Wednesday, May 16, 2012
Revenue Forecast Up for Final Two Months of Fiscal Year
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May 11, 2012
LITTLE ROCK - The state's budget for Fiscal Year 2012 will grow slightly because of moderate growth in the Arkansas economy.
The director of the state Finance and Administration Department notified legislators that an additional $39.4 million would be available for state agencies to spend between now and the end of the fiscal year on June 30.
The state's top budget official said the economic recovery in Arkansas is continuing at a moderate pace and that revenue growth is encouraging. State government's tax rates have not gone up in years, therefore any increase in revenue is due to growth in economic activity.
In spite of the encouraging trend in state revenue, the administration's change in forecast affects state spending only for the remaining two months of the current fiscal year, May and June. The forecast for the fiscal year that begins July 1 remains unchanged, for now.
Administration officials use the Revenue Stabilization Act, the state's balanced budget law, to authorize additional spending by state agencies. In times of economic slumps, they rely on the same act to implement cuts in spending.
The new and higher forecast allows state government to replenish its "rainy day fund" by $10 million. Two years ago this month state revenue fell by $41 million, in a fiscal year marked by several major budget shortfalls. The governor allocated about $25 million of the $40 million in the state's "rainy day fund" to prevent drastic cuts in state services, especially in state aid to public schools.
In announcing the increase in the forecast, the governor and budget officials cited encouraging growth in individual and corporate income taxes. That indicates more people are working and an increase in economic activity.
The Department of Human Services, will receive about $15 million more in revenue because of the increase in the forecast. It manages the Medicaid program, which is projected to have financial problems next year because of sharp increases in the number of people eligible and because of consistently high increases in the costs of paying for medical care.
The Department gets more than $1 billion in state funding, much of which is matched with federal funds to pay for medical treatment, prescription drugs, hospital stays, nursing home care and long term care. People who are eligible for Medicaid include poor people, children from low-income families, the elderly and people with disabilities.
The state's institutions of higher education will share an additional $7 million, bringing the amount of state aid they receive to about $733 million for this year.
New Student Center at School for Math and Science
The Arkansas School for Mathematics, Sciences and the Arts at Hot Springs will dedicate a new $17 million Student Life Complex on May 24. The school was created by the legislature in 1991 for gifted and talented students who are in their junior and senior years of high school.
The Student Life Complex will have dormitory space for about 250 students, a kitchen, a dining hall and a student lounge. Future plans include the addition of a library.
The school is one of 14 public, residential high schools in the United States that specializes in teaching students with an aptitude for math and sciences. The director, Janet Hugo, is retiring on June 30 and the school's board has narrowed the search for her replacement to two finalis