Arkansas state budget

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Arkansas is one of only four states in the U.S. to enter fiscal year 2011 without an official deficit.^[1] Governor Mike Beebe said “conservative budgeting and cautious spending have put Arkansas in an advantageous position.”^[2]

The state will receive approximately $220 million from H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[3]

Over the past five years, Arkansas state government grew by an average of about 7%, with the biggest year of growth was for fiscal year 2005 when the state budget grew by 10.88%.^[4]

The state met its $4.4 billion budget for FY2010 with $23.7 million left over, according to the the state's fiscal office, and did so by tapping its newly established “rainy day” fund, using unspent educational facilities funds, and making $206 million in budget cuts. cut the state budget twice by $100 million in October 2009 and by $106 million in January 2010 due to shortfall in revenues. The state did not have layoffs or reductions in services for FY2010.^[2] The state budget for FY2011 is $4.4 billion. ^[2]

See also: The Arkansas State Budget on State Budget Solutions

[edit] FY2011-13 state budget

The state budget for FY2011 is $4.4 billion.^[2]

Arkansas began FY2011 ahead of expectations as the state collected more taxes than predicted in July 2010, the first month of the fiscal year.^[5] The state Department of Finance and Administration said that Arkansas' net available general revenues totaled $370.6 million in July. Individual income tax collections totaled $181.2 million, which was $7.4 million above last year and $3.4 million above forecast, sales tax collections totaled $188.3 million, which was $15.4 million above last year and $4.9 million above forecast, and corporate taxes were also up.^[5]

The FY2011 budget does not include cost-of-living increases for state employees.^[6],^[7]

Arkansas has borrowed more than $300 million from the federal government for its unemployment insurance fund and has not determined how it will repay that money. It is likely to be a major budget issue in January's legislative session.^[8]

[edit] Federal Stimulus

Arkansas could receive approximately $220 million from H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[9]

Arkansas is one of a handful of states with a balanced budget and public education is the top budget priority in the state.^[10] Because the state's eduction budget is balanced, Gov. Beebe's administration said it was not clear that the state will be permitted to use the $90 million in federal funds for education for other school purposes.^[10] The state instead wants to use the money for a variety of one-time costs, including buildings, roofs, heating and air conditioning equipment, and school laboratory equipment. “My preliminary reading of this bill is you’ve got to use this money to keep from firing teachers, or rehiring teachers who have been fired, and we didn’t do any of that,” Beebe said.^[10]

Arkansas is to receive $129 million in federal funds for Medicaid.^[10]

The state has borrowed more than $300 million from the federal government to fund its unemployment insurance fund. It is still unknown how the state will repay that money and that is likely to be a major budget issue in January's legislative session.^[1]

[edit] FY2010 state budget

Arkansas' fiscal office reported that the state met its $4.4 billion budget for fiscal 2010 with $23.7 million left over.^[2] In FY2010, gross tax collections totaled $5.43 billion, a decrease of $130.7 million, which is 2.4% less than the previous year.^[1] Lawmakers did so by tapping its newly established “rainy day” fund and unspent educational facilities fund.^[2]

According to January 2010 reports the state of Arkansas collected $20.9 million less in tax revenues than estimated for the month of December 2009. Total state revenues for 2009 were $54.9 million below predictions. State tax revenue from July through December 2009 totaled $2.58 billion, 3% below 2008 levels and 1.9% below predictions. The drop in revenues led to an announcement by Gov. Beebe that if revenues continue to fall $100 million would be cut from the 2010 state budget.^[11][12]

In January 2010, Gov. Beebe said he intended to cut the state's budget by $106 million, or 2.4% after the state's Department of Finance and Administration said that the state's revenues came in below forecast in the last quarter of 2009. At the same time, the state lowered its estimate of income in fiscal year 2011 by 0.4 percent, a reduction of $19.4 million from the forecast the government issued in December 2009.

Arkansas' unemployment rate increased to 7.7% in December 2009, a three-tenths of a percentage increase from November. Compared to December 2008, Arkansas saw a 2% increase in 2009. The national unemployment rate for December was 10%.^[13]

The state weathered the 2009 state budget storm better than most states due to its conservative budgeting system. FY 2010’s $4.6 billion budget estimated a $75 million deficit to be filled by Arkansas’ recently established “rainy day” fund.^[14] The Arkansas State Legislature set aside $100 million of surplus to cover FY 2010.^[15] 54% of the state’s revenue is from income taxes and 38% from sales/use taxes. 42% ($1.9 billion) of state spending is on public schools, 25% ($1.1 billion) on health/human services, and 16% ($730 million) on higher education.^[16]

The 2010-2011 budget did not include cost-of-living increases for state employees.^[17],^[18]

[edit] Budget Background

Arkansas’ Revenue Stabilization Law (Act 311 of 1945) requires the state to designate budget funding to be prioritized into 3 categories: A, B-1, and B. FY 2010 budget funded all A level budgets 100% with partial funding for B level budgets at 54%. New programs must start in the B category. This innovative model has been credited with keeping the state’s budget deficits low and manageable during difficult times.^[19]

Arkansas voters approved November 4, 2008 a constitutional amendment for annual legislative sessions and appropriations no longer than 1 fiscal year effective in 2009.^[20] Previously, Arkansas’ legislature met and budgeted on a biennial basis. Annual budget began in FY2010.^[21]

The budget schedule requires the Governor to submit his budget to the Legislature in November before they convene. The Legislature meets January to April (January 12 to May 1 in 2009) and needs a three-fourths majority to pass the budget. The fiscal year begins July 1st and ends June 30th.^[22]

See Arkansas state budget (2008-2009) for more information.

