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Fiscal Session 2014 Adjourns

$126 Million Surplus


LITTLE ROCK – After approving a $5 billion budget for state government, the legislature officially adjourned the 2014 Fiscal Session.

All but a few of the 300 bills approved during the session were budgets for state agencies, public schools and institutions of higher education.

One non-budget measure, Act 210, will save the state more than $1 million because it avoids the necessity of holding a special election between now and November to fill the lieutenant governor’s office.  Under the act, if the office becomes vacant within 10 months of a general election, in which there are candidates for lieutenant governor on the ballot, the governor shall not call a special election.

The state’s balanced budget law, the Revenue Stabilization Act, is considered a non-budget bill because it does not actually appropriate state funds.  It prioritizes state agency spending requests into categories.  If state tax revenue falls off because of a slowing economy, state agencies will reduce spending. Agencies whose appropriations are in the lower categories are more greatly affected by budget cuts.

Act 300 includes a repeal of the state sales tax on sand and other granular products that are injected into natural gas wells.  They are known as “proppants.”

According to revenue officials the sales tax on proppants would generate about $5.1 million in state revenue. However, collection of the tax was on hold because it had been successfully challenged in court and a Pulaski County judge had ruled in favor of the gas production company.  The language in Act 300 clarifies that proppants are considered part of the already tax exempt equipment used in production.

Although an estimated $126 million will be available in surplus funds at the end of the current fiscal year, the legislature agreed to spend only $21.9 million of that amount.  That means more than $100 million will be kept in reserves.

Out of the surplus, $5 million will go into a revolving loan fund for charter schools to tap into for construction of facilities. Another $5 million will go toward installing fiber optic cables, to help public schools increase their broadband capacity.

Another $5 million will go to the Correction Department for accumulated overtime and holiday pay of employees, while $3.7 million will be spent by the Department to reimburse county jails for holding inmates when state prison units were full.

The Department of Community Correction, which operates work release, halfway houses, parole and drug courts, will get $500,000 for reimbursements to county jails for housing inmates under state jurisdiction. Also, $719,000 will help the Correction Department to hire 14 security guards so it can open an additional 200 beds at the North Central Unit near Calico Rock. The unit now houses 500 inmates.

Also, $2 million of the surplus will go to the Health Department for its breast cancer program.

The budget assumes that state government spending will grow by $109 million next year, even after accounting for $85 million in tax cuts that were approved in the 2013 regular session.

The Public School Fund will increase by $65 million, to a total of $2.1 billion.

The Department of Correction’s budget will increase by $3.1 million, bringing its annual funding from the general revenue fund to $316 million.

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