LITTLE ROCK – During legislative budget hearings, the governor presented his balanced budget plan for the next biennium, Fiscal Years 2020 and 2021.
The highlights of the proposed budget include a cut in income taxes, an increase in minimum teacher salaries and the hiring of 24 additional State Troopers and 30 parole officers.
The state would add $30.8 million to the Public School Fund, an increase of 1.4 percent over this year. The governor also proposed increasing the Public School Fund by 2.5 percent in the second year of the biennium, Fiscal Year 2021.
Providing adequate funds for public schools is the single, largest category of expenditure of state tax revenue. Human Services is the second largest category, and it is supplemented by much greater amounts of federal matching funds.
In the second year of the biennium, state government would reap about $7.5 million in savings under his plan to reduce the number of cabinet agencies from 42 to 15, the governor said. The details of the proposed restructuring must be approved by the legislature.
The governor proposed an income tax reduction that would provide about $111 million in tax relief after they take effect. His administration worked closely with the Tax Reform and Relief Legislative Task Force on the tax cut plan. The top rate would go from 6.9 percent to 6.5 percent next year, and 6.3 percent the following year. The plan would simplify the state’s income tax tables and also lower taxes by increasing the standard deduction.
The minimum teacher salary in 174 school districts would gradually go up to $36,000 over the next four years, under a proposal by the governor. The state minimum is now $31,800, but many districts pay more than that. The cost for the teacher pay raise is an estimated $60 million a year, which the state would provide.
The Department of Community Correction now employs 489 parole officers with an average caseload of 98. Adding 30 officers would lower the average to 90, the director of the department said. Last year the department supervised more than 57,000 offenders on probation or parole.
The administration also presented its official forecast for next fiscal year. An indication of the good general health of the Arkansas economy is that the state’s gross general revenue is expected to grow by 2.9 percent, according to economists at the Department of Finance and Administration.
The current fiscal year began on July 1 and will end on June 30, 2019. If the economy continues in its current state, growth this year will be 2.8 percent over last year.
Legislators will use the proposal as a framework on which to build a spending plan for state government. They are holding budget hearings in preparation for the regular session that convenes on January 14, and will continue working on state agency spending requests throughout the session. An official state budget for next fiscal year won’t be complete until the session’s final days, likely in late March.
Under the Constitution, the legislature has the duty of appropriating state revenue for the operations of state agencies, and for providing state services such as education.