New Fiscal Woes Emerge, Budget Leaders Weigh In

Two new budget problems have emerged ahead of the Feb. 13 start to the fiscal session.

State Treasurer Martha Shoffner’s (D) office missed a federal deadline to request funds for road projects and school services from the U.S. Forest Service.

The snafu could cost counties located in federal forest lands $1.16 million.

The missed deadline was blamed on a mix-up involving a 2009 law that transferred responsibility for submitting the funding request from the state Department of Education to the state Treasurer’s office.

The Education department historically requested the money provided by the Secure Rural Schools and Community Self-Determination Act because the bulk of the money received went to rural schools, while a smaller percentage went to rural county roads.

When officials became aware that a deadline was missed, they appealed to federal officials for leniency. State and county officials say they are hopeful that a positive resolution will be achieved.

State Rep. Nate Bell (R-Mena), whose House district encompasses areas affected by the potential funding shortfall in western Arkansas, claimed the error could have been avoided.  He cited a July 20, 2011 letter from the U.S. Department of Agriculture that notified the Treasurer’s office of a pending Sept. 30, 2011 deadline.

Bell also said that without the funds, his county may have to lay off county workers.

“Montgomery County may be forced to lay off 3 employees after [the] Treasurer’s office failure to file for federal payments in lieu of taxes,” he wrote on his Facebook page.

In another budget matter, the Arkansas Department of Health is instituting cuts to curtail a possible $2.2 million deficit at the end of this fiscal year.

The Arkansas Democrat-Gazette was the first to report on the issue.

The Health Department will cut costs in its Home Care program, which is the largest home health provider in the state. The program serves around 26,000 patients statewide. The services include nursing care, physical and speech therapy, home health aides, and supplies.

The budget cuts to the program include unpaid furloughs, lower mileage reimbursement rates and a reduction in hazardous duty pay. State health officials blame a reduction in federal Medicare reimbursement for the revenue shortfall.

With the fiscal session beginning in a little over a week, Gov. Mike Beebe (D) and state lawmakers will have an opportunity to address the two new budget issues.

State Rep. Kathy Webb (D-Little Rock), co-chair of the Joint Budget Committee, tells Talk Business that she plans to discuss the missed deadline with the Treasurer’s office next week to gain more information. With the Health Department, she’s sees the need for quick legislative intervention.

“I am open to helping with the Health Department shortfalls, for sure. I need to read more and get more information on the Treasurer’s issue. I hope to talk to Martha early this week,” Webb said.

Matt DeCample, spokesman for Gov. Beebe, tells Talk Business that the office is watching the Treasurer’s office situation and has done all it plans, for now, with the Health Department budget.

“We don’t have any plans for introducing any additional supplementals at this time. The Governor did already authorize the movement of some money within the Health Department to make sure that cut was not deeper,” said DeCample. “We’ll continue to watch the situation with the Treasurer’s office.”

Last week, Beebe outlined his requests for supplemental appropriations that he’d like the legislature to approve in the fiscal session. “Supplementals” are recommendations for spending the budget surplus from the state’s last fiscal year. Typically, they address one-time or emergency needs.

State financial officials project the surplus to be $72.2 million.

Beebe’s supplemental appropriations requests totaled $30.5 million and included the following items, but did not include restoration of the missed road and school money or the home health cutbacks:

$10 million for public employees’ merit adjustment fund
$9 million to the Arkansas Department of Corrections for overtime and holiday pay
$3.8 million for the State Hospital for compliance and regulations standards
$2.7 million request for the financially troubled Arkansas Forestry Commission
$2 million to the Arkansas Department of Corrections for back-pay for state inmates housed in county jails
$1.8 million to the Arkansas Department of Corrections to reduce case-load assignments
$1.4 million to the Arkansas Department of Corrections to repair an inmate housing facility on Roosevelt Road in east Little Rock.
$130,000 to replenish the Governor’s Emergency Fund, which has been depleted for several immediate needs
$110,000 for Drug Court funding
$35,000 to the Arkansas Parole Board