Arkansas' general revenue budget would increase by $109.3 million, or 1.76%, to $6.31 billion in the next fiscal year that starts July 1 under the proposed Revenue Stabilization Act unveiled Thursday in the Legislature's Joint Budget Committee.
Most of the increased general revenue funding would be earmarked for educational initiatives under the proposed act.
The proposed Revenue Stabilization Act for fiscal 2025 virtually mirrors Republican Gov. Sarah Huckabee Sanders' proposed general revenue budget that she released March 6 to the Joint Budget Committee. Fiscal 2025 begins July 1, 2024, and ends June 30, 2025.
The Revenue Stabilization Act prioritizes the distribution of state general revenue, such as income taxes and sales taxes, to state-supported programs such as public schools, human services, higher education institutions, corrections and Arkansas State Police.
The proposed Revenue Stabilization Act for fiscal 2025 only includes a Category A of $6.31 billion.
The identical proposed Revenue Stabilization Acts are Senate Bill 80 and House Bill 1097.
The Joint Budget Committee will consider the bills Tuesday morning. Legislative leaders said Thursday they are aiming to wrap up legislative action in the fiscal session next Thursday and then return to the state Capitol to formally adjourn May 9.
State Rep. Lane Jean, R-Magnolia, maintained the proposed Revenue Stabilization Act "takes care of our needs and, in an inflationary time, it is very modest growth.
"We are still adding to our balances," said Jean, co-chairman of the Joint Budget Committee.
In fiscal 2025, the state would accumulate a general revenue surplus of $376.6 million if the state's general revenue collections meet the state Department of Finance and Administration's latest forecast of $6.68 billion for net general revenue.
The finance department has projected a $240.5 million general revenue surplus in fiscal 2024 that ends June 30.
Jean said Thursday the state's general revenue surplus will probably exceed $400 million at the end of fiscal 2024.
Legislative leaders have said they want to wait until the end of fiscal 2024 before determining whether to cut income taxes further in a special session, called by Sanders, later this year or to wait until the regular session starts in January to consider more income tax cuts.
The $109.3 million, or 1.76%, increase to $6.31 billion in the proposed Revenue Stabilization Act would be the smallest increase since fiscal 2022 based on state records.
In fiscal 2022, which ended June 30, 2022, the Revenue Stabilization Act was reduced by $50.4 million, or 0.85%, to $5.84 billion based on state records. State government reported a $1.628 billion general revenue surplus at the end of that fiscal year.
During the Joint Budget Committee's meeting Thursday, Rep. Jim Wooten, R-Beebe, noted that the cost of living and inflation are increasing faster than the state's proposed Revenue Stabilization Act for fiscal 2025.
Sen. Jonathan Dismang, R-Searcy, said part of the growth in education and Medicaid expenses will be absorbed by the sizable Medicaid trust fund and education fund balances, and that is why there is lower growth in the state's proposed Revenue Stabilization Act in fiscal 2025.
Wooten also raised questions about the state's general revenue surplus.
Dismang, co-chairman of the Joint Budget Committee, said the state's general revenue surplus stems in part from Internet sales tax collections and the state's strong economy. State lawmakers also have been good stewards of tax dollars, he said, and he praised Wooten for pressing state agencies to eliminate vacant positions.
Critics counter the state isn't adequately funding essential state services.
For fiscal 2025, the proposed Revenue Stabilization Act would increase the general revenue for the state's Education Freedom Accounts by $65.7 million to $97.4 million. Education Freedom Accounts are vouchers designed to help students attend private school, parochial school or home school.
The Education Freedom Accounts were created under Sanders' signature education initiative dubbed the LEARNS Act, which was enacted in the 2023 regular session.
Among other things, the LEARNS Act also substantially increased starting teacher pay from $36,000 to $50,000 a year and authorized $2,000 raises for other teachers.
The proposed Revenue Stabilization Act for fiscal 2025 also would increase the state's general revenue for the public school fund by $38.2 million to $2.48 billion, including a $34.2 million increase in general revenue to $2.44 billion for the state Department of Education's Division of Elementary and Secondary Education and a $4 million increase in general revenue to $26.8 million for career and technical education.
The proposed act would reduce the total general revenue allocation to the state's institutions of higher education by $2.4 million to $778.8 million, including a $1.8 million reduction to $628.6 million for the four-year institutions, an $848,319 reduction to $117.1 million for the two-year institutions, and a $241,699 increase to $33 million for the technical colleges.
Sanders also proposed allocating $4.5 million in general revenue to fund a sustainable building maintenance revolving loan program for the state's higher education institutions in the coming fiscal year.
Under the proposed Revenue Stabilization Act, the University of Arkansas, Fayetteville's general revenue budget would increase by $387,468 to $134.5 million.
The proposed act would increase the general revenue allocation for the University of Arkansas at Pine Bluff from $26.1 million to $27.7 million.
Among the state's other four-year institutions, the University of Central Arkansas' general revenue allocation would slip by $892,398 to $56 million, Arkansas Tech University's allocation would decline by $741,960 to $36.3 million, and the University of Arkansas at Little Rock's would drop by $539,714 to $60 million.
Under this proposal, Arkansas State University in Jonesboro's general revenue allocation would be $62.1 million -- a dip of $390,716. The University of Arkansas at Medical Sciences' general revenue allocation would stay flat at $93 million.
Wooten raised questions about why many two- and four-year universities would either be receiving less general revenue or the same amount in fiscal 2025 than in fiscal 2024 under the proposed Revenue Stabilization Act.
Dismang said "it is 100%" due to the higher education productivity funding formula that the state's colleges and universities developed several years ago.
A revamped higher education productivity funding formula probably won't be developed by the state's higher education institutions during the 2025 regular session, he said, and he hopes lawmakers develop a funding formula that makes more sense.
The proposed Revenue Stabilization Act would increase the general revenue allocated to the Division of Arkansas State Police by $3.9 million to $92.5 million. The proposal also funds an additional Arkansas State Police trooper school.
Under the proposed act, the general revenue for the Department of Corrections' Division of Correction would increase by $536,285 to $434.8 million and by $571,631 to $105.3 million for the department's Division of Community Correction. The general revenue allocation for county jail reimbursement would remain at $25.7 million.
The state Department of Human Services' general revenue would increase by $4.4 million to $1.83 billion under the governor's proposal, including a $3.6 million increase to $57.4 million for county operations. State officials have said most of the increased general revenue for the Department of Human Services stems from the transfer of a program from the state Division of Workforce Services.