During my last year in office, I have visited many annual events and celebrated many annual traditions with a sense of nostalgia. At each of these occasions, I was acutely aware that it was my last time there as governor.
This week brought my final visit to the legislature's Joint Budget Committee. My history, in this case, far eclipses my time as governor. I was deeply involved in budget negotiations throughout my 20 years in the State Senate, as well the past eight years as governor.
Every fall, Arkansas's governor is required by law to propose a balanced budget to the General Assembly. That is still true this year, even though I will no longer be in office when the next budget is approved. Not only did I work to develop a proposed budget with our Department of Finance and Administration, I worked to develop two distinct budgets.
Two years ago general-revenue dollars, freed up by the creation of the Arkansas Private Option, opened the door for significant new tax cuts. The legislature passed about $100 million in tax relief for our current fiscal year, with additional cuts scheduled to go into effect next July. I said then that I was worried about whether we could afford that second round of reduced revenue while still maintaining essential state services. I've proposed delaying, not repealing, about $26 million in additional tax cuts. My two budgets clearly demonstrate how I foresee that delaying, or not delaying, those cuts would impact funding for our state obligations.
Arkansas needs more state funding for Medicaid, about $84 million. This is not because we've put more people on Medicaid. In fact, we fund care for fewer traditional Medicaid patients now because of the Private Option. The state's financial successes have increased the state portion of Medicaid costs required by the federal government. For a long time, that share was about 25 percent. Because of rising incomes in Arkansas, that share has increased to about 30 percent.
Delaying this next round of tax cuts would allow us to reduce our dependency on one-time surplus money to keep Medicaid intact. There are, of course, other needs throughout state government. Needs like funding additional educational adequacy requirements and ensuring that our Department of Correction can pay counties to house state inmates.
My budget proposals assume the continuation of savings from the Private Option. If it is not re-approved, $90 million in general-revenue savings will vanish. In addition, more than 200,000 Arkansans will lose their health care, creating more strains on the budget and the overall well-being of our state.
I know that Governor-elect Hutchinson will build his own proposed budget during these transition months, much as I did at the end of 2006 before taking office. Budgets are never easy, and our constitution mandates that Arkansas must have a balanced budget. There will be difficult decisions and disagreements ahead. I've added my voice to the process one last time.
In addition to my proposals, I thank everyone who has worked with me in the past for our people, and I wish the best for those who face similar challenges ahead.