it would make more sense to consider granting spending authority for the Division of Medical Services after lawmakers meet in a planned special session to modify the state Medicaid program.

Hutchinson announced earlier this month that he would call the special session in May to consider changes to the program that were not allowed under former President Barack Obama's administration.

The state's Medicaid expansion is now known as Arkansas Works under Hutchinson's administration. It was previously called the private option because the state pays for private health insurance for low-income Arkansans under the program.

Late last week, U.S. House Speaker Paul Ryan, R-Wis., decided not to ask the Republican-controlled U.S. House of Representatives to vote on his federal legislation aimed at repealing and replacing the Patient Protection and Affordable Care Act that Obama signed into law in 2010.

More than 300,000 Arkansans are covered under Arkansas Works. The total Arkansas Works budget is $1.82 billion in fiscal 2018, with the federal government's share at $1.71 billion and the state's share at $109 million, Department of Human Services spokesman Brandi Hinkle said last week.

Information for this article was contributed by Brian Fanney and John Moritz of the Arkansas Democrat-Gazette.

A Section on 03/28/2017

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