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Legislators charting speedy fiscal session; plan is to complete business in 10 days

by Michael R. Wickline | April 5, 2020 at 8:53 a.m.
FILE — The state Capitol is shown in this file photo.

In the face of a fast-growing health crisis, leaders of the Arkansas General Assembly aim to pass a state budget and complete their business within 10 days during the sixth-ever fiscal session.

State lawmakers are required by law to start the fiscal session Wednesday, all the while knowing that two members have tested positive for the coronavirus that has swept the world, infecting more than 1 million people and killing tens of thousands.

The session also comes on the heels of Gov. Asa Hutchinson's administration on March 23 cutting the general revenue budget for fiscal 2020 by $353.1 million, to $5.38 billion, and then the Legislature meeting in a special session to create a "rainy-day" fund with $173 million in surplus funds to fill budget holes and unexpected needs linked to the pandemic.

The budget cut is the largest in state government since at least 1988, according to state Department of Finance and Administration records.

Hutchinson has attributed the cut to projections that the pandemic will lead to reduced tax collections in the last three months of fiscal 2020 and to the state moving the deadline for filing and paying individual income taxes from April 15 to July 15 to match the same move by the federal government. Fiscal 2020 ends June 30.

The pandemic's projected effects also extend to next fiscal year. The finance department on Thursday trimmed its forecast for net general revenue available to state agencies in fiscal 2021 by $205.9 million, to $5.68 billion, citing an expected recession.

Just a month ago, the governor proposed a $5.83 billion budget for fiscal 2021 and setting aside $54 million in surplus funds.

In the fiscal session, lawmakers and the governor will hash out which programs get the highest funding priority next fiscal year.

APRIL 17

Senate President Pro Tempore Jim Hendren, R-Sulphur Springs, and House Speaker Matthew Shepherd, R-El Dorado, said their goal is for the General Assembly to convene Wednesday and then complete its business on April 17, which would be the 10th day of the fiscal session. A fiscal session normally lasts a few weeks.

They said state Department of Health officials advised them that lawmakers should attempt to complete their work in the fiscal session as soon as they can to reduce the risk to the health of lawmakers and staffs.

"At least from the numbers that we are looking at across the country, it looks like we are going to continue to have more cases over the next few to several weeks, and so it doesn't make sense to put something off for two or four weeks because I don't have a reason to believe things are going to be better at that point, and they could be worse," said Nate Smith, secretary of the state Department of Health.

Two lawmakers -- Reps. Reginald Murdock, D-Marianna, and Vivian Flowers, D-Pine Bluff -- disclosed last week that they tested positive for covid-19.

Senate Democratic leader Keith Ingram of West Memphis said those positive tests for the coronavirus exponentially increased lawmakers' urgency to complete their business in the fiscal session before the spread of the virus peaks in Arkansas. The positive tests also will increase the number of lawmakers voting by proxy and watching meetings through video-streaming.

Hutchinson said he plans to give a State of State address in the Senate chamber on Wednesday, and his remarks will be broadcast remotely to the House of Representatives meeting in the Jack Stephens Center of the University of Arkansas at Little Rock.

"We are being careful," the governor said at a news conference Friday.

"No one wants to cross the line. No one wants to endanger themselves or family or their work that they are doing, so we are trying to set the example, but also we are concerned about the health of our loved ones," Hutchinson said.

The 100-member House will spread out in the Jack Stephens Center, just as it did during the special session that was March 26-28, Shepherd said.

The 35-member Senate will be spread out in its chamber, plus the galleries overlooking the chamber and nearby offices, like it did in the special session, Hendren said.

EXTENSION PLANNED

Hendren said the House and Senate plan to adopt a resolution Wednesday extending the fiscal session by 15 days to 45 days, which is the maximum time allowed under the Arkansas Constitution, in the event they need to meet after completing action within 10 days.

He said the period of time that lawmakers will go into recess before adjourning the fiscal session is "potentially not long, but will depend on how things go." May 22 would be the 45th day of the fiscal session, said Senate Director Ann Cornwell.

The first fiscal session, in 2010, lasted 25 days. The second, in 2012, was 26 days. The longest was 38 days in 2014. During Hutchinson's time in office, sessions were 27 days in 2016 and 29 days in 2018.

Fiscal sessions exist because in 2008 voters adopted Amendment 86 authorizing the budgeting sessions in even-numbered years.

Previously, the Legislature met in odd-numbered years in "regular" sessions, during which it enacted the state budget for two fiscal years. With annual sessions, the Legislature approves only one year's budget.

