Gov. Asa Hutchinson declined this week to authorize merit raises for state government's more than 24,000 executive branch employees at the start of the coming fiscal year, but signaled that he will review that option in the fall.
Officials for many other state government offices beyond the executive branch said they are following the Republican governor's lead.
Hutchinson hasn't specified the size of the merit pay raise that he considered allowing for executive branch employees at the start of fiscal 2021, which starts July 1.
"The state workers have been so committed to getting the job done during this Pandemic and I wanted to be sure they were rewarded by a merit increase, but opted to wait until the fall to better measure the state of our economy and our budget," Hutchinson said late Wednesday afternoon in a written statement to the Arkansas Democrat-Gazette when asked how large of a merit raise was considered for executive branch employees.
"There are too many unknowns at this time and the fall will be a better opportunity to assess the level of any increase," he said.
The governor's office on Tuesday night released his one-page letter to state employees in which he wrote in part that "even though our economy has fared better than many, we have experienced rising unemployment and declining economic activity" and "the resulting revenue losses have caused us to make sacrifices across the government."
State government's executive branch has 24,572 employees with an average annual salary of $43,113, said Alex Johnston, a spokeswoman for the state Department of Transformation and Shared Services.
State agencies were authorized to use up to 2.8% of their then-payroll costs for merit raises at the start of fiscal 2019 and up to 2.4% of payroll costs for merit raises at the start of fiscal 2020, she said. Fiscal 2020 ends June 30.
Asked about the governor's decision regarding merit raises, John Bridges, executive director of the Arkansas Association of State Employees, said, "We understand the negative impact to the state budget due to the COVID-19 pandemic.
"Many state employees have been on the front lines, working overtime and with fewer staff," Bridges said in a written statement. "Compensation to recognize them would be greatly appreciated. We urge the governor to approve of performance payments once the economy improves or as soon as funds are available, to reward state employees' dedication to serving the public."
REVENUE REDUCTION
On March 23, Hutchinson's administration cut the fiscal 2020 general revenue budget by $353.1 million to $5.38 billion. By comparison, the budget totaled $5.62 billion in fiscal 2019.
The governor cited projected reductions in tax collections because of the coronavirus pandemic and from shifting the state's individual income tax filing and payment deadline from April 15 to July 15 to coincide with the shift in the federal government's deadlines.
In fiscal 2020 through the end of May, the net revenue available to state agencies has dropped by $105.7 million, or 2%, below the same period in fiscal 2019 to nearly $5.2 billion, but exceeded the March 23 forecast by $287.6 million, or 5.9%.
Hutchinson said Wednesday that raising the revenue forecast for fiscal 2020 "remains an option and the decision will be made before June 30."
In this year's fiscal session in April, the Legislature enacted a $5.89 billion general revenue budget for fiscal 2021. The fiscal 2021 forecast, cut $205.9 million on April 2, would provide $5.68 million for that budget and leave $212.2 million unfunded.
Asked whether the governor also is considering increasing the forecast for fiscal 2021, spokeswoman Katie Beck said Thursday that "revising the forecast is under consideration and a final decision will be made later this month."
Beck said the governor's office employees will not receive raises July 1.
Other agencies and offices also disclosed their decisions about fiscal 2021 raises:
The Arkansas Department of Transportation and Arkansas Game and Fish Commission are governed by the Arkansas Highway Commission and the Game and Fish Commission, with commissioners who are appointed by the governor.
At the Department of Transportation, Randy Ort, deputy director and chief operating officer, said in a written statement that "ARDOT is following the direction of the Governor, no performance based pay raises (or raises of any kind) on July 1.
"The governor indicated he would revisit this in the fall, and we'll await further instructions at that time," Ort said Thursday. The department has 3,698 full-time regular employees with an average salary of $46,272 a year, he said.
Game and Fish Commission spokesman Keith Stephens said Thursday that no formal decision was made about the amount or timing of a raise.
"Like the rest of the state, we will be watching our revenue situation over the next several months to better gauge the financial impact," he said in a written statement. "Our hope is that we can provide our employees some form of increase in FY21. AGFC employees did not receive increased compensation the last time the executive branch agencies received a raise."
The commission has 577 regular, full-time employees with an average annual salary of $48,005, Stephens said.
Lt. Gov. Tim Griffin said Thursday that he isn't considering giving raises to his employees.
"I cut my budget upon taking office, and it has been frozen there ever since. I will continue to spend taxpayers' dollars wisely," he said.
m Attorney General Leslie Rutledge said in a written statement that "it is apparent that this public health crisis will continue to have a significant economic impact on our state for the foreseeable future" and that the unemployment rate continues to rise and many households and businesses continue to struggle, which affects the state's ability to collect tax revenues.
"With this in mind and after much consideration, I have decided that I must postpone the approval for any performance bonuses and raises until future circumstances permit," she said.
No pay increases are being given to employees in Secretary of State John Thurston's office, said spokesman Kevin Niehaus.
State Treasurer Dennis Milligan won't give raises to his employees, said Milligan spokeswoman Stacy Peterson.
All employees in state Auditor Andrea Lea's office won't receive a general raise, said Skot Covert, her chief of staff.
No employee of Commissioner of State Lands Tommy Land will receive a pay increase, either individual or general, said Land's spokeswoman Nikkie Heck.
Bureau of Legislative Research Director Marty Garrity said Thursday that "at this time the bureau will not be awarding merit raises."
Legislative Auditor Roger Norman said Thursday that Arkansas Legislative Audit is "not giving merit raises at this time."
Merit raises for state Senate employees are "not planned" at this time, said Senate Director Ann Cornwell.
State House of Representatives Chief of Staff Roy Ragland said House officials decided not to grant pay raises to employees at the start of fiscal 2021 and will reevaluate that decision probably in January "if the economy has recovered."
At the University of Arkansas System, none of the system's institutions budgeted for merit or across-the-board raises for fiscal 2021 that were approved by the board of trustees at its May 21 meeting, said Nate Hinkel, a spokesman for the UA System.
The Arkansas State University System institutions are only doing mandated minimum wage adjustments and adjustments related to promotion and tenure programs, said system spokesman Jeff Hankins.