No Big Surprises With Beebe Budget, Key Leaders Share Priorities

There were no big surprises in Gov. Mike Beebe’s (D) FY 2013 budget proposal, but key budget leaders expressed ideas for additional spending priorities.

On Tuesday (Jan. 17), Richard Weiss, director of the Department of Finance and Administration, presented Beebe’s estimated budget for the upcoming fiscal year in the first pre-session budget hearing of the year. The budget proposal is required by law in advance of the February fiscal session, which starts Feb. 13.

State budget forecasters left unchanged the current year’s forecast for fiscal year 2012 at $4.567 billion, a 0.1% decrease, in a December legislative hearing. That forecast is unchanged from a previously released forecast on April 21, 2011.

However, for the following year — fiscal year 2013 — finance officials lowered their growth estimate from 5.3% to 3.5%, an increase of $163 million from 2012, but $121.3 million less than previously estimated. DF&A said that $87.2 million of the $121.3 million reduction was attributable to economic conditions. The remainder of the decrease was based on tax changes and other adjustments.

The bulk of the expected revenue increase will be steered to K-12 public education and Medicaid, according to Beebe’s proposal. Key spending increase details include:

• $56.6 million more for general education
• $117.2 million more for the Department of Human Services’ Medicaid and behavioral health programs
• $2.1 million more for the Department of Correction offset by a $508,000 reduction in the Department of Community Correction budget
• $3.5 million more for two-year and four-year institutions of higher education
• $383,000 more for Arkansas State Police
• No cost-of-living adjustments or merit pay increases for state employees, which would have amounted to $15 million

ADDITIONAL PRIORITIES
In the fiscal session, state lawmakers will also decide how to spend an expected $72 million budget surplus.  Beebe has already advocated for steering $2.7 million to the Arkansas Forestry Commission, which has experienced a number of financial setbacks.

Weiss said that Beebe would release a full list of potential supplemental appropriations on the first day of the session in February. He said the Governor was undecided on all requests pending, but there could be as many as 10-12 requests.

Other surplus priorities could include shoring up the state’s trial court funding, drug court funding and general improvement fund (GIF) projects, which are typically one-time spending items.

Two of the state’s budget leaders, Rep. Kathy Webb (D-Little Rock) and Sen. Gilbert Baker (R-Conway), laid out additional spending hopes for the surplus and next year’s budget.

In an earlier interview for Talk Business Quarterly, which will be released Wednesday (Jan. 18), Webb said Medicaid and public schools were her top focus, too. She also said that lawmakers must look to fill budget gaps from expected federal cuts and she wanted more money steered toward job creation and workforce training.

“It is important that we focus on job creation, even in the fiscal session. Two of the key elements of job creation are education and an adequately trained workforce. It is our responsibility to make sure taxpayers are getting their money’s worth and that every program offered in workforce training meets the needs of 21st century workers,” Webb said.

Baker agreed with the Governor’s and Webb’s top priorities, but also expressed interest in higher education needs.

“The fiscal session will almost surely produce no increase in general operating funds for colleges and universities,” Baker said. “We will look for ways to maintain several specialty scholarships that are scheduled to be cut. Those scholarships help students who have excelled (Governor’s Distinguished), or whose families have special needs (Military Dependents), who have the opportunity to do undergraduate research (SURF), or who participate in a unique internship (Washington Center).”

In other news, Baker and Webb announced a Forestry subcommittee to study the spending problems at the embattled state agency. Sen. Missy Irvin (R-Mountain View) and Rep. Buddy Lovell (D-Marked Tree) will co-chair the subcommittee.