From the historic hallways of the most beautiful state Capitol in our great nation, this is Senator Keith Ingram.
The news this week is not only good news, it is wonderful news.
State government ended the fiscal year with a budget surplus of almost a billion dollars.
Considering how the Covid-19 pandemic shut down businesses and forced people out of work, the size of the budget surplus is actually amazing.
Arkansas is accustomed to budget surpluses. We have one almost every fiscal year because of how conservatively we budget, and because we operate under a balanced budget law known as the Revenue Stabilization Act.
Typically, if we end the fiscal year with a budget surplus of $100 million, it’s considered a good year. A surplus approaching $200 million is considered a great year.
But to end the year with almost a billion dollars is absolutely phenomenal.
Believe it or not, the enormous size of the surplus will force legislators to make some difficult decisions. How do we spend it? How much do we keep in reserve?
A host of well-meaning organizations, state agencies and institutions are lining up to request funding for their projects. Most of the projects are worthy, but some are more important than others.
Here’s an analogy: you can imagine what would happen if Mom won the lottery. All the kids would start asking for new clothes and new cell phones. Dad would make the case that his old fishing boat isn’t safe anymore out on the lake, and he needs a new one.
You get the picture.
Arkansas is going to spend the money wisely, and we’ll take our time before making any big financial decisions.
We know we’re going to upgrade our broadband network. We’ll improve health care services and schools.
One thing we must avoid is spending the money like a sailor on shore leave. State revenue officials say that a large part of the surplus is due to federal stimulus payments. They were a lifeline to individuals and families, when the pandemic forced so many businesses to close last year.
Thanks to stimulus checks, people were able to spend on necessities and household items. State sales tax collections were up 12 percent.
Thanks to people going back to work, individual income taxes were up 18 percent. However, some of that increase was due to the fact that tax filing deadlines were postponed at the height of the pandemic. The result was that we had two tax filing deadlines last year, instead of just one.
Before we spend every penny of the surplus, we have to calculate how much of the budget surplus was caused by growth in the economy, and how much was the result of federal stimulus checks and changes in the filing deadline.
Ultimately, the legislature will make the final decisions on how best to use the surplus. The Arkansas Constitution clearly spells out the duties of the legislative branch, and its “power of the purse strings” is unquestioned.
Under our Constitution, no money can be drawn from the state treasury without the legislature first enacting an appropriation.
There is only one exception, and it’s a good one. The legislature may not authorize spending on our own salaries. An independent, citizens’ commission is empowered by the Constitution to set legislative salaries.
From the Capitol, it is always my great honor and sincere privilege to serve you as your state Senator. This is Keith Ingram.