This week, members of the Senate and the House met in a joint budget hearing as they prepare for the upcoming fiscal session. On Tuesday morning, I presented my balanced budget goals for next year.
I opened with a quick review of some of the good news from 2017, a year in which our economy grew and our wage rates were up. We saw a significant increase in the number of jobs, our unemployment rate declined to its lowest level in state history, and more Arkansans were in the workforce than ever before.
The $100 million tax cut we enacted in 2015 has put more money in the pocket of middle-class Arkansans. And because people have more money to spend, that renewed confidence is streaming money into the economy.
Medicaid enrollment is down, and benefits paid through the SNAP program (Supplemental Nutrition Assistance Program) are at the lowest level in nine years.
That’s just a sampling, and last year’s progress has created a strong tailwind for Arkansas as we head into next year.
The budget I propose for next year cuts $100 million in spending from my original forecast, and we project a surplus of $64 million.
This budget reflects real spending cuts in a number of agencies that we achieved by efficient spending and without cutting services.
This budget shows a slower growth in Medicaid spending. It meets the requirements of education adequacy. It increases funding for public safety. And of great significance, this budget reduces our time-worn reliance on filling ongoing budget needs by dipping into surplus funds.
I have asked a number of agencies to reduce their overhead. They will do this by improving efficiency and not by cutting the quality of service. These spending reductions come to approximately $3 million.
The Department of Human Services has been able to reduce the number of Arkansans on the Medicaid rolls by more than 116,000 in the past year. DHS accomplished that by ensuring the accuracy of Medicaid rolls, and because more people are working and increasing their wages.
The proposed budget reflects a cut of $55 million in state general revenue for Medicaid compared to the original outline we presented a year ago.
The budget includes funding for 65 new child welfare caseworkers, and $3 million for the Arkansas State Police vehicles, and $10 million to implement the Higher Education Productivity Funding Model.
All of this leads to a $64 million surplus. My budget allocates 75 percent of the projected surplus to a new Restricted Reserve Fund that can only be touched with the concurrence of the legislative branch. This restricted reserve fund also safeguards state operations against an unexpected economic downturn and sets the foundation for potential cuts to the state’s income tax. In addition, the other 25 percent of the surplus will be used to help fund future highway construction in the state.
I also took the opportunity of my presentation to the Joint Budget [Committee] to announce that I am asking all of Arkansas’ universities to freeze their in-state tuition at the current level and not increase it for the next academic year.
It’s time to give our students a break. The letter I sent to the presidents and chancellors of our four-year universities was not intended as a criticism but an encouragement, and they have been very good partners in this effort. While leaders in higher education have worked hard to reduce the cost burden on our students, I think we can do more.
Our goal as a state is to help students increase the number of credentials they can earn in a more efficient and affordable manner. Controlling costs for our students sends a strong message to students, taxpayers, and legislators that we are serious about making a college education affordable for everyone, and that we trust our institutions of higher education with our investment.
I also challenged two-year colleges to limit their tuition increases to the level of the Consumer Price Index or below.
Arkansas is on a good path. I am confident we will continue on it in the future.