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Friday, Apr. 29, 2016

A preview of the 2005 state budget

Thursday, December 16, 2004

Only in the halls of government can people receive more money one year than they received the previous year and then claim they're experiencing "cuts." In the private sector, folks know what a real cut is. During the recession in 2001 and 2002, private companies across the country were forced to make real cuts. So were those of us in government.

Now our economy is recovering. As Jeff Collins from the Center for Business and Economic Research at the University of Arkansas recently said, if we would just quit comparing the economy of today with the tremendous growth of the late 1990s, we would realize how well we're doing.

Consider these facts: We have 6,600 more payroll jobs in Arkansas than we had a year ago. Arkansas ranked eighth nationally in income growth between the first quarter and the second quarter of this year. Arkansas housing values increased 5.5 percent in the 12 months that ended in June.

Most importantly, as far as the state budget is concerned, net general revenues increased 9 percent for the fiscal year that ended in June. The previous fiscal year saw only a 2.2 percent increase. For the first four months of the current fiscal year, net available general revenues were 9.2 percent above last year and 7.3 percent above the general revenue forecast we issued May 4. In other words, our economy is purring along. As a result, state government is doing well.

We presented a balanced-budget proposal to the Legislature that includes needed additional funding for Medicaid and other human services, for the growing prison population and for the growing numbers of college students across our state. Already, thanks to economic growth and some of the largest tax increases in Arkansas history, we're pumping tens of millions of new dollars into our public schools. After we presented our original balanced-budget proposal for the next two fiscal years, the Legislature asked us to present a revised budget that included $80 million a year for school facilities (even though the facilities study hadn't been concluded yet; the $80 million appeared to be a number pulled out of thin air).

We did, however, comply with the Legislature's request to present a revised budget, in part by taking money that had been budgeted for increased school costs caused by inflation. By reading some of the media accounts, you would think we're reneging on our pledge to increase teacher salaries. Nothing could be further from the truth. The salaries for teachers are increasing dramatically, regardless of how this $80 million is used.

What it comes down to is a matter of setting spending priorities, which is what a legislative session is all about. These tens of millions of dollars of new money will still go to public education. What we must determine is how much of your money is used for facility improvements and how much is used for programs and salaries. I do feel strongly that we must be fiscally responsible. After the huge tax increases that were enacted earlier this year, I question whether you're prepared to support more large tax increases for education.

You've also likely read that certain advocates want $20 million a year more to further expand early childhood education programs. Once again, no one is talking about a cut. We're already significantly expanding these programs.

The question is how much further we can afford to expand these programs this year without additional tax increases. The needed expansions will take place over a period of years. Every interest group has its wish list. That's the way the system works. The job of officeholders is to represent the taxpayers and deal with the fiscal realities. Absent major tax increases, this additional preschool expansion would have to be done at the expense of Medicaid, prisons and college scholarships. Those also are pressing state needs. As governor, I must look at the big picture. I must consider the needs of the elderly in our nursing homes at the same time I consider the needs of preschool children. I'm thankful for our vastly improved economy. But I'm also mindful of my duty to ensure we spend the taxpayers' money as efficiently as possible while properly balancing the many obligations of state government. We simply can't fulfill everyone's wish list without taxing the state back into a recession.