Gov. Asa Hutchinson presented the legislature with his proposed budget for the state of Arkansas this morning, outlining a plan that would include a $50 million tax cut, a significant increase in child welfare spending and no money added to the General Improvement Fund (which provides an avenue for pork barrel spending by legislators and discretionary spending by the governor’s office).
The governor also proposed modest increases in pre-K and mental health. He touted “efficiency” measures he’s already enacted to consolidate some government functions and hinted at more in the future. He said he expects changes at the Department of Human Services — which is undergoing a major reorganization under Director Cindy Gillespie — to save $50 million. Hutchinson said the state has reduced the number of state employees by over 1,000 since he took office, a 4 percent decrease.
Afterwards, Hutchinson was asked by reporters about the passage of Issue 6, the medical marijuana amendment, which the governor campaigned vigorously against. He was sanguine: “The people have spoken,” he said, and mused that the vote “reflects contrarianists to the status quo” that dominated this election. The governor said he’s already told state agencies to start work on the regulations necessary to implement the new law, but that it’s too early to give details. He said the state “needs to act in good faith to implement the will of the people” on Issue 6.
What about the future of Arkansas Works — that is, the Medicaid expansion created by Obamacare — under a Trump administration? Hutchinson demurred. “It means the American people expect some changes in our health care system,” he said.
Hutchinson reiterated his desire to increase funding for higher education by $10 million, conditional upon the implementation of proposed reforms intended to boost outcomes. He proposed an additional $5 million per year to “reform mental health systems” across the state, including three “crisis stabilization centers” that he hopes will alleviate the burden on the criminal justice system. The governor said the mentally ill are “overwhelming” county jails.
He also wants to rework how state employees are paid; his compensation plan will “help us reward high performers,” he said. Libraries and senior centers will see a reinstatement of funding that was cut out of the last budget, at $1 million apiece.
Hutchinson proposed a $3 million increase for pre-kindergarten education, with a focus on attracting and training “more highly trained teachers” in pre-K. He said his budget funds K-12 education as determined by the adequacy process.
The governor noted the ever-expanding number of children in the state foster care system, which has been at crisis levels for some time. The foster care population has been growing at around 20 percent annually, he said. He proposed an increase to DHS’s Division of Children and Family Services of around $27 million in fiscal year 2018 and another $12 million in FY19. The boost will help “more children find safe homes where they can find the care they deserve,” he said.
He did not explicitly address the findings of an independent consultant for DCFS, which issued a report this summer highly critical of decisions made both within the child welfare agency and within the courts that has led to a rise in the number of children removed from their homes. However, he did say that “DHS needs to reverse the trend” of rising foster care numbers.
Hutchinson said the state budget “has fully absorbed the landmark $100 million tax cut from last session” and can now handle another $50 million cut to income taxes, but not until the second year of the upcoming biennium. He said he’ll lay out details of his proposal in January before the session. He told reporters afterwards that he’d likely oppose any larger tax cuts without closing some exemptions to pay for them. (Some Republican legislators want to see larger tax cuts than the governor proposes.)
From a governor’s release:
n his remarks, Governor Hutchinson highlighted the savings already achieved by his administration through the statewide hiring freeze, agency mergers and the creative sale of the home health business unit within the Department of Health. As a result of those executive actions, the state has saved millions of taxpayer dollars while reducing state employment (mostly through attrition) by 4% – a decrease of more than one-thousand employees.
In addition to savings, the Governor’s budget underscored specific reforms, including: new funding for Pre-K that emphasizes quality over quantity; new Mental Health Crisis Stabilization Centers; a new Higher Education Funding Formula; Foster Care; and a new State Pay Plan.
Governor Hutchinson also proposed a $50 million income tax cut. This is the Governor’s second round of tax cuts in his first term, which includes his historic $100 million tax cut in 2015 – the largest income tax reduction in Arkansas history.
Governor Asa Hutchinson issued the following statement:
“As a balanced-budget state, it is important that we control spending while determining how to best fund our priorities. This balanced budget takes a responsible approach to funding our areas of need, including education, foster care and mental health, while also lessening the tax burden on Arkansans.”
“This budget meets the needs of our state, maximizes the opportunity for economic growth, and emphasizes our continued commitment to efficiencies and reform. I look forward to working with the General Assembly to iron out the final details of the budget as we approach the legislative session in January.”