Tackling 2-year budget, state to face needs, flux
Posted on Sunday, October 5, 2008
State government’s budget hearings start Tuesday amid lots of needs and plenty of uncertainty as legislators prepare for the 2009 legislative session.
“The national economy changes daily, almost hourly,” said Rep. Chris Thyer, D-Jonesboro, cochairman of the Joint Budget Committee. “Everybody needs more money. That’s just the nature of it. Frankly, I don’t think there is going to be a whole bunch of new money [for state programs ] the next two years.”
The hearings are scheduled to last until Nov. 19.
The state’s general revenue budget — mainly the income and sales taxes — is $ 4. 4 billion this fiscal year within a total budget of about $ 20 billion.
Legislators say they will learn more about priorities and what the state can do as the hearings progress.
More information will be revealed Nov. 13, the deadline in law for Gov. Mike Beebe to release his proposed balanced budget for fiscal 2010 and 2011, the years to be budgeted during the 2009 session.
Beebe’s not tipping his hand on the details of his proposal but has offered some general priorities.
“First, we’ll do education,” he said Friday, noting the Supreme Court has placed public-school funding as a top priority.
The public school fund is $ 1. 9 billion this fiscal year.
But what specifically is included in the governor’s educationspending proposal is unknown. Teachers are demanding the state fund more of their health-insurance premiums. The teachers ’ premium share for a family insurance plan is more than $ 700 a month.
Other educators are pushing for more state funding for school districts’ transportation costs.
“We’re in discussion with some of these people about transportation and insurance,” Beebe said.
Beyond education, he said his administration will be “relatively conservative” in forecasting state revenue the next two years. Revenue forecasts dictate how much agencies will be allowed to spend. He said it’s easier to add to budgets if revenue comes in greater than expected than it is to cut after revenue falls short.
He’ll prioritize other essential state needs “based on the facts,” he said.
“After that, then we’ll look at what we need to continue reducing and ultimately eliminating the grocery tax,” Beebe said.
He said “a top priority” is to restore money after the $ 58 million Medicaid funding cut ordered in May. He said he may restore some of that next week, given good news in the revenue report the state finance department issued Thursday.
Additionally, “critical needs” such as the state’s foster-care system, which has been under criticism recently, “gets a high priority.”
“All of that is subject to change,” Beebe said, based on information that may be revealed later. Some public officials for years have talked about the uncertainty in trying to set a two-year budget months before those years begin.
He said his position on the state sales tax on groceries, which will mean a loss of about $ 130 million a year in revenue if the remaining 3 percentage-point tax is eliminated, hasn’t changed: He will only move to reduce it after essential state services are met.
As to what he considers essential, Beebe said, “It’s essential we have prison beds to keep murderers and rapists in prison. It’s essential that we prioritize children and family services. It’s essential we try as much as we can to keep college as affordable as we can keep it. It’s essential we don’t run out of money for Medicaid match, so we have to throw people out of nursing homes. There are a lot of essentials.”
He acknowledged that “essential” is a “broad term.” But he added, “It’s not a game-playing term. My attitude about essential is that if most reasonable people could look at what I thought was essential and have some degree of agreement, then that’s reasonable.”
Thyer worries about the state’s use of its Medicaid trust fund, which the administration used instead of general revenue dollars for Medicaid.
“I’m telling you there is a train wreck coming,” he said.
The state’s Medicaid program is seeking $ 93 million more in general revenue next fiscal year and $ 111 million more the following year, in part because the trust fund is running out of money.
Thyer said, “reading the tea leaves,” he suspects a new pay structure for state employees will likely be adopted, costing about $ 10 million a year. He pointed out that Beebe has said it was a priority.
State officials and legislators have long argued that state employees need more money to compete with private-sector jobs.
Thyer said his “gut is telling me” the state can’t afford to cut the rest of the grocery tax this session.
Sen. Shawn Womack, RMountain Home, the other budget committee co-chairman, said he expects there to be a push for the state to fund “adult day-care centers.” He said these are places where caregivers for the elderly can drop them off and let professionals care for them to allow time for errands or other things the caregivers need to do.
Womack warned that legislators should be careful about the way they fund more public school transportation because if they do it the wrong way, the state could have problems with the Supreme Court again.
Another item being discussed is additional money for colleges to improve retention rates, which will cost about $ 95 million over seven years, a legislative subcommittee has said.
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