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Governor Proposes Balanced Budget for Next Two Years

SUBMITTED BY SENATOR LARRY TEAGUE – 

November 11, 2016

LITTLE ROCK – As required by law, the governor proposed a balanced budget for state government for the next two fiscal years and presented it at legislative budget hearings.

The recommendation will be the starting point for the legislature to use for adopting state agency spending levels. Lawmakers are meeting in budget hearings now, in preparation for the regular legislative session that begins on January 9.

The governor’s proposal would increase the Public School Fund by 0.2 percent next year and 2.4 percent the following year. The fund will disburse about $2.2 billion this year and is one of the largest single categories of state spending.

The Human Service Department, which administers Medicaid and food stamps and a variety of other social programs, would get a much larger increase in spending levels under the governor’s proposed budget. He proposed increasing the DHS budget by 7.8 percent next year and 10.6 percent the year after that.

Within DHS, the Children and Family Services would get a 29 percent budget increase next year and a 10 percent increase the following year. It oversees the state’s child welfare system, which includes foster care and adoption services. Its employees investigate allegations of abuse and neglect of children.

The Human Services Department will spend an estimated $7.2 billion this fiscal year, according to legislative budget officials. Of that total, more than $5.5 billion is federal funding and more than $1.6 billion are state matching funds.

The two agencies that operate prisons and supervise parolees and probationers would get an increase in the first fiscal year of the coming biennium, but only a small increase in the second year.

The Correction Department would get a 3.2 percent increase next year and 0.5 percent the following year, bringing the amount of general revenue spent on state prisons to about $353 million. The cost of securely housing inmates is a consistent challenge for legislators. For example, 20 years ago the state spent $121 million on prison operations.

The Department of Community Correction hires parole and probation officers. It operates drug courts and facilities that transition inmates back into the free world. Its budget would get an increase of 11.3 percent next year and 0.2 percent the following year.

The governor’s recommended budget has no increase in state aid to higher education. The state’s two-year colleges and four-year universities will receive $734 million in state funding this year, and under the governor’s budget that amount would stay the same in Fiscal Years 2018 and 2019.

However, the governor has pledged to add $10 million to higher education funding if the legislature approves a new funding formula that shifts the basis from enrollment to “productivity,” in other words, how many students graduate with degrees and certificates.

When the governor and his budget officials presented the recommendations to lawmakers, the major headlines were about his plan to reduce state income taxes by about $50 million a year. The cuts wouldn’t begin until the second year of the biennium.

Last year the state collected $5.368 billion in net general revenue, an increase of 2.2 percent over the previous year. This year the total is estimated to be $5.333 billion, reflecting about $100 million in annual income tax cuts for middle class families that the legislature approved last year.

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