The Arkansas Senate and House of Representatives on Friday approved identical versions of the state's Revenue Stabilization Act that would boost the state's general revenue budget by $177.7 million to $6.2 billion in the coming fiscal year before they recessed the regular session until May 1 or sooner.
The Arkansas Senate also voted to send Gov. Sarah Huckabee Sanders a sweeping public safety bill intended to overhaul the state's parole system and require people convicted of serious crimes to serve most if not all of their sentences in prison, after concurring with a House amendment to the bill.
Friday was the 89th day of the 94th General Assembly's regular session.
After the House and Senate recessed, Sanders' spokeswoman Alexa Henning said Friday in a written statement that "The Governor is thankful to President Pro Tem [Bart] Hester, Speaker [Matthew] Shepherd and the rest of the legislature that have been great partners helping get bold, transformational policy changes through the legislature on behalf of the state of Arkansas."
The Republican-dominated Legislature enacted the first-year Republican governor's priorities -- an education overhaul, public safety overhaul and income tax cuts.
The Arkansas House on Friday voted 92-0 to approve Senate Bill 569, the proposed Revenue Stabilization Act, before the Senate voted 31-1 to approve an identical bill, House Bill 1833.
The chambers voted to send the bills to Sanders.
Most of the increased general revenue would be allocated to education and corrections programs in fiscal 2024 that begins July 1 under the two bills that would increase the state's general revenue budget by about 2.95% over the budget in fiscal 2023. The Revenue Stabilization Act prioritizes the distribution of state general revenue to state-supported programs.
Sen. Bryan King, R-Green Forest, is the only state lawmaker who voted against either SB569 or HB1833.
"This session has not been anything but more government, more spending, more programs and more everything," he told senators.
King said he sees "a lot of clouds out there" with high inflation, a supply side crisis, a cooling housing market and the possibility of a mild recession looming.
"I just think we need to be more cautious in spending money right now," he said.
Afterward, Joint Budget Committee co-Chairman Sen. Jonathan Dismang, R-Searcy, said "I think a 2.95% growth rate in the environment we have is a very conservative budget, and also it is very reflective of us and our concerns about the state of the economy.
"No one wanted to get out ahead of ourselves on spending, but we are well below the inflationary rate, which is technically a reduction in government spending," he said in an interview.
In November, then-Gov. Asa Hutchinson proposed a $314 million increase in the state's general revenue budget to $6.33 billion in fiscal 2024, with $200 million of the increase earmarked for the public schools.
At that time, the former Republican governor said his proposed budget for fiscal 2024 would represent a 5.2% increase over the current budget of $6.02 billion, leaving a projected general revenue surplus of $254.9 million at the end of fiscal 2024. Considering annual inflation was more than 8% at that time, limiting the growth of the state's general revenue budget to 5.2% reflected conservative budgeting, he said.
The state's general revenue forecast projects net general revenue of $6.59 billion for fiscal 2024, so the proposed Revenue Stabilization Act of $6.2 billion would leave a general revenue surplus of $391.2 million at the end of fiscal 2024. The projected general revenue surplus of $391.2 million doesn't factor in individual and corporate income tax cuts and other tax cuts the Legislature approved in this year's regular session, said Scott Hardin, a spokesman for the finance department.
The proposed Revenue Stabilization Act for fiscal 2024 in SB569 and HB1833 doesn't include the $70.3 million in general revenue allocated for the educational facilities partnership program in fiscal 2023, which Hutchinson recommended continuing in fiscal 2024.
Instead, Senate Bill 578 by Dismang would create a $500 million set-aside account in the restricted reserve fund for public school academic facilities. That could cover the state's school building costs for five or six years, Dismang said.
SB578 would authorize the transfers of $1.4 billion in unallocated and unobligated state funds, including $1.3 billion from the general revenue allotment reserve balance, and up to $380.6 million in surplus funds in fiscal 2023 largely to set-aside accounts in the restricted reserve fund for nearly 30 projects. To tap the funds in the set-asides created in the restricted reserve fund for state agencies, the governor would be required to submit requests to either the Legislative Council outside of a session or the Joint Budget Committee in a session for the funds and get the panel's approval. The House voted Thursday to send SB578 to Sanders.
In his proposal for fiscal 2024, Hutchinson set aside $41 million in general revenue in fiscal year 2024 for an overhaul of the state's pay plan for executive branch employees. The proposed overhaul of the state's pay plan would cost roughly $80 million after factoring in the cost to other revenue sources beyond general revenue.
On March 15, Sanders announced Arkansas taxpayers should not be saddled with the $80 million total cost for a proposal that doesn't consider the strategic needs in education, public safety, health care and corrections. She asked the Department of Transformation and Shared Services to review and rework the existing classification and compensation structure. The plan covers more than 22,000 executive branch employees.
In the proposed Revenue Stabilization Act for fiscal 2024 under SB569 and HB1833, the general revenue allocation to the state's public school fund would increase by $118.7 million to $2.4 billion in fiscal 2024.
