By James Jefferson
Arkansas News Bureau

LITTLE ROCK — Two years ago, Mike Beebe began his first legislative session as governor with the state awash in extra money. This time around, it’ll be pinching pennies.

With a surplus close to $1 billion, Beebe was able to earmark nearly half for renovating dilapidated public school buildings and equipment and still managed to cut the state sales tax