State Capitol Week in Review
From Senator Steve Crowell
March 13, 2026
LITTLE ROCK — Arkansas lawmakers recently convened for budget hearings to review spending across state government ahead of the fiscal session beginning April 8. The hearings opened with a presentation of Governor Sarah Sanders’ balanced budget proposal for Fiscal Year 2027. Arkansas does not deficit spend or borrow to fund day‑to‑day government operations, so each year’s budget must be balanced.
The Department of Finance and Administration outlined a plan that increases state general revenue by $194.5 million. Overall, the proposed budget totals $6.7 billion, reflecting a three‑percent increase in state spending.
In her introductory letter, the governor emphasized that her administration’s top priority is limiting the growth of government while continuing to invest in essential services. She noted that this approach supports the ongoing effort to responsibly phase out the state income tax.
To help manage spending, the proposal formally reinstates “Category A” and “Category B” designations. Category A includes essential expenses such as employee salaries and building maintenance—items the state must fund every year, much like families must cover rent and utilities. Category B covers discretionary programs that may be funded when revenues allow, similar to how families budget for vacations or non‑essential purchases.
The proposed budget includes several notable funding items:
• More than $309 million for the Arkansas LEARNS Education Freedom Account program—an increase of $122 million from last year’s proposal—along with an additional $70 million from surplus funds to accommodate anticipated growth. The program allows families to use state funds for educational expenses such as private school tuition and homeschooling. This is the first year the program is open to all students, and approximately 44,000 are participating.
• $53.4 million for the state’s new pay plan, with the majority dedicated to salary increases for correctional officers and Arkansas State Police troopers.
• $6 million for higher education institutions.
• $7 million for drug task forces across the state.
• $5 million to improve the state’s Supplemental Nutrition Assistance Program (SNAP) error rate. Under the federal One Big, Beautiful Bill Act, states will begin sharing the cost of SNAP benefits for the first time in the program’s 86‑year history. A state’s share will depend on how often it overpays or underpays benefits. Those with error rates below six percent will continue receiving full federal coverage, while those above six percent must begin contributing at least five percent of program costs beginning Oct. 1, 2027. As of December 2025, Arkansas’ error rate was 7.01 percent.
• $6 million for the 10:33 Initiative, a program led by the governor’s Faith‑Based Initiatives office. It connects Arkansans in need with faith and community partners who can provide immediate assistance and long-term support to help families move out of poverty and become self‑sufficient.
During the upcoming fiscal session, legislators will finalize the state budget for Fiscal Year 2027, which is from July 1, 2026 – June 30, 2027.