General revenue totaling $31.7 million would be allocated for Educational Freedom Accounts to help pay for students to attend private, parochial or home schools.
The state Department of Education has projected Sanders' education overhaul law, Act 237 of 2023, will cost $297.5 million, including $150 million in "new money," in fiscal 2024. Act 237 will raise the state's minimum teacher salary from $36,000 to $50,000 a year, grant other teachers $2,000 salary increases, create Educational Freedom Accounts and enact many other changes in the education system.
House Bill 1688 by Rep. Brian Evans, R-Cabot, would increase per-student foundation funding by $205 to $7,618 for the 2023-24 school year and to $7,771 for the 2024-25 school year. The Senate on Thursday voted to send the bill to Sanders.
Full-time classified staff, bus drivers, custodians and other school workers would receive funding for about a $2-per-hour raise, Evans said. In addition, the state would fund a 1.8% cost-of-living adjustment for teachers and school secretaries in fiscal 2024 and a 2.2% increase in fiscal 2025, he said.
The state's colleges and universities would get a $5.6 million increase in general revenue to $781.2 million under SB569 and HB1833, with University of Arkansas for Medical Sciences getting a $5 million increase to $93 million in fiscal 2024.
The University of Arkansas, Fayetteville would receive a $3.3 million increase in general revenue to $134.1 million, Arkansas State University in Jonesboro would get an increase in general revenue of about $422,000 to $62.5 million, and the University of Arkansas at Little Rock would receive about $180,000 more in general revenue to $60.5 million under the measures.
Under the proposed Revenue Stabilization Act for fiscal 2024 in SB569 and HB1833, the state Division of Correction would get a $55.3 million increase in general revenue to $434.3 million, and the Arkansas State Police would get a $10.5 million increase to $88.6 million.
The state Division of Community Correction would get a $7 million increase in general revenue to $104.7 million, the Department of the Military would get a $2.2 million increase in general revenue to $9.9 million, and the Department of Health would get about a $935,000 increase in general revenue to $81.8 million.
The general revenue allocation to the state Department of Human Services would increase by $5.5 million to $1.8 billion.
Priorities for general revenue funding of programs are set in the Revenue Stabilization Act, which is enacted every year by the Legislature and the governor and keeps the state from deficit spending. The state's two largest sources of general revenue are individual income taxes, and sales and use taxes.
The bills would create two categories for spending priorities in fiscal 2024: A and B. Category A, the highest priority, would be allocated $6.009 billion. Category B would be allotted $192.6 million.
PUBLIC SAFETY OVERHAUL
On Friday, the Senate voted 28-4 to give final approval to the sweeping public safety bill -- Senate Bill 495 by Sen. Ben Gilmore, R-Crossett -- after the chamber concurred with a House amendment to the bill.
The amendment addressed concerns raised by legislators regarding increased penalties for theft and negligent homicide.
The bill would establish the Protect Arkansas Act and its part of a wide-ranging criminal justice package backed by Sanders and Attorney General Tim Griffin.
Beyond restructuring the parole system, the 131-page bill features other provisions, including supporting child victims of crimes, preparing incarcerated people to enter the workforce and suspending court fines for incarcerated defendants for 120 days after they are released from custody.
Under SB495, people convicted of 18 of the most violent felonies in state code, including rape and capital murder, would have to serve the entirety of their sentences in prison. SB495 would require courts to add a period of post-release supervision in these cases if defendants are not already sentenced to the statutory maximum for their offense.
People convicted of 53 lesser violent felonies such as second-degree murder, battery in the first degree or sexual indecency with a child would have to serve 85% of their sentence before being eligible for release with supervision.
Those convicted of felonies not addressed in the bill could be eligible to serve 50% or 25% of their sentence depending on a seriousness grid or table established by the Arkansas Sentencing Commission and approved by the Legislative Council.
To become eligible for early release under the bill, offenders would have to earn credits by participating in programs in prison.
The bill would require the state Board of Corrections to develop rules setting guidelines for the accrual of earned release credits for work practices, job responsibilities, good behavior and involvement in rehabilitative activities.
An impact statement prepared by the Arkansas Sentencing Commission estimated the bill could result in more than $163.8 million in costs over the next 10 years associated with providing additional care to inmates.
Last week, Sanders announced plans to add 3,000 new beds to Arkansas' prison system. The expansion will cost an estimated $470 million to build and $31 million in annual operating costs, she said.
To allow the state Department of Corrections and courts to prepare for the changes included in the bill, Rep. Jimmy Gazaway, R-Paragould, has said, offenders convicted of the most serious violent felonies would be required to serve 100% of their sentences starting Jan. 1. For people convicted of lesser offenses, the new post-release supervision system would go into effect beginning Jan. 1, 2025.
Information for this article was contributed by Will Langhorne and Neal Earley or the Arkansas Democrat-Gazette.