Arkansas state budget

From Sunshine Review

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Arkansas 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.^[1] The Arkansas State Legislature set aside $100 million of surplus to cover FY 2010.^[2] 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.^[3]

FY 2010 forecasts and collections were on track until September of 2009 when collections took an unanticipated drop. Governor Mike Beebe announced October 2, 2009 September’s figures showed a $55.8 million gap below estimated revenues. Gov. Beebe said spending level cuts will be made accordingly and asked state finance officials whether the revenue forecast for the current fiscal year should be revised down.^[4]

In January 2010, Beebe said he intended to cut the state's budget by $106 million, or 2.4%. The announcement came 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. The 2010-2011 budget, which goes into effect on July 1, 2010, does not include cost-of-living increases for state employees.^[5],^[6]

Arkansas lawmakers have proposed increasing taxes on businesses in order to eliminate the $220 million debt to the federal government for unemployment insurance benefits. However, the proposal requires a two-thirds vote before being implemented.^[7]

[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.^[8]

Arkansas voters approved November 4, 2008 a constitutional amendment for annual legislative sessions and appropriations no longer than 1 fiscal year effective in 2009.^[9] Previously, Arkansas’ legislature met and budgeted on a biennial basis.

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.^[10]

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

[edit] Accounting Principles

The Arkansas Division of Legislative Audit is responsible under the Legislative Joint Audit Committee (A.C.A. 10-3-407)^[11] for independent auditing of state and local entities. The Legislative Joint Audit Committee meets monthly and is composed of:

• 16 Senators
• 20 Representatives
• Ex-officio officers:
  • Speaker of the House
  • President Pro Tempore of the Senate
  • Immediate past Co-Chairmen of the Legislative Joint Auditing Committee
  • Co-Chairmen of Legislative Council
  • Vice Co-Chairmen of Legislative Council

Roger A. Norman is Legislative Auditor. Audit reports are published on the division’s Web site.^[12]

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.^[14] Arkansas’ Department of Finance and Administration, Office of Accounting is responsible for filing the CAFR. Richard Weiss is the Director of Finance and Administration.^[15]

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] Accounting transparency checklist

Comprehensive Balanced budget Timeliness Usability

[edit] The good

• The website has Comprehensive Annual Financial Reports (CAFR) dating back to 1999.^[16]
• It provides supplements to the budget workup, such as timelines.
• The budget is posted using organized and consistent methods of financial reporting.
• It includes all costs incurred by the government, including future liabilities

[edit] The bad

• The 2008 budget CAFR is not published online, yet 2007 – 1999 are published online.
• Arkansas law requires a balanced budget and does not prohibit a deficit at the end of the year to be carried over to the following year.
• State audits are not published online, apparently.
• Actual expenditures is greater than actual revenues.
• The CAFR is posted in a series of PDF format documents, so they are not searchable online.

[edit] 2009-2010 budget crisis

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.^[17][18]

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%.^[19]

[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.^[20] "See proposed changes to Arkansas FOIA for more information.

[edit] Website evaluation

Budget Usability Elected Officials Administrative Officials Ethics Audits Contracts Lobbying Public records Taxes

Arkansas.gov is the website for the state of Arkansas.

• Main article: Evaluation of state websites

[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.^[21] 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. ^[22]

According to preliminary reports Arkansas is expected to receive:^{[23] [24]}

• $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.^[25][26]

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.^[27]

[edit] The good

• Site has a search function and is fairly easy to navigate.
• Budget is published.^[28]
• Elected officials are listed with contact information under their respective office.^[29]
• Administrative officials are listed with contact information under respective agencies.^[30]
• Information on the state ethics commission is provided.^[31]
• State tax information is posted.^[32]
• Annual financial audits are published.^[33]
• Statewide contracts are published.^[34]

[edit] The bad

• Full text of the Arkansas Freedom of Information Act is posted, but no form/contact information for requesting records is provided.^[35]
• Only provides lobbyist forms^[36], 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:

[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.^[37]

• Arkansas will receive an estimated $2.1 billion. ^[21]

• 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

[edit] References

v • d • e State Budgets Cost of state transparency websites • State budget issues, 2009-2010 • Pubic employee salaries • States with spending online • Glossary of state budget terms Alabama • Alaska • Arizona • Arkansas • California • Colorado • Connecticut • Delaware • Florida • Georgia • Hawaii • Idaho • Illinois • Indiana • Iowa • Kansas • Kentucky • Louisiana • Maine • Maryland • Massachusetts • Michigan • Minnesota • Mississippi • Missouri • Montana • Nebraska • Nevada • New Hampshire • New Jersey • New Mexico • New York • North Carolina • North Dakota • Ohio • Oklahoma • Oregon • Pennsylvania • Rhode Island • South Carolina • South Dakota • Tennessee • Texas • Utah • Vermont • Virginia • Washington • West Virginia • Wisconsin • Wyoming •

	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 |