The Joint Budget Committee will meet Wednesday-Friday and possibly Saturday to take action on all of the bills that it needs to consider in the fiscal session, Hendren and Shepherd said.

They said their plan is to place a proposed Revenue Stabilization Act for fiscal 2021 on lawmakers' desks Friday. The act is used to prioritize spending.

The Joint Budget Committee will be spread out in Room A and possibly Room B in the Multi-Agency Complex, west of the state Capitol, and approve rules allowing for proxy votes, Hendren and Shepherd said.

Under this plan, the House and Senate wouldn't meet on April 13 and 14, allowing legislative staff members to complete their work and lawmakers time to read bills.

Legislators would return to complete action on April 15-17 and possibly April 18 if needed, Hendren and Shepherd said.

"We're trying to balance the pressing health concerns against the duties that we have to take care of as legislators," Shepherd said. "We're obviously operating on an expedited calendar, and it's going to require a real commitment from the membership over the next couple of weeks. Everybody is going to have to be focused in on the job at hand."

STATE BUDGET

Shepherd said the governor's office is working on the proposed Revenue Stabilization Act for fiscal 2021.

"That's one of the things that ... as we move into this [next] week we're hopeful we have further information from the governor's office, so we can get that out to members and that's going to be a key component to us being able to hopefully meet our expectations and our goals regarding being able to conclude our work in short order," he said.

In the Revenue Stabilization Act, top spending priorities are placed in Category A. Funding flows to Category B measures only after Category A ones have been fully funded, and funding flows to Category C measures only after Category B ones have been fully funded. The goal of the act is to prevent deficit spending.

"When you look at the $205 million reduction in the revenue forecast for next [fiscal] year, we are going to look at [the Revenue Stabilization Act] as the tool to manage it," Hutchinson said Friday.

"It is pretty serious in the [act] as to whether you are in Category C or Category B or [Category] A funding," he said in an interview.

"Even though we are going to be budgeting for $205 million in reductions, we don't know exactly how the economy is going to respond. We are going to have to be flexible and ... there is going to have to be some tightening of thaxe belt next year, if those revenue forecasts are accurate," Hutchinson said.

In Hutchinson's proposed fiscal 2021 budget, before the funding forecast was cut, most of the increase will go to human services' programs, if fully funded.

The state Department of Human Services' proposed budget would total $1.8 billion, if fully funded.

But in the current year's budget cut, the department's budget is $1.6 billion, a $134.3 million cut.

The department's Medicaid program has been helped by the federal government increasing its match rate for the traditional Medicaid program for the coronavirus, retroactive to January, and the balances in the Medicaid trust fund and other funding sources.

"We'll feel good about where we are at in the short-term" in fiscal 2020, said Jake Bleed, the state budget administrator. "The real challenge is going to be next year."

ARKANSAS WORKS

The Arkansas Works program provides health care coverage to about 250,000 low-income Arkansans. This year, the state is required to provide a 10% match for the federal funds.

A three-fourths vote is required for approval of the spending authority for the Arkansas Works program as part of the state Division of Medical Services' appropriation, and that's often been a difficult threshold to meet in the past several years.

But Sen. Bob Ballinger, R-Berryville, said, "I anticipate it will go through without much of a fight," although he isn't happy about the program not having a work requirement. He said lawmakers could consider changes to the program in the 2021 regular session instead.

A federal appeals court, in affirming a lower court order, has ruled that the Trump administration unlawfully allowed Arkansas to impose a work requirement on recipients of coverage under the Medicaid expansion program. Hutchinson has said he hopes the U.S. Supreme Court reviews the ruling.

Hutchinson said Arkansans shouldn't notice a reduction in state services as a result of the state's $353.1 million budget cut in fiscal 2020.

"In fact, it is probably more important than ever that our services continue, and there's probably greater demand on it with the uptick that we're going to see in Medicaid recipients, and SNAP recipients and unemployment benefits and other state services," he said.

"We are going to manage the $353 million in budget cuts," Hutchinson said. "That, of course, will be handled through some transfers from the covid-19 rainy-day fund. But we're also taking steps to eliminate travel, which is not hard in this environment. We're eliminating some of the secretaries' discretionary raises that they have authority for. We are reinstating a hiring freeze."

Hutchinson on Monday won the approval of legislative leaders for using $45 million from the covid-19 rainy-day fund, including $30 million for masks and other protective equipment for health care workers, $13.5 million for ventilators and $1.5 million for a public education campaign by the Health Department.

He said his next request for money out of the fund will be for the Department of Health and Division of Emergency Management "that would be adversely impacted without the [budget] gaps filled up by the covid-19 funds."

SundayMonday on 04/05/2020

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