Arkansas lawmakers near fiscal session end, set aside $300 million for superproject

With a little drama but some mystery, Arkansas lawmakers have pushed through week 3 of their biennial fiscal session business to land a $6.7 billion balanced budget that looks mostly like it was expected.

Gov. Sarah Sanders pitched a state budget that included $194 million in new spending for Education Freedom Accounts (EFAs), a $70 million set aside for possible EFA cost overruns, $53.4 million more for state employee pay, and a 3% overall spending increase from the previous year.

Absent from her budget was new spending on a Franklin County prison proposal that has been met with bipartisan opposition.

Despite unsuccessful efforts to pare back EFA spending and a payroll position in the governor’s office, the budget session is barreling toward a Wednesday conclusion with few changes to the governor’s original proposal.

Sen. Terry Rice, R-Waldron, made efforts to cut the salary and position of Joe Profiri, who once held the Secretary of Corrections top job. He was ousted by the board, but Sanders kept him on her staff as a senior advisor at a salary of $189,000 annually. Rice has sought to eliminate the job and pay declaring the salary to be excessive and Profiri’s job to be undefined. The attempts died in a personnel subcommittee this week.

Legislators are poised to increase the Homestead Tax Credit from $600 to $675 per year. The tax credit reduces property taxes for homeowners. It has cleared committee and will be voted on in the House and Senate this week with expectations of passage.

A curveball did come mid-week when legislators, at the governor’s request, added a $300 million set-aside for an economic development superproject in West Memphis. Details are being kept confidential, but it could generate up to 4,000 jobs initially and another 2,000 after completion. The $300 million would come from tax dollars being held in reserve through previous budget surpluses.

The money would be broken out into $150 million for incentives for a “advanced manufacturing, non-data center” project and another $150 million for infrastructure improvements, such as roads and highways. While non-disclosure agreements are restricting more public discussion of the superproject, it has the scale and characteristics of an automobile factory that would bring major parts suppliers in its wake. East Arkansas has long been considered for an advanced automobile plant.

Legislators are expected to pass the Revenue Stabilization Act, known as RSA, this week. It sets spending priorities for the $6.7 billion budget into specific spending categories.

At the conclusion of the session, Gov. Sanders is expected to call lawmakers back the following week for a special session to consider a 0.2% personal income tax cut. The call could also include cutting corporate income taxes by a comparable level.