Beebe unveils two-year budget

Gov. Mike Beebe proposed a $4.9 billion general revenue budget for fiscal 2014 in a presentation last week to the Arkansas Legislative Council and the Joint Budget Committee.

The two-year proposal includes a $5.1 billion spending plan for fiscal 2015.

The official forecast calls for $6.2 billion of gross general fund revenue in fiscal 2014, which will begin July 1, and $6.4 billion in fiscal 2015.  The gross total does not include personal or corporate income tax refunds.

The budget, which will be considered by the General Assembly next year, will boost state spending by $180 million from fiscal 2013. State aid to local education will increase by $49 million.

The Department of Human Services asked for an additional $358 million in 2014 to bring the Medicare program’s budget to $1.2 billion and another $467.2 million in 2015, for a total budget of $1.3 billion.

Director John Selig said the additional funding was needed to avoid reductions in the state’s program that serves almost 800,000 Arkansans.

However, Beebe’s proposal provided only an additional $97 million next year and $229 million in 2015. The gap would be filled with $70 million state surplus a year from an expected surplus of $300 million at the end of fiscal 2013, and up to $48.5 million from a 2% sale tax on soft drinks.

Beebe proposed setting aside $10 million as an emergency fund.

Beebe’s budget includes a possible reduction in the state sales tax on groceries to 0.125% from the current 1.5%. The remaining tax is constitutionally protected revenue for conservation efforts.

The tax cut is linked to a decline in certain state obligations by at least $35 million for six consecutive months. The tax was 6% when Beebe, who campaigned for the demise of the grocery tax, was elected in 2006.

The obligations cited by Beebe include final settlement of a school desegregation suit and debt service on water, water disposal, and pollution facilities bonds authorized by lawmakers in 2007 and higher education facility improvement bonds issued under a 2005 law.

Richard Weiss, director of the Department of Finance and Administration, said some payments would end in fiscal 2014. The official forecast for general revenue in fiscal 2013 has been revised up to $99.5 million due to strong revenues in the first quarter, Weiss said.

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Arkansas
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