State budget leaders talk about 2011 surplus

Editor’s note: Roby Brock, with our content partner Talk Business, wrote this report. He can be reached at [email protected]

The state’s nearly $94 million budget surplus is likely to grow and shrink and that has a host of budget leaders in a cautious mode.

The state of Arkansas finished its fiscal year on June 30, 2011 with a $93.9 million surplus that will grow by a few million more when interest accrued from several state accounts is added in.

But the final balance on the surplus will ultimately decline. Lawmakers have nearly $40 million committed to projects through the General Improvement Fund (GIF), which typically pays for one-time infrastructure investments. Gov. Mike Beebe and the legislature also committed money to pay for prison reforms and the state’s public school computer network, which handles a variety of financial data for school districts.

Where that balance settles should be somewhere below $50 million, which will lead to immediate speculation of where those funds should be spent.

Four key Arkansas budget leaders tell Talk Business that they advocate a cautious approach to moving forward.

• Sen. Gilbert Baker, R-Conway, Co-chair, Joint Budget Committee
"The reason we can be in a budget surplus is because we do budgets so conservatively. I wish the folks in D.C. could get that message. We have to be extremely cautious because we don’t know what the economy is going to do in next year or two. To run out and spend it all would be wrong. There will be no shortage of needs pop up now that this surplus is public, but we need to be extremely cautious because of the economy."

• Rep. Kathy Webb, D-Little Rock, Co-chair, Joint Budget Committee
"We have a Medicaid shortfall ahead of us. I don’t think we should spend any of the surplus at this time. We need to continue our conservative fiscal policies and reserve the money to deal first with Medicaid. Second, we need to see how the corrections reform is working and make sure we allocated the proper resources for the reforms to be put in place and start working."

• Sen. Larry Teague, D-Nashville, Chairman, Senate Revenue and Tax Committee
"In the fiscal session coming up, we’ll have an opportunity to address that. There’s going to be lots of hands out for it. It won’t be easy to decide what to do with it."

• Rep. Davy Carter, R-Cabot, Chairman, House Revenue and Tax Committee
"Upon initial review of the ‘Fiscal Year 2011 Revenue Summary,’ it appears that a good portion of the ‘surplus’ is attributable to a large non-reoccurring insurance department transfer, as well as smaller than forecasted individual and corporate income tax refunds. Overall, I am pleased with the year-end numbers, but do remain cautious as we move forward in this recovery cycle. Accordingly, I think it is premature to start discussions today on finding ways to ‘spend’ the surplus. If anything, the surplus should help fund the tax cuts that went into effect on July 1st, and otherwise remain under the pillow as we address pending state obligations and generally other ways to responsibly put more money back into the hands of the taxpayer."