Arkansas' executive branch employees will receive 2% cost-of-living raises in their paychecks soon as an answer to inflationary pressure, Gov. Asa Hutchinson announced Thursday.
During his weekly news conference at the state Capitol, the Republican governor said the 2% increase in pay will be reflected in the Feb. 25 paycheck. The pay increase is effective Feb. 6, the governor's office said.
Hutchinson, who has been governor since 2015, said the 2% cost-of-living (COLA) adjustment will be the first cost-of-living raise granted to executive branch employees since 2012.
"The law allows the governor to award an increase of 2% if the chief fiscal officer has certified that sufficient general revenues are available for that purpose and that certification has been made to me," he said.
Department of Finance and Administration Secretary Larry Walther is the state's chief fiscal officer.
"This is a 2% COLA increase, but I see this as absolutely necessary in light of the inflationary pressures that they are all experiencing and their extraordinary work coming out of this pandemic," Hutchinson said.
The governor said the cost-of-living adjustment increase will be funded through the state's Performance Fund or state agencies' general revenue as needed.
About 22,500 state employees will receive the 2% cost-of-living adjustment and the total cost, including the cost of salary and benefits, will be about $24 million a year, including $10 million a year in general revenue, state Department of Transformation and Shared Services spokeswoman Alex Johnston said afterward.
The 2% cost-of-living adjustment will increase the average salary of these employees from about $46,588 to about $47,519, she said.
Hutchinson said "this special one-time" cost-of-living adjustment to executive branch employees is not in lieu of merit raises for these employees. Merit raises for state employees will be considered later, he said.
Afterward, John Bridges, executive director of the Arkansas State Employees Association, said in a text message to the Arkansas Democrat-Gazette that Hutchinson's decision to grant the 2% cost-of-living adjustment to executive branch employees is a "total surprise.
"We asked for a new pay plan," he said. "This is a very nice surprise, and [state employees] deserve it."
In June, the state's personnel administrator Kay Barnhill told state lawmakers that the state implemented a new pay plan for executive branch employees several years ago and needs to consider adopting a new pay plan.
The state's pay plan was last overhauled in 2017 by the Legislature and Hutchinson's administration.
At that time, state officials projected that overhaul of the pay plan for about 25,000 employees would cost the state about $57 million beginning in fiscal 2018, which started July 1, 2017. The biggest beneficiaries of the overhaul of the state government pay plan worked in a wide range of categories: some agency administrators, registered nurses, information-technology employees and various entry-level workers.
In 2009, the state's pay plan was overhauled by the Legislature and Democratic Gov. Mike Beebe's administration.
Inflation has been climbing over the past year as the Labor Department announced last week that consumer prices jumped 7.5% last month compared with a year earlier, the steepest year-over-year increase since February 1982, according to The Associated Press.
Shortages of supplies and workers, heavy doses of federal aid, ultra-low interest rates and robust consumer spending combined to send inflation leaping in the past year, according to AP.
The result has been price jumps for goods ranging from food and used vehicles to electronics, household furnishings and rental cars. The average price of a used vehicle rose nearly 28% from November 2020 to last month -- to a record $29,011, according to data compiled by Edmunds.com.
Federal data showed that average prices for "food at home," namely groceries, were up 6.4% in the past year and the cost of "food away from home" climbed 5.8%. Steak was up almost 25% compared with a year ago, and bacon 21%. Eggs were up 8%, apples 7.4% and flour roughly 6%.
Information for this article was contributed by Michael R. Wickline of the Arkansas Democrat-Gazette.