Gov. Asa Hutchinson on Tuesday proposed a $5.84 billion general revenue budget for the fiscal year starting July 1, an increase of $161 million over the current funded budget of $5.68 billion.
Hutchinson's proposal also set aside $50 million for income tax cuts for low and moderate-income Arkansans.
In April, the Legislature enacted a $5.89 billion general revenue budget for the current fiscal year 2021, but the state’s April 2 forecast provides $5.68 billion in funding, leaving the remaining $212.2 million unfunded.
Most of the increased state general revenue in fiscal 2022 would go to human services, public schools and the colleges and universities under the Republican governor’s proposed budget.
Hutchinson also proposed cutting the top individual income tax rate for new residents to 4.9%, for five years, and set a goal of reducing the state’s top individual income tax rate to 4.9% over a five-year period.
The state’s top individual income tax rate dropped from 6.9% 6.6% on Jan. 1 of this year and will drop to 5.9% on Jan. 1, 2021, under Act 182 of 2019.
The governor also proposed cutting the sales tax on used vehicles priced at $4,000 to $9,999 from 6.5% to 3.5%. There is no sales tax on used vehicles priced up to $4,000 under current state law.
Hutchinson proposed spending $227 million of $240 million in surplus funds, including transferring $100 million to the state’s long-term reserve fund, $30 million to rural broadband, $28 million to the Department of Education for academic facilities, $25 million to offset the income tax reduction, and $25 million to the state’s rainy-day fund.
Hutchinson said the state’s long-term reserve fund has grown from nothing to $185 million with him as governor, and he will present a plan that will see that balance rise to at least $420 million by the end of fiscal 2023.
Read Wednesday's Arkansas Democrat-Gazette for full details.
CORRECTION: The state's current funded budget is $5.68 billion. An earlier version of this story misstated the amount.