State Budget Cuts Announced

State cuts budget $100 million(Max Brantley, Arkansas Blog, 10/20/09)

As expected, Gov. Mike Beebe has announced that he'll cut the state budget for the balance of this fiscal year -- it runs through June 30 -- by $100 million because of a continuing decline in state tax revenue. Prisons, health and the State Police will experience the hardest hits of what amounts to a 2.2 percent budget cut, the governor said. Surplus funds will maintain education spending at court-mandated "adequacy" levels.

Some further details from Richard Weiss, the state director of Finance and Administration:

He says the cuts are intended to recoup shortfalls so far this year, but the economic forecasts still indicate some rebound in economic performance by spring so the overall cut isn't as deep as the 10 percent decline in revenue seen in recent months. He said he doubted the 2.2 percent cut should mean layoffs or cuts in recently granted pay raises. Leaving positions open, normal turnover reductions in travel and other expenses and other savings should be sufficient to avoid job layoffs, he said.

Weiss was optimistic, too, that fund balances would avoid a "doomsday" scenario of deeper cuts in other agencies so money would be available to meet education mandates.

Next year? That's a matter of some concern. No official forecast is due until Dec. 1. But even with a hoped-for rebound in the economy, state officials will have to look hard at tentative budget figures approved in the 2009 legislative session for the fiscal year beginning July 1, 2010. Can the projected 3.8 percent state employee pay raise surive? That's a questiion as yet unanswered. The first fiscal session in January won't be a happy one.

For now, said Weiss, “The cuts we’re making today will hold us in good stead. But 2010 is going to be something we have to look very closely at.”

It is at least an irony of timing that higher education will suffer a spending cut. The lottery amendment provided that college support couldn't be reduced on account of the new lottery scholarship money. But it could happen concurrently anyway.

Here's the memo to state agencies about the cut.

Here's the memo to legislators with a discussion on economic forecasts.

Here's the agency-by-agency spreadsheet on the dollar amount of the cuts.

The governor's release:

LITTLE ROCK – Governor Mike Beebe has accepted a recommendation by the Arkansas Department of Finance and Administration to cut the state budget by $100 million for the current fiscal year. The revised budget forecast comes after revenues fell below those predicted for the first three months of the fiscal year.

"Just like any family or business, state government must live within its means," Beebe said. "Despite our conservative budgeting, it appears that our recovery from the recession has been slower than anticipated. There are still positive signs in the revenue numbers, and we maintain hope that the recovery will accelerate."

The revised cut means a 2.2 percent reduction of the overall budget, with the Departments of Correction, Community Correction and Health and the Arkansas State Police seeing the largest reductions. Existing fund balances will ensure continued adequacy for public education.