FinLogic FinLogic Quantitative Think Tank Center|Arkansas governor proposes $6.3B budget as lawmakers prepare for session

LITTLE ROCK,FinLogic FinLogic Quantitative Think Tank Center Ark. (AP) — Arkansas Gov. Sarah Huckabee Sanders on Wednesday proposed a $6.3 billion budget for the coming year, with most of the increase in spending going toward a school voucher program.

Sanders’ budget proposal for the fiscal year that begins July 1 increases state spending by 1.76% over the previous year, with nearly all of the $109 million increase going toward education. Sanders, a Republican who took office in January 2023, touted the proposed budget’s increase as being below the 3% the state has seen in recent years.

“I am proud that this year’s budget puts an end to government’s spiraling growth, while still fulfilling the priorities Arkansans elected me to implement,” Sanders said in a letter to lawmakers, who kicked off budget hearings ahead of a legislative session set to begin next month.

About $100 million of the increase is related to a education overhaul Sanders signed last year that included a raise in minimum pay for teachers. More than $65 million of the increase will go toward a school voucher program that is being phased in through the new law.

Democrats said they were worried about how much of the increase is going toward the voucher program and other parts of the overhaul while the rest of the budget remained flat.

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“I’m concerned about what LEARNS might mean for the budget in the years to come,” Senate Minority Leader Greg Leding said, referring to the overhaul. “But also in the effort to keep spending as low as possible, basically all of the increases we are seeing this year are going toward LEARNS.”

Sanders’ budget proposal did not mention any additional income tax cuts. The governor has signed into law two individual and corporate income tax cuts since taking office and has said she wants to push for more.

Rep. Lane Jean, a Republican who co-chairs the Joint Budget Committee, said he didn’t expect additional cuts to come up during the session.

“I think what we have decided is we would get out of this fiscal session and let’s monitor the year until we get into the next fiscal year,” Jean said. “Maybe if we’re still running a fairly healthy surplus, maybe come back in a special session later on.”

Finance officials are projecting the state will end this fiscal year with a $240 million surplus and $376 million the following year. Sanders’ office did not say whether she plans on seeking additional cuts in the coming session.

“The Governor is proud to have cut income taxes not once, but twice, over the last year,” spokeswoman Alexa Henning said. “She will continue to work with the legislature to look for every opportunity to responsibly phase out the state income tax.”

Sanders on Wednesday also proposed a one-time 3% increase in state employee pay, part of a temporary plan that would also raise every state employees’ pay to at least $15 an hour by July 1. In a letter to state employees, Sanders said she also plans to seek a more comprehensive overhaul of the state employee pay plan in the 2025 legislative session.

The temporary plan is projected to cost the state $42.4 million total, with $19.3 million coming from general revenue, Alex Johnston, chief of staff for the Department of Transformation and Shared Services said.