Wednesday, Jul 16, 2014
State Ends Fiscal Year With Healthy Surplus
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LITTLE ROCK - Thanks to very conservative budgeting by the Arkansas legislature, state government ended Fiscal Year 2014 with a surplus of almost $79 million.
The state already had almost $96 million in unobligated funds left over from previous surpluses. Also, between now and the end of Fiscal Year 2015, which just began on July 1, the state is expected to gain an additional $5 million in interest earnings. That will be added to the surplus. What this means is that the legislature will have about $180 million in surplus funds to allocate during the 2015 regular session.
Traditionally, surplus money has been considered "one time" money, rather than an ongoing source of constant revenue. Therefore it is usually not spent on continuing expenses like maintenance, salaries and operational costs, but instead is spent on infrastructure, construction and equipment purchases that are considered one time capital expenses.
Also, a portion of the surplus is often used for the state's "rainy day" fund and for economic development funds that can be used to recruit industries that create jobs.
In spite of the difficult economic environment, state government has generated a surplus for the past few years because of very conservative budgeting. In fact, because it holds to a very tight fiscal discipline, the legislature has been able to cut taxes while still providing sufficient funding for essential services.
State general revenue is mostly generated from the state sales tax and from income taxes on individuals and corporations. For the fiscal year that ended on June 30, general revenue increased only slightly over the previous year, from $6.214 billion to $6.242 billion. That is $28 million, or 0.5 percent.
The state's top fiscal officer said that the year's revenue report was an indication that Arkansas was slowly coming out of the economic recession.
Sales taxes are a general indicator of consumer demand and for the year they were up by 2.3 percent. However, state budget officials were concerned that sales taxes came in below projections, and by the late trend in sales tax collections. For June, the final month of the fiscal year, sales tax collections were down 2 percent from June of last year. The state's fiscal officer called the drop in sales tax collections "disappointing" and an issue of obvious concern.
Two groups submitted petitions to have ballot measures placed on the November general election ballot. If the petitions have enough valid signatures of registered voters, the measures will be on the ballot.
One would gradually raise the state's minimum wage to $8.50 an hour in 2017. The other would make it legal to sell alcoholic beverages in all 75 counties in Arkansas. Now, there are 37 dry counties in Arkansas. Ten counties are wet and the rest are wet with portions that are dry.
Employees of the Secretary of State's office have until August 21 to certify the signatures. Meanwhile, the groups are continuing to gather additional signatures.
A widely publicized effort to legalize marijuana for medicinal purposes will not come before voters this fall because supporters failed to gather enough signatures by the July 7 deadline. Leaders of the group said they would get an early start in order to get a similar measure on the ballot in 2016.