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There is a reason that recent governors and legislatures have done stingy operating budgets for Arkansas state government.

There is a reason they have chosen to endure the whining of agencies and advocates while they built up cash surpluses.

It's that a virus could always come along.

It's that it might be such a virus that it would shut down the economy for an undetermined period of time and invite talk of a deep recession and an unemployment rate of... well, let's hope not that high.

So, here's the thing Gov. Asa Hutchinson announced Monday: There are only three months left in this state fiscal year--April, May and June--and the economy has so constricted that the state needs to absorb $160 million in expected lost revenue over that relatively brief time.

Beyond that, the governor has decided we ought to help people--and simplify their lives--by mimicking the federal government and extending the individual filers' state income tax deadline by three months, to July 15, which is not until the next fiscal year.

That's $193 million that would have come with tax forms during April of this fiscal year but now will come in during July of next fiscal year. So, that's $353 million in total cuts for these last three months of fiscal 2020.

As it happens, Arkansas is proud of, and famous for, its budget-balancing mechanism called the Revenue Stabilization Act (RSA).

What the RSA requires is that, when state officials foresee such a downturn in revenue, they must reduce the official forecast that controls spending distribution levels. The state has now reduced that forecast by $353 million for April through the end of June. That means the Revenue Stabilization Act will take care of it by cutting distribution levels across the board in all appropriations by enough to produce that amount.

But the governor and others don't want to let the RSA be the last word. They think across-the-board cuts that steep would be especially ill-advised for the health and human services agencies at this extraordinary time of virus-invoked hardship.

As it happens, the state has a surplus sitting around with about $170 million in it. It also happens to have other unallocated or reserve funds totaling about that much.

But the state can't activate and spend that money without appropriating legislation. So, in the next few days, the Legislature will meet for a quickie special session--with members staying six feet apart and otherwise tuning in remotely--to put a sum of those unallocated funds together and appropriate them through the governor's Rainy Day Fund.

Hutchinson would then control the release of that money subject to sign-off approval from a committee of legislative leaders that the appropriating legislation would specify.

The math is almost symmetrical. The state could gather up all the surpluses and agency cash-fund accounts and pretty much bestow the governor with enough money in the Rainy Day Fund to hold everyone harmless until June 30.

What I'm hearing is that the governor and his people don't want to milk themselves that dry and then embark on a new fiscal year July 1 with nary a spare cent on hand and a virus possibly still hamstringing the economy and thus the state budget.

So, the Legislature likely will appropriate into the governor's Rainy Day Fund something less than its full reserves, but enough to hold the most vital agencies harmless while imposing a few manageable cuts elsewhere.

What that means is that state government can proceed through June in something not quite qualifying as, but approximating, business as usual.

If this were Washington, letting the governor parcel out this Rainy Day Fund with a few legislators signing off would be called a corrupt "slush fund" by the party opposite the president's.

But what am I saying? If this were Washington, we'd just borrow the shortfall--and a stimulus on top of that.

The next complication in state government is that the budget for the new fiscal year starting July 1 that the governor already has recommended--at an uncommonly stingy level--now will need to be revised downward ... unless the virus effect suddenly somehow abates.

The new fiscal year's budget needs to be low enough to produce some of that usual overage for hard times.

After the special session, the Legislature will come back April 8 for its regular annual fiscal session--again to stay six feet apart physically and, in some cases, away altogether, checking in remotely or getting voted by proxies.

A rainy day is here indeed.

John Brummett, whose column appears regularly in the Arkansas Democrat-Gazette, is a member of the Arkansas Writers' Hall of Fame. Email him at Read his @johnbrummett Twitter feed.

Editorial on 03/25/2020

Print Headline: BRUMMETT ONLINE: The rain has come


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