Governor’s Balanced Budget Calls For 3% Overall Increase In Spending

Gov. Asa Hutchinson proposed a new budget – his first as the state’s chief executive – that called for a 3% increase in state spending in FY 2016 and a 3.3% increase in FY 2017.

One-time monies will plug various aspects of the budget, including a new computer science initiative, funding for adequate school facilities, and Medicaid funding. Hutchinson proposed $5 million from the state’s surplus for computer science education, nearly $40 million over two years for adequate facilities funding, and $80 million to shore up Medicaid expenses.

The $5.196 billion proposed budget in the fiscal year that starts July 1, 2015, also seeks:

• A 8.4% increase in the General Education Fund
• A 6.5% increase in Human Services funding;
• A 2.9% increase in State General Government Agency funding; and
• A 1% COLA increase for state employees over the next two years

The budget, if approved, would also include an additional $11.4 million for county jail reimbursements and would include an increase in their per day rates from $28 to $30. The Department of Corrections would see a $14.3 million increase in its budget under the proposal.

There were no cuts recommended to higher education facilities and there was no increase recommended to expand pre-K funding.

The Governor’s middle class tax cut proposal would deplete state revenues by $12.8 million in the next fiscal year and $80.6 million in the following fiscal year.

Hutchinson’s budget also included a reclassification of revenue tied to natural gas severance taxes that would lower state revenues by $2.6 million in the next fiscal year and $2.7 million in the following fiscal year.

The governor also asked for additional appropriations in the current fiscal year of $447,245 for computer and maintenance upgrades to his office and $50,000 for similar expenses to the Governor’s Mansion Commission.

Hutchinson’s FY 2017 budget seeks a 3.3% increase would result in a total state budget of $5.37 billion.

Lawmakers will use the budget proposal from Hutchinson to set priorities for the Revenue Stabilization Act, the state law that requires no deficit spending.

Lawmakers did not receive any guidance from the Governor on General Improvement Funds (GIF). GIF monies are typically outlined for surplus spending and allow legislators to fund one-time projects in their communities, such as volunteer fire departments, senior citizen centers, and parks.

Rep. Lane Jean, R-Magnolia, is co-chairman of the Joint Budget Committee. He said that he’s not written off GIF projects yet, but confesses they won’t be large if they come to fruition.

“We’ll see what the revenue for the rest of the year looks like,” Jean said. “With the record year we had last year, there won’t be that kind of GIF money but there possibly could be some… It won’t be the size we had last year.”