From the Arkansas Advocate:
Gov. Sarah Huckabee Sanders’ administration proposed a nearly $6.7 billion budget Wednesday that raises spending by 3% and adds $70 million to the state’s school voucher program.
The budget presented to lawmakers proposes a $194.5 million increase to the state’s general revenue budget for the fiscal year that begins July 1.
Sanders’ proposed budget includes more than $309 million for the state’s school voucher program, $122 million more than was proposed in last year’s budget. The amount matches what was ultimately spent on the program this year.
In addition to that amount, Finance Secretary Jim Hudson said the budget calls for setting aside another $70 million from surplus funding for anticipated program growth.
Created under an expansive 2023 education law, the Educational Freedom Account program allows state funds to be used for certain educational expenses, such as private school tuition. Around 44,000 students are participating this academic year, the first time the program has been open to all students.
Democrats and some rural Republicans have been critical of the rising cost of the program. After allocating $187 million in last year’s budget, lawmakers approved an additional $90 million in June and $32 million in January, bringing the program’s total to $309 million the current fiscal year.
Sanders plans to incorporate however much of the $70 million in additional funding that’s used into her budget proposal for the fiscal year that begins July 1, 2028, Hudson said.
Sen. Greg Leding, a Fayetteville Democrat and budget committee member, told the Advocate that if all the available funds are used, the voucher program could cost the state more than $379 million, which is worrisome to lawmakers on both sides of the aisle.
“I don’t know what Arkansans thought we were signing up for when we passed this legislation, I doubt many of them thought we’d ever be spending this much money, but I do have a number of conservative Republican colleagues who are deeply concerned about where we are in terms of spending,” Leding said.
While the voucher program is receiving the largest increase, Hudson said several other initiatives would also receive additional funding, including $6 million for higher education, $7 million for drug task forces, $5 million for the Department of Corrections’ medical contract and $6 million for the 10:33 Initiative, a faith-based effort to help low-income Arkansans secure full-time employment.
The budget proposes $53.4 million for the new state employee pay plan, with the majority supporting raises for corrections officers and state troopers. State finance officials also recommended transferring $100 million in surplus funds to a Medicaid Sustainability Fund.
Finance officials have said they expect the state’s surplus for the current fiscal year to total $334 million.
Lawmakers and Hudson did not discuss the possibility of any additional funding that may be sought during this year’s session for the 3,000-bed Franklin County prison project.
Sanders’ budget calls for an additional $5 million to be added to the inspector general’s budget to improve Arkansas’ SNAP error rate, Hudson said.
The federal spending and tax cut signed by President Trump known as the One Big Beautiful Bill Act, requires states to share some of the cost of the Supplemental Nutrition Assistance Program’s benefits for the first time, and each state’s share will depend on how often it overpays or underpays those benefits.
“Our top priority leading into [the] fiscal session is to limit the growth of government while still investing in our top priorities, allowing us to continue to responsibly phase out the state income tax,” Sanders said in a letter to lawmakers. “Achieving all three objectives is not easy, but this budget moves us toward those goals.”
Sanders has not said whether she plans to seek additional tax cuts this year.
Hudson said the state is prioritizing tax cuts by using categories of funding. The top level in Sanders’ budget proposal is category A which would represent around 93% of an agency’s allocation, and includes items that must be paid for, such as employee salaries and building maintenance.
Category B would be one-time expenses that can be deferred if there isn’t sufficient revenue.
“We think when we do this, then we have more opportunity to manage the growth of our budget so that we can begin to prioritize cutting taxes,” Hudson said. “We don’t want the tax cut conversation to be an afterthought.”
Wednesday’s discussion marked the start of three days of budget meetings ahead of April’s fiscal session. Hudson said the proposed 3% increase in state spending is on par with what’s been recommended in recent years.
Sanders proposed a $1.76% increase for the fiscal year that began July 1, 2024 and a $2.89% increase for the following fiscal year.
