Gov. Beebe nips $106 million in second budget cut move (Updated)

Arkansas Gov. Mike Beebe announced Monday (Jan. 11) a budget cut of $106 million in response to declining tax collections.

It’s the second cut in less than three months, with a $100 million cut pushed Oct. 20 after state tax collections fell 7.2% for the first three months (July-September) of the state’s fiscal year.

Updated info: The two rounds of budget cuts creates a more than $900,000 loss of “operating dollars” for the University of Arkansas at Fort Smith, according to a note from UAFS spokeswoman Sondra Lamar.

“This is particularly difficult because the second reduction only gives us six months to absorb it,” Dr. Paul Beran, UAFS chancellor, said in a statement. “We will be looking at every area of the university for savings, including things like critical decisions on whether to fill positions, whether we pursue some building projects that are in the planning stages but not begun, and whether or not we need to curtail non-essential travel.”

Collections improved somewhat but total $2.577 billion in the July-December period, down 3% below the same period in 2008.

The Arkansas Department of Finance & Administration has blamed the collections downturn on weak consumer sales, weak business-to-business sales and weather effects.

"Arkansans are being increasingly cautious with their money, and our government must reflect that in our use of tax dollars," Beebe said in a statement. "While we still foresee a recovery for our State economy, our spending must match the pace of that recovery to keep our budget balanced."

This round of cuts is 2.4% across the board, slightly higher than the 2.2% cut across the board in the first round of cuts.

Beebe’s statement also noted that other education funds will be “used to protect public education and adequacy requirements. Rainy-day funds and other set-asides will be used to lessen the impact of the cuts for the Departments of Human Services, Correction and Community Corrections.”

The first round of cuts in October pulled $432,254 from the $20.242 million in fiscal year 2010 state funds budgeted for the University of Arkansas at Fort Smith. At the time, Vice Chancellor of Finance and Administration at UAFS Mark Horn said the university’s 2010 budget included a set aside of almost $400,000 to be “held as insurance against a downward revision in the state revenue forecast.”

Horn said in October that another round of state cuts would not be a surprise, adding that UAFS officials were working on an “inventory of responses” to handle possible future cuts.