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| | Economic growth won't cover education reform costs
Sunday, Dec 7, 2003 By Wesley Brown Arkansas News Bureau LITTLE ROCK - Even though the state's economy is starting to rebound and revenue collection is picking up, it's still likely the sales tax will have to be increased to raise the money necessary for education reform, lawmakers and economic experts say. Heading into Monday's special session, the state Department of Finance & Administration reported that an improving economy and individual income tax collections resulted in the "best November ever" for state tax revenue collections. Net available revenues in November were $280.9 million, which is 6.9 percent, or $18.1 million, above projections. Revenues collected were a whopping 13.8 percent, or $34 million, above a year ago. For the year, net available revenues of $1.43 billion are now O.6 percent or $9.1 million above the state's forecast of May 15, 2003. That amount is $83.3 million or 6.2 percent above last year. Net available revenues are gross revenues minus such things as tax refunds, money redirected to the Education Excellence Trust Fund, and 3.8 percent off the top for constitutional agencies and central government functions. Richard Weiss, DFA director, cited an improving national economy and President Bush's tax cut as the primary reasons for the improvements in revenue collection. "A lot of the national (economic) indicators are going up, and we are going right up with them." Weiss said, citing improved consumer confidence, a rising stock market and increased manufacturing production. Despite the state's improving revenue picture, collections are not adequate to meet the required costs to improve Arkansas' educational system to make it adequate and equitable, as ordered by the state Supreme Court, experts say. Cost estimates to pay for the roster of education proposals now on the table range from $340 million to around $1 billion. Jeff Collins, director of the University of Arkansas Center for Business and Economic Research, said all of the proposals will require substantial funding. "No matter what happens, in order for the state to achieve what the Supreme Court demands in the Lake View case, we're going to have to spend money," Collins said in a recent interview. After an earlier special session in May was called to provide a two-year budget for state government after the regular session ended April 16 without one, Gov. Mike Huckabee warned that the state will most likely will face a similar revenue crisis when it convenes in 2005. "There's no way we can continue double-digit inflation in the Medicaid program, and having very minuscule growth in the revenue that comes into the state," Huckabee said after the May special session. He further noted that prison and education costs continue to outpace the state's revenue growth. Currently, about 80 percent of the state's $3 billion budget is spent on education. Overall, Medicaid, prisons and education account for 91 percent of the state's entire general revenue budget. After months of indecision and at times bitter conflict, Arkansas lawmakers in May settled on a combination tobacco and income tax increase bill to help fill about a $150 million budget shortfall. The measure, which Gov. Huckabee signed into law, will impose an additional 25-cent-per-pack cigarette tax, a 7 percent increase on other tobacco products and a 3 percent income tax surcharge. The income tax surcharge will end in two years if the state meets its revenue growth projections of 4.3 percent. More recently, an adequacy study by the Legislature has spotlighted a potential for some $850 million of new spending - $225 million for new teachers/improved instruction; $356 million for teacher pay (including raises, incentives, bonuses and evaluations); $100 million for pre-kindergarten programs; and $167 million for maintenance/operations. Other evaluations of Arkansas' education needs have put the price of reform at much less. "Whatever the outcome, though, new revenues must be generated to meet the high court's education funding standards," said Travis Justice, director of commodity and public policy at the Arkansas Farm Bureau. |
