LITTLE ROCK — Arkansas ended the 2011-2012 fiscal year in the black, managing a $145.6 million surplus that Gov. Mike Beebe said Tuesday likely would be used in part to help address a looming Medicaid shortfall.
For the budget year that ended Saturday, the state’s net available general revenues totaled $4.7 billion, or 3.2 percent above forecast, the state fiscal office reported.
Combined with $45 left from the previous fiscal year, the state will have at least $191 million available in surplus for emergency and one-time needs when the Legislature convenes in January, said Richard Weiss, director of the state Department of Finance and Administration.
Weiss and the Democratic governor credited the state’s fiscal posture to conservative budgeting during a sluggish economic recovery.
“The economy improved but we were very conservative with out budgeting,” Beebe said.
Independent reporting for Pine Bluff & Jefferson County since 1879.
Weiss added the administration has budgeted conservatively for several years, “and had we not been super conservative, well we would have probably spent that and kept on going.”
Legislative Republicans said the surplus validated their arguments there was more room in the budget for tax cuts during the 2011 regular session.
In all, lawmakers approved about $35 million in tax cuts, about $20 million more than Beebe said the state could afford beyond the additional $15 million cut in the state grocery tax he pushed.
The governor ended up accepting a sales tax holiday and an increase in the sales tax exemption on used cars.
“I think through that debate there was one side that thought more taxes should have been cut and there was another view that proclaimed that the tax cut proposals were going to be very harmful to the state budget,” said Rep. Davy Carter, R-Cabot, chairman of House Revenue and Taxation Committee. “I think it’s probably obvious, at least on that one extreme, that wasn’t the case.”
Beebe said Tuesday at least $40 million of the surplus likely would be used to address a Medicaid shortfall estimated to reach $250 million to $400 million next fiscal year. Some lawmakers wanted that much set aside in the 2011 session for looming Medicaid needs but Beebe resisted, saying the money would be available, barring an emergency, and available for future use.
Beebe said he also would like to use some of the surplus to replenish his economic development incentives fund. known as the Quick Action Closing Fund, and some to go to higher education building projects.
“I don’t have broken down in terms of amounts,” he said, adding he also expects state agencies to lobby for additional money between now and the 2013 session.
“It’s the nature of the beast. We always use to jokingly say back when I was in the Senate that it was a harder session, harder to govern, when you had more money than when you had less,” the governor told reporters. “Because you had more people fighting over it. I’d much rather be in that posture, however, then not having any money.”
Beebe said he has not ruled out further cutting the sales tax on groceries, which was cut from 2 cents to 1 1/2 cents last year. The food tax has dropped from 6 cents since Beebe took office in 2007.
Carter said he expects the Legislature next year to discuss cutting the state income tax.
“The debate going forward will be what do we do with spending money and looking for tax relief … that’s always the balance,” he said. “Would I like to provide Arkansans with more tax relief in the right area? Yes. Bottom line is, we’re going to have to balance that with the Medicaid shortfall and all those other things.”
Weiss told reporters that lawmakers should not look at the $145 million surplus as a signal that the state can afford additional tax cuts.
“We still have a lot of shaky economic times in this country, and for anybody to say we’ve crossed over into some time where we can cut all the taxes and not have any income and everything’s going to be rosy, I don’t think you can read into that at all,” Weiss said. “I certainly don’t.”