State Capitol Week in Review From Senator Jimmy Hickey, Jr.

Legislators held budget hearings to scrutinize every spending category in state government, in preparation for the fiscal session that begins April 10.

Leading off the agenda was the presentation of a balanced budget for next fiscal year. Arkansas does not deficit spend, or borrow money to pay for state government operations. The director of the Department of Finance and Administration presented a proposed budget for Fiscal 2025 that will be about $8.2 billion in gross general revenues.

The largest single expenditure is about $2.5 billion for the Public School Fund, which is the main source of state aid to local school districts. The state distributes funding for career and technical education, child care after classes, pre-school programs, the State Library, the Schools for the Deaf and the Blind, educational television¸ facilities and transportation.

Another large expenditure is the state match for Medicaid, an appropriation of about $1.4 billion to the state Human Services Department. The state share has averaged about 29 percent of Medicaid spending over the past ten years, while the federal government has provided about 71 percent.

The legislature will consider appropriating more than $1.9 billion in funding for the state Human Services Department. In addition to providing health coverage for people with disabilities, the elderly and the poor, the department provides treatment for drug abuse and mental illness, supervision of youths who have gotten in trouble with the law, food stamps, welfare, foster care and adoption services and nursing home care.

This year the state will reimburse county governments almost $26 million for holding state inmates in county jails, when there is no available space in state prisons. Also, the state will spend an estimated $540 million for housing and supervision of inmates and parolees.

About $779 million in state revenue will go to public four-year universities and two-year colleges. Institutions of higher education have significant sources of revenue besides state aid, such as tuition and student fees, endowments and gifts from alumni.

Traditionally, higher education receives about 12.6 percent of all state general revenue spending. Public schools and the Department of Education receive 41.8 percent. The Health Department and the Human Services Department receive 30.9 percent. Corrections, which includes prison operations and parole supervision, receives 9.2 percent.

About 3.5 percent goes to cities and counties in turnback aid, and for miscellaneous smaller state agencies.

The State Police is budgeted to receive $88.6 million in Fiscal 2025. The Parks and Tourism Division will get $22 million, the Heritage Division will get $7.7 million, the Department of Agriculture will get $19.4 million and the Division of Environmental Quality will get $4.2 million in state dollars.

In 1991 the legislature created the Educational Excellence Trust Fund with proceeds from a half-cent sales tax increase. It will generate about $452 million this year that will go to schools and not be included in the total general revenue fund.

In 2003 the legislature created the Educational Adequacy Trust Fund with a portion of the state sales tax. It also is not included in state general revenue spending and this year it will generate about $470 million.

The state has several special revenue sources from taxes for specific purposes, such as motor fuels taxes to pay for highway construction and maintenance.

During the fiscal session the legislature will approve a state government budget for Fiscal Year 2025, which begins on July 1, 2024.