LITTLE ROCK — Gov. Mike Beebe's proposed budget for the next fiscal year will be relatively flat, the governor said Wednesday, a day ahead of state finance officials' scheduled release of their annual revenue forecast.
LITTLE ROCK — Gov. Mike Beebe’s proposed budget for the next fiscal year will be relatively flat, the governor said Wednesday, a day ahead of state finance officials’ scheduled release of their annual revenue forecast.
Beebe also said he is still interested in eliminating the state sales tax on groceries and suggested paying for it with money now being used for desegregation funding.
The revenue forecast, due to be released today by the state Department of Finance and Administration, will reflect projections of slow economic growth, Beebe told reporters after giving a speech at the Arkansas Farm Bureau’s annual convention.
“All the prognostications are it’s going to be a slower growth than what they had anticipated a year ago,” he said. “You’ve got to take that into consideration, and then you’ve got to take into consideration the tax cuts, the additional tax cuts that were passed by the Legislature. So there’ll be some decrease modification from what the two-year prediction was.”
The Legislature passed $35 million worth of tax cuts this year, or $20 million more than Beebe requested. Beebe asked legislators to pass only a half-cent cut to the grocery tax.
Beebe said Wednesday his proposed budget, which he will present in January, will include spending increases for education in order to maintain court-ordered adequacy in public schools, but otherwise, “it’s going to be a relatively flat budget.”
The governor said concerns on his mind as he looks at the forecast include a $60 million Medicaid shortfall projected for July, as well as automatic federal spending cuts that will result from the failure of the congressional supercommittee on deficit reduction to reach a compromise plan.
Beebe said he did not foresee any state budget cuts except possibly “in those areas where federal funding has been a primary source, if the federal funding is gone.”
Department of Finance and Administration Director Richard Weiss echoed Beebe’s comments, saying the forecast will be smaller than it was in the two-year forecast from a year ago because of the tax cuts passed by the Legislature and because of the slow economic recovery.
“We did expect a stronger recovery than I think has manifested itself to this point,” Weiss said. “Back in November of ‘10, it was looking like when you got up to ‘12 and ‘13 that we would be rebounding nicely from the recession. That doesn’t appear to be happening.”
Since Beebe was first elected in 2006, he had pushed through incremental cuts that reduced the grocery tax from 6 cents to 1 cent. He said Wednesday he will not seek a further reduction during the fiscal session that starts in February.
“I’d like to, obviously, cut it in the (2013) session, but what I’ve always said is it’s going to be dependent on making sure we can do it in a sensible manner that doesn’t adversely impact essential services,” he said.
As for a way to pay for the tax cut, Beebe said he is hopeful that the state will be able to resolve the long-running school desegregation lawsuit in Pulaski County and end its desegregation payments to the school districts in the county.
“The first place you could take care of what happens there is, we could get rid of the rest of the grocery tax,” he said.