Legislative Updates — March 27, 2020

LITTLE ROCK – The legislature convened in special session to address potential revenue shortfalls, resulting from the sudden economic downturn caused by the outbreak of the coronavirus.

Applications for unemployment insurance had averaged about 1,500 per week. After so many businesses closed to prevent any further spread of the virus, more than 18,000 applied over a two-week period.

The sharp increase in job layoffs caused sales tax and personal income tax revenue to go down.

Another decrease in state revenue is predicted to result from the extension of the filing deadline for taxes, from April 15 to July 15.

In his call for the special session, the governor noted that extending the tax deadline would cost the state millions of dollars this fiscal year, but it was the right thing to do to provide relief to taxpayers.

Budget officials predicted that revenue would be short by $353 million because of the slowdown in economic activity, combined with the extension of the tax filing deadline. June 30 is the final day of the fiscal year.

Arkansas operates under a balanced budget law, known as the Revenue Stabilization Act, which prioritizes state agency spending. When revenue drops, spending by the state government drops proportionately. Unlike the federal government, the state does not borrow to pay for budgeted programs, a practice commonly known as deficit spending.

The state has reserve funds because it has consistently approved very conservative budgets.

In order to protect vital services provided by the state Health Department and medical programs in the Human Services Department, the legislature voted on a transfer of money from a reserve fund to operating accounts. The reserve fund has $173.6 million.

Legislators took unique precautions during the special session in order to maintain social distancing.

They did not all sit in their usual desks in the Senate chamber but sat further apart than usual. Some senators participated from the public galleries.

The House of Representatives had more difficult challenges because there are 100 representatives compared to 35 senators.

The House convened in the basketball arena of the University of Arkansas at Little Rock, which is large enough that representatives and essential staff could keep at a safe distance from others. It has seating for 5,600 people.

The hospitality and service industries have been hit hard. The state has closed DeGray Lake Resort State Park, Mount Magazine State Park, Petit Jean State Park, and Queen Wilhelmina State Park.

Barbers, hair salons and gyms have been closed. Church services are being video streamed, because health officials strongly advise against any gathering of more than 10 people.

The Department of Workforce Services has waived the one-week waiting period that had been required of laid-off workers before they could apply for unemployment, to accelerate the payment of claims. However, due to the spike in claims, be prepared to wait when you file a claim.

The Board of Nursing and the Medical Board are accelerating their licensing processes so that the next generation of medical providers can get to work faster.

Banks have been notified that some regulations will be modified, to encourage them to restructure loans to troubled businesses.