DALLAS — Arkansas Gov. Mike Beebe Wednesday unveiled a proposed fiscal 2012 general fund budget of $4.59 billion that is minimally higher than the current spending plan.
The proposed budget, which will be presented to the General Assembly when it meets Jan. 10, is 2.5% higher than the fiscal 2011 general fund budget of $4.48 billion.
The Office of Finance and Administration expects a 2.8% increase in general fund revenue in fiscal 2012.
The general revenue budget is funded mostly by income and sales tax collections. The overall state budget of $24 billion also includes federal funds, transportation spending supported by state fuel taxes and motor vehicle levies, and college tuition and fees.
Beebe’s budget calls for a reduction of the state sales tax on groceries to 1.5% from the current 2%. The reduction would cost the government $15.5 million in fiscal 2012, which begins July 1, 2011.
Lowering the tax was one of the main campaign promises by the Democratic governor, who was elected to a second four-year term last week.
Beebe has reduced the food tax from 6% since taking office in 2007.
“Any reduction in revenue is tough in a tough economic time, but I think we have to keep the momentum going on reducing to ultimately eliminating the grocery tax,” he said.
Beebe said the tax cut was achieved through expected increases in state revenue rather than reduced spending.
Rep. John Burris, R-Harrison, said Republican lawmakers would be amenable to the tax reduction proposed by Beebe. Burris will be the minority leader in the House when the General Assembly convenes in January.
“It’s a promise he made and we want to help him keep it,” Burris said. “Whether or not now is the right time is what we’ll be looking at.”
Democrats hold 56 of the 101 seats in the Arkansas House and 22 of the 35 Senate seats.
Any further tax cuts would have to come attached to spending cuts, according to Beebe.
“If you’re going to cut taxes, you better have a proposal on what you’re going to cut in spending,” he said at a news conference on Wednesday. “The actual ramifications of those tax cuts have to be presented. What part of higher ed, prisons are you going to cut?”
State aid to higher education is up 1% in the proposed budget from the current one. The extra money would be allocated to the schools according to an existing formula.
Arkansas would increase its support of local public education by $55.1 million under Beebe’s proposal. State funding would increase to $1.86 billion in fiscal 2012, up from $1.81 billion in fiscal 2011.
The proposed budget includes $23.3 million for a 1.86% cost-of-living pay raise for state employees who did not receive a salary increase in fiscal 2011.
