State Employee Raises One Trip In Final Budget

With a deal worked out on tax cuts, the path is cleared to resolve the state budget and end the 88th General Assembly, right?

Wrong.

While tax cuts are a factor in setting the projected revenue side of the budget equation, there will still be wrangling over a number of expenses items.

Earlier this morning, the Governor’s office and members of House and Senate leadership met to discuss the Revenue Stabilization Act (RSA), the mechanism that balances the state budget.

Rep. Kathy Webb (D-Little Rock), co-chair of the Joint Budget Committee, was in the meeting . She says RSA details are far from done.

"We’ve got the tax cuts taken care of and we’re trying to start to look at Revenue Stabilization. There’s nothing definitive, we’re just starting to talk now. We’re really very early in the process," Webb said.

With less than 2 weeks before adjournment, is that a troublesome statement?

Not really. The budget moves pretty quickly once many of the parameters are set, but they’re not all set yet.

One big hurdle remaining centers on cost-of-living adjustments (COLAs) for state employees.

Gov. Mike Beebe had built a 1.86% across-the-board raise for employees into his balanced budget proposal, but lawmakers have balked at high-paid state employees receiving a salary increase. Beebe’s proposal, which includes the COLA adjustments and about $5 million for career service payments, carried a $24.3 million price tag.

Legislators and the Governor are looking at a number of scenarios for potentially capping pay raises at certain salary levels. Of course, each range has a budget impact.

Here are a few scenarios based on projections calculated from the Arkansas Department of Finance and Administration:

• Reducing the COLA raises to state employees making $50,000 or less reduces the total cost to $23.1 million, a savings of $1.2 million.
• Reducing the COLA adjustments to those making $35,000 or less drops the total cost to $21.7 million, a savings of $2.6 million.
• Reducing the increases to those making $25,000 or less carries a $20.4 million price tag, a savings from the Governor’s proposal of $3.9 million.

"From my perspective it shows that many of our state employees are in those very low income categories," said Rep. Webb.

According to DF&A statistics, approximately 38,000 state employees were originally being considered for COLA increases. Of the 38,000 state employees in the mix, about 4,400 make more than $50,000.

Also to watch, the Joint Budget Committee meets on Wednesday morning and will consider an item inserted in a Special Language Committee on Monday. Expect a major budget fight as House leaders have found cash reserves in a fund tied to the Commissioner of State Lands’ office.

The money has to pay for operations from the Land Commissioner’s office, but the balance has also been eyed by legislators with a few unfunded bills that were left out of the tax cut compromise and House GIF battle. Expect a few fireworks at Wednesday’s budget meeting.