State Capitol Week in Review – October 21, 2022

LITTLE ROCK – Legislators have begun budget hearings in preparation for the 2023 regular session.

Members of the Joint Budget Committee and the Legislative Council will review in detail all spending requests by state agencies.


The governor will present a balanced budget plan on November 10 that legislators will consider before they recommend spending levels for state government. At the same time the administration will update its economic forecast for the remainder of this year and next fiscal year.


Final approval of the state budget will occur during the regular session, which begins January 9. It will set spending levels for Fiscal Year 2024 begins on July 1, 2023.


The state’s general revenue budget for this fiscal year is about $6 billion. Legislative leadership has said that the main focus during budget hearings will be on education, human services and corrections.


A major element of education funding will be teacher pay raises. The Senate Education Committee has spent months preparing an adequacy report that sets funding levels for public schools. The committee recommended that next fiscal year teachers receive pay raises of $4,000 a year, and that the starting minimum salary go up from $36,000 to $40,000.


Arkansas public schools have 33,886 teachers and 476,579 students in 259 school districts.


When lawmakers consider funding of the Division of Correction, there likely will be an effort to build a new prison, or to significantly expand existing prison units.


The Division of Correction employs about 3,500 people.


Another factor in the background of this autumn’s budget hearings is that Arkansas will elect a new governor in November. The new governor’s administration will have its own spending priorities.


The state is in relatively healthy financial condition, with about $2.5 billion in various reserve funds and rainy day funds. The most recent forecast in May projected a budget surplus in fiscal 2023 of about $900 million. The legislature met in special session to accelerate previously enacted tax reductions.


The tax cuts lowered the amount of the estimated surplus to about $400 million, but it has continued to grow since the special session. During the first three months of the current fiscal year revenue has exceeded the forecast by $175 million.


Arkansas has traditionally adopted very conservative budgets. It also operates under a balanced budget law called the Revenue Stabilization Act, which reduces state agency spending if an economic downturn lowers revenue.


Overall, the challenge will be adequately paying for essential services while holding growth below the inflation rate, legislative leaders have said.


Medicaid is a government health care program that provides services for more than a million Arkansans. As of the first of September, 1.1 million Arkansas residents were enrolled.


Medicaid is administered by the state Human Services Department, which has a budget of about $10 billion. Most of that comes from federal funding. This year Arkansas will match federal grants with about $1.78 billion in state funding.


The department has 6,600 employees.


The Department of Transportation, with 3,600 employees, is funded from special revenues such as motor fuels taxes and truck fees.