The Arkansas Senate and House of Representatives on Friday approved identical versions of the state's Revenue Stabilization Act that would boost the state's general revenue budget by $177.7 million, to $6.2 billion in the coming fiscal year, before they voted to recess the regular session until May 1 or sooner.
The Arkansas Senate also voted to send Gov. Sarah Huckabee Sanders a sweeping public safety bill intended to overhaul the state's parole system and require people convicted of serious crimes to serve most, if not all, of their sentences in prison.
Friday was the 89th day of the 94th General Assembly's regular session.
The Arkansas House on Friday morning voted 92-0 to approve Senate Bill 569, the Revenue Stabilization Act, before the Senate voted 31-1 to approve an identical bill, House Bill 1833. The chambers sent the bills to Gov. Sarah Huckabee Sanders.
Most of the increased general revenue would be allocated to education and corrections programs in fiscal 2024, which begins July 1 under the two bills that would increase the state's general revenue budget by about 2.95% over the fiscal 2023 budget. The Revenue Stabilization Act prioritizes the distribution of state general revenue to state-supported programs.
State Sen. Bryan King, R-Green Forest, is the only state lawmaker who voted against either SB569 or HB1833.
"This session has not been anything but more government, more spending, more programs and more everything," he told senators.
King said he sees "a lot of clouds out there" with high inflation, a supply side crisis, a cooling housing market, and the possibility of a mild recession.
"I just think we need to be more cautious in spending money right now," he said.
Afterward, Joint Budget Committee Co-Chairman Sen. Jonathan Dismang, R-Searcy, said "I think a 2.95% growth rate in the environment we have is a very conservative budget, and also, it is very reflective of us and our concerns about the state of the economy.
"No one wanted to get out ahead of ourselves on spending, but we are well below the inflationary rate, which is technically a reduction in government spending," he said in an interview.
In November, then-Gov. Asa Hutchinson proposed a $314 million increase in the state's general revenue budget to $6.33 billion in fiscal 2024, with $200 million of the increase earmarked for the public schools.
At that time, the former Republican governor said his proposed budget for fiscal 2024 would represent a 5.2% increase over the current budget of $6.02 billion, leaving a projected general revenue surplus of $254.9 million at the end of fiscal 2024. Considering annual inflation was more than 8% at that time, limiting the growth of the state's general revenue budget to 5.2% reflected conservative budgeting, he said.
The proposed Revenue Stabilization Act for fiscal 2024 in SB569 and HB1833 doesn't include the $70.3 million in general revenue allocated for the educational facilities partnership program in fiscal 2023, which Hutchinson recommended continuing in fiscal 2024.
Instead, Senate Bill 578 by Dismang would create a $500 million set-aside account in the restricted reserve fund for public school academic facilities. That could cover the state's school building costs for five or six years, Dismang said.
SB578 -- which the House voted Thursday to send to Sanders -- would authorize the transfers of $1.4 billion in unallocated and unobligated state funds, including $1.3 billion from the general revenue allotment reserve balance, and up to $380.6 million in surplus funds in fiscal 2023, largely to set-aside accounts in the restricted reserve fund for nearly 30 projects.
To tap the funds in the set-asides created in the restricted reserve fund for state agencies, the governor would be required to submit requests to either the Legislative Council outside of a session or the Joint Budget Committee in a session for the funds and get the panel's approval.
In the proposed Revenue Stabilization Act for fiscal 2024 under SB569 and HB1833, the general revenue allocation to the state's public school fund would increase by $118.7 million to $2.4 billion in fiscal 2024. General revenue totaling $31.7 million would be allocated for Educational Freedom Accounts to help pay for students to attend private, parochial or home schools.
The state Department of Education has projected Sanders' education overhaul law, Act 237 of 2023, will cost $297.5 million, including $150 million in "new money," in fiscal 2024. Act 237 will raise the state's minimum teacher salary from $36,000 to $50,000 a year, grant other teachers $2,000 salary increases, create Educational Freedom Accounts and enact many other changes in the education system.
House Bill 1688 by Rep. Brian Evans, R-Cabot, would increase per-student foundation funding by $205 to $7,618 for the 2023-2024 school year and to $7,771 for the 2024-2025 school year. The Senate on Thursday voted to send the bill to Sanders.
Full-time classified staff, bus drivers, custodians and other school workers would receive funding for about a $2-per-hour raise, Evans said. In addition, the state would fund a 1.8% cost-of-living adjustment for teachers and school secretaries in fiscal 2024 and a 2.2% increase in fiscal 2025, he said.
Under the proposed Revenue Stabilization Act for fiscal 2024 in SB569 and HB1833, the state Division of Correction would get a $55.3 million increase in general revenue to $434.3 million, and the Arkansas State Police would get a $10.5 million increase to $88.6 million.
The state Division of Community Correction would get a $7 million increase in general revenue to $104.7 million, the Department of the Military would get a $2.2 million increase in general revenue to $9.9 million and the Department of Health would get about a $935,000 increase in general revenue to $81.8 million.
The state's colleges and universities would get a $5.6 million increase in general revenue to $781.2 million under SB569 and HB1833, with University of Arkansas for Medical Sciences getting a $5 million increase to $93 million in fiscal 2024.
The University of Arkansas, Fayetteville would receive a $3.3 million increase in general revenue to $134.1 million, Arkansas State University in Jonesboro would get an increase in general revenue of about $422,000 to $62.5 million, and the University of Arkansas at Little Rock would receive about $180,000 more in general revenue to $60.5 million under the measures.
The general revenue allocation to the state Department of Human Services would increase by $5.5 million to $1.8 billion.
Priorities for general revenue funding of programs are set in the Revenue Stabilization Act, which is enacted every year by the Legislature and the governor and keeps the state from deficit spending. The state's two largest sources of general revenue are individual income taxes, and sales and use taxes.
The bills would create two categories for spending priorities in fiscal 2024: A and B. Category A, the highest priority, would be allocated $6.009 billion. Category B would be allotted $192.6 million.
The Legislature was required to enter into recess simultaneously on Friday at the close of business in the House and Senate or at an earlier time agreed upon by the House and Senate under House Concurrent Resolution 1007 by House Speaker Matthew Shepherd, R-El Dorado, which the House and Senate approved in February to extend the session beyond 60 days. A three-fourths vote of the House and Senate would have been required to extend the regular session further.
The speaker and the Senate president pro tempore may by joint proclamation reconvene the General Assembly at any time before noon on May 1 for considering vetoes, correcting errors and oversights, completing work on proposed constitutional amendments, and considering the need for further extension of the regular session, or adjourn the regular session at any time before noon on May 1 if they determine it is not necessary to reconvene under HCR 1007.
If the Legislature formally adjourns on May 1, that would be the 90th day of the regular session.