DALLAS — Arkansas Gov. Mike Beebe ordered a $100 million reduction in state agency spending on Tuesday to balance the state’s fiscal 2010 budget due to steady and unexpected drops in revenue collections.

Beebe took the action after the Department of Finance and Administration lowered the expected revenues for fiscal 2010 from $4.5 billion to $4.4 billion, a drop of $99.97 million, or 2.2%. 

The governor said the spending reduction would be across the board, but some agencies will see steeper cuts than others. However, he promised that no money would be taken from the public education budget.

State agencies are to submit details of their budget-cutting plans to the finance department by Nov. 3.

State officials were surprised when September revenues came in 12% below the official forecast.

September collections totaled $464.2 million, more than $63 million less than expected and $76.5 million less than collected in September 2008.

Revenues have been less than expected since the state’s fiscal year began July 1, and monthly collections have been below those from the same month in 2008 for nine of the past 10 months.

The latest report from the revenue department predicted continued weakness in revenues through the end of the calendar year, with moderate growth in the final six months of fiscal 2010.

Gross general revenues for the first three months of fiscal 2010 total $1.27 billion, or $86.8 million less than the estimate used to develop the budget, and $99.6 million less than collected in the first quarter of fiscal 2009.

Arkansas state GO bonds are rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s.

Beebe said making the budget cuts so early in the fiscal year should allow Arkansas to avoid state employee layoffs or furloughs.

“The big [revenue] drop in September wasn’t something we anticipated or else we would have made changes even earlier,” the governor said at a news conference. “The good news is we don’t wait until the eleventh hour and then find out that you got to raise taxes or furlough everybody and close down institutions or offices.”

The 2009 Legislature allocated $101 million of state surplus funds to supplement agency operations at the governor’s request.

The general improvement fund is normally reserved for one-time projects, but Beebe said he wanted a cash cushion to supplement agency budgets if revenue did not meet expectations.

About $40 million of the allocation remains unspent, according to the governor said.

“We’ll tap it in the right places for the right reasons as the situation dictates, but we’ll be very conservative with that, too,” he  said.

Beebe will release his proposed budget for fiscal 2011 in December. The Legislature will convene Feb. 8 for its biannual budget session.

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