Important story appeared inside the Arkansas Democrat-Gazette today. A budget shortfall appears likely to hit the state government fan.
Gov. Asa Hutchinson said he expects state revenue to dip for March, when reported next week, even with the first month of sales tax collections from on-line retailer Amazon, which has begun voluntarily to collect from direct customers (though not from sales by affiliates) in Arkansas.
The state is already $15 million behind the forecast by which the budget was set for the first eight months of the year, which ends June 30.
The state budget is expected to increase by about 3 percent, or about $163 million in the year beginning July 1. But $113 million of the increase is in Human Services, money that mostly comes from the federal government.
There are telltale cracks throughout the budget, including use of one-time money to meet a promised contribution to highway spending to obtain federal matching money.
The real problem is in covering the cost of paying the employees who run the rest of state government. A new pay plan for the state’s 25,000 employees already was built on the presumption that 4 percent of jobs would be eliminated (by attrition.) But it apparently is going to be worse. The $24 million originally budgeted to make the pay plan fairer to lower income workers has now been reduced to $16 million.
The governor’s budget administrator, Duncan Baird, said state agencies will have to “absorb” that change. Sen. Uvalde Lindsey was quick on the uptake:
“Mr. Baird, you just confirmed my fears. You’re actually going to make up any shortfall in the pay plan by personnel reductions and savings, regardless of what the impact might be in the delivery of services to the citizens of this state.”
Less is less. Money=people=services.
And, against this backdrop, the legislature has resisted attempting to force more collection of taxes on Internet sales and resisted charging road users a fair tax to pay for road construction.
The legislature hasn’t exercised the same discipline on spending. To name just one niggling point: it’s happy to throw some more spending on the State Police to develop a training program to allow more guns in more public places in Arkansas.