State Capitol Week in Review from Senator Larry Teague

State Capitol Week in Review

From Senator Larry Teague

April 15, 2016

LITTLE ROCK – As soon as this year’s fiscal session of the legislature convened, the tension began to build.

On the first day of the session the Joint Budget Committee endorsed the spending bill for the state Medicaid program, which has been the most politically controversial bill in the General Assembly for the past several sessions.

The committee endorsement meant that the entire Senate was able to consider the bill on the second day of the session. Because it is a spending bill, it requires a 75 percent majority for passage, and in the 35-member Senate that amounts to 27 votes. The bill failed to win approval by a 25-to-10 vote.

Another vote is expected when the legislature returns to the Capitol for the second week of the session.

Fiscal sessions take place in even-numbered years. The first one was in 2010. They will last 30 days, unless extended by a 75 percent vote of each chamber. Under the terms of the constitutional amendment that established fiscal sessions, they cannot be extended any more than 15 days. Therefore, the longest a fiscal session can possibly last is 45 days.

Only appropriation bills may be introduced and considered, although there is a mechanism for filing other types of bills. However, it is not easy to get other types of bills on the calendar.

Normally, fiscal sessions are routine and uneventful, as we authorize funding for state agencies, public schools, colleges and universities. Arkansas lawmakers are fiscally conservative, and the state operates under a balanced budget law called the Revenue Stabilization Act.

If tax revenue declines due to a downturn in the economy, state government spending decreases proportionately, according to priorities spelled out in the Revenue Stabilization Act.

The governor has proposed a budget that forecasts growth in general revenue spending of 2 percent. When the surplus from past years is included, his proposed budget forecasts a 2.7 percent increase in net general revenue.

The state has not raised tax rates, which means the 2 percent growth in state spending is not a result of higher taxes but rather of increased business activity in Arkansas companies. Last year the legislature lowered income taxes for middle class families by about $100 million a year.

Under the governor’s proposed budget, public schools and the Human Services Department are in line to receive the bulk of the increase in state spending. One of his goals is to boost funding of the foster care system, which places children in adoption and investigates allegations of abuse and neglect of children.

Prisons would receive a small boost in funding under the governor’s plan, while two-year colleges and four-year universities would receive no increase in state aid.

The Arkansas constitution gives the legislature the ultimate power to approve all spending bills, therefore it may amend the governor’s proposed budget.

If the economy stays healthy and revenue flows according to forecast,  state government will have net revenue of about $5.33 billion next year. That is about $142.7 million more than what it will spend this year.

The state fiscal year goes from July 1 to June 30. Legislators will finalize a budget for Fiscal Year 2017, which begins on July 1 of this year.

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