[edit] Accounting Principles

Main article: Arkansas government accounting principles

The Arkansas Division of Legislative Audit is responsible under the Legislative Joint Audit Committee (A.C.A. 10-3-407)^[23] for independent auditing of state and local entities.

Roger A. Norman is Legislative Auditor. Audit reports are published on the division’s Web site.^[24]

Credit Rating	Fitch	Moody's	S&P
Arkansas[25]	NR	Aa2	AA

The Institute for Truth in Accounting (IFTA) rates Arkansas “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Arizona’s CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[26] Arkansas’ Department of Finance and Administration, Office of Accounting is responsible for filing the CAFR. Richard Weiss is the Director of Finance and Administration.^[27]

Arkansas currently has no statewide, official spending database online. However, the Department of Finance and Administration has created a statewide contracts procurement Web site.

[edit] Budget transparency

Arkansas currently has no statewide, official spending database online. However, the Department of Finance and Administration has created a statewide contracts procurement Web site.

HB 1053, known as "The Open Checkbooks in Government Act" would have created an online database of state expenditures. Unfortunately, HB 1053 died in committee.^[28] "See proposed changes to Arkansas FOIA for more information.

See also: Evaluation of Arkansas state website

[edit] Economic Stimulus Package

Arkansas is expected to receive approximately $2.1 billion from the $787 billion economic stimulus package, or the American Recovery and Reinvestment Plan. According to White House officials the stimulus bill is estimated to create or save 31,000 jobs.^[29] Gov. Beebe said that a state run website is being created to track Arkansas' use of the federal stimulus money. "This is your money — and your leaders should be held accountable for how it is managed," he said. ^[30]

According to preliminary reports Arkansas is expected to receive:^{[31] [32]}

• $325.5 million for state infrastructure projects
• $26 million is directed to transportation-enhancement projects and metropolitan planning projects
• $117.7 million is obligated to "shovel-ready projects"
• $7 million for Head Start
• $1 million for the national school lunch program
• $444 million for Kindergarten through 12th grade school modernization, renovation or repair
• $857,000 for senior meal programs
• $39.2 million to fund state government energy technology research and development programs
• $730 million for Medicaid

[edit] Error in ARRP

On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.^[33][34]

Arkansas’ 6th District received more than $360,000 from the stimulus package, according to ARRP's tracking website. However that District has not existed since 1963. In total, the website shows it send money to 9 fake Districts.^[35]

[edit] The good

• Site has a search function and is fairly easy to navigate.
• Budget is published.^[36]
• Elected officials are listed with contact information under their respective office.^[37]
• Administrative officials are listed with contact information under respective agencies.^[38]
• Information on the state ethics commission is provided.^[39]
• State tax information is posted.^[40]
• Annual financial audits are published.^[41]
• Statewide contracts are published.^[42]

[edit] The bad

• Full text of the Arkansas Freedom of Information Act is posted, but no form/contact information for requesting records is provided.^[43]
• Only provides lobbyist forms^[44], no information on state paid lobbying or database of registered lobbyists.

[edit] Legislation

None.

[edit] Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
None	n/a	n/a	n/a	n/a	n/a	n/a

[edit] Economic Stimulus Transparency

• The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.^[45]

• Arkansas will receive an estimated $2.1 billion. ^[29]

• The economic recovery website to show how legislators and government officials in Arkansas are spending Federal funds is available here.

[edit] Independent transparency sites

None.

[edit] Public employee salary information

None.

[edit] See Also

• Arkansas taxpayer-funded lobbying

[edit] External links

[edit] Additional reading

• The City Wire,"December jobless rate up to 7.7% in Arkansas," January 22, 2010
• Associated Press,"Gov. Beebe Agrees to Cut Arkansas Budget by $106M," January 11, 2010
• The City Wire, Arkansas’ budget issues less severe than most states, August 1, 2010

[edit] References

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	v • d • e State of Arkansas Little Rock (capital)
Transparency	Arkansas Freedom of Information Act | Open Meetings Law | Government corruption reports | Transparency Legislation | FOIA procedures | Transparency Advocates |
Divisions	State | List of counties | List of Cities | List of School Districts | Evaluation of State website | Evaluation of county websites | Evaluation of city websites | Evaluation of school district websites |
Government	Arkansas State Constitution | Executive | House of Representatives | Senate | Local officials | Public school system |
State spending	State budget | State salaries | Stimulus allocations | Taxpayer-funded lobbying |
Judiciary	Arkansas Supreme Court | Arkansas Courts of Appeal | Circuit Courts | District Courts | Arkansas City Courts | Judicial News | Judicial selection in Arkansas |
Ballot Measures	Ballot measures | Ballot measures by year, from 1912-2008 | Arkansas 2008 local ballot measures | Initiative laws | Campaign finance requirements | Laws governing the initiative process |