Gov. Asa Hutchinson on Wednesday presented lawmakers with his budget recommendations for next two years, including a $125 million increase in Fiscal 2020.
The $5.75 billion budget for the next fiscal year, if approved by the General Assembly, includes funding for raising the state’s minimum teacher salary, sets aside $111 million for income tax cuts and provides funding for manpower increases for state police and parole officers.
“There are always other ways to spend money,” the Republican governor said during an address a legislative budget committee. “But this budget meets our state obligations, funds necessary services, increases teacher pay, meets the needs of public safety and continues to reform our tax code.”
Hutchinson said the balanced budget accounted for a $38 million hit to state revenues due to the passage of a constitutional amendment last week that authorizes the state to license four full-fledged casinos. However, it also accounts for projected revenue increases from the collection of sales tax from online retailers.
The budget also allocates $1.3 million to a long-term reserve fund and $29 million to the Rainy Day fund in case of emergencies and unanticipated expenses.
The governor on Thursday proposed moving $60 million to a special fund for education to increase Arkansas’ minimum teacher salary over the next four years from the current $31,800 to $36,000. Under Hutchinson’s proposal, those monies would be available to the 173 school districts that currently have teacher earning less than $36,000 a year.
Since Hutchinson and the joint Education Committee endorsed the minimum pay increase earlier this year, some districts have expressed concerns about being able to afford the mandatory pay raises. Hutchinson said his proposal was to allay those concerns, adding it wasn’t going to be an “unfunded mandate.”
Hutchinson said the $111 million allocated for tax cuts was developed in coordination with the Tax Reform and Relief Legislative Task Force. The plan would simplify the tax code, increase the standard deduction and reduce the top income tax rate to 6.5 percent in 2020 and 6.3 percent in 2021. The governor said his ultimate goal is to reduce the top rate to 5.9 percent by 2022.
Hutchinson’s budget also provides a $2.3 million boost for Arkansas State Police, allowing the agency to hire 24 new troopers over the next two years; it also funded the additions of 30 new parole and probation officers.
He also said the budget planned for $7.5 million in savings from his government transformation plan, which would reduce the number of state agencies that report to the governor from 42 to 15. The plan will require legislative approval next year.
Speaking with reporters after his address, Hutchinson said the budget aligned with legislators’ priorities, but he expected the most fight on the $111 million set aside for tax cuts from lawmakers with other spending priorities.