Today Governor Beebe sat down for an interview with Talk Business & Politics editor Roby Brock for an insightful 30-minute interview broadcast live via the web. Beebe answered questions on numerous topics, but one area that struck me was the discussion of the state budget and what to do with the roughly $94 million surplus left over from the last fiscal year.
An article from Stephen’s Media on Sunday originally sparked my interest in this topic. In the article, Republican House Minority John Burris said he wants to use the surplus as an opportunity to cut taxes, even though this surplus is a one-time money source and a tax cut is permanent.
Tax cuts always sound good in theory, but in this case, Burris’s idea is a bit short-sighted. According to John Lyon’s article:
Arkansas’ Medicaid budget is expected to see a shortfall of between $60 million and $80 million by July 2012 and $250 million by July 2013. The federal government matches state Medicaid dollars 3-1, so the total shortfall is projected to be about $1 billion by July 2013.
We already know that we’re facing a budget shortfall, so why go out of our way to make it an even bigger shortfall? John Brummett’s column today in Stephen’s Media discussed the surplus and gave his take on it all. I got to know Rep. Burris during my stint in state government and consider him a good legislator, but here I strongly disagree with him philosophically.
In today’s interview with Roby, Beebe said he opposed using the surplus as a way to cut taxes. Beebe highlighted his record for cutting taxes in the past 4 years with specific mention of the reduction of the grocery tax and said the surplus is needed to “plug holes” for prison costs or Medicaid.
Beebe further noted, “Every politician wants to give more money back in the form of tax relief. It’s good politics from the standpoint of getting yourself elected. What’s better politics is managing your budget in a way that your state’s not one of all those in trouble so that our whole financial house is in a wreck. Arkansas is in good shape and I intend to keep it that way.”
Will this surplus issue be a bone of serious contention in next year’s budget session? Or will GOP House and Senate leaders leave it alone and agree to use it to plug the holes? Let’s wait and see.
Plugging holes in the state budget is not an exciting way to use a one-time state surplus, but in this case it’s the right way.