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Arkansas better off than some states with increased revenue, official says Wednesday, Jun 6, 2007 By Rob Moritz Arkansas News Bureau LITTLE ROCK - Arkansas may be better off than other states that have seen their revenues grow in recent years because the state has not greatly expanded government programs, the state's deputy finance director said Tuesday. Instead, the Legislature approved more than $300 million in tax relief and "wisely" used $456 million in one-time money from a $919 million surplus to repair crumbling public school buildings, said Tim Leathers, deputy director of the state Department of Finance and Administration. "We never did get out of hand with a bunch of spending," Leathers said. "We've continued to, the Legislature and governor, to try and be conservative with the revenue forecast and budget conservatively." A report released Tuesday by the National Governors Association and the National Association of State Budget Officers found that while states have spent freely in the past year, they are starting to worry about leaner times ahead. The report said state spending was up 8.6 percent nationally over the previous year, compared to 6.5 percent growth on average over the past three decades. In Arkansas, state spending rose 5.4 percent two years ago and 6.1 percent this fiscal year, which ends June 30. Spending is expected to increase 7.1 percent next fiscal year and 4 percent in 2008-2009, according to Leathers. The national report said state revenues came in at or above forecast in 41 states, while nine states saw revenues fall below projections. "We're going to have growth, but it's going to be slower than it was," Leathers said, discussing the report and the state's revenue forecast for the next two years. "If the (national) trend was that everybody was going crazy spending because we had the money, I don't think you can say that Arkansas ever did that and we didn't grow a bunch of new agencies or do a bunch of things like that." He said Arkansas is in good financial shape because revenue projections over the biennium are conservative, but growth is projected. Chief among concerns in most states about future spending is spiraling health care costs, the NGA report said. "The steady rise in health care costs continues to be a dominant force in increased state spending," NGA executive director Raymond C. Scheppach said. "Governors realize that meeting these ever-increasing expenditure expectations with limited revenues will be problematic in the future." Along with addressing important school repairs with one-time money, the Arkansas Legislature managed to approve more than $300 million in tax relief. The cuts, which go in effect July 1, include a 50 percent reduction in the state's 6 percent sales tax, a 2 percent reduction over two years in the sales tax manufacturers pay on utilities and adjustment in state income tax brackets to drop low-income individuals and families from the state tax roles. A $50 hike in the homestead exemption, from $300 to $350, also was approved and signed into law. Leathers also said state budget forecasters have not forgotten what happened after the last major tax cuts in 1997. A recession that began in 2001 eventually forced the Legislature to cut state programs and raise taxes to overcome budget shortfalls. "We think we've budgeted for (leaner times). We've made our best projections," he said. "I think an economic downturn contributed to that and I don't think you can attribute that downturn to those (reductions in) taxes. "We always have to make our budget based on the best information available and we do it as scientifically as we can," he said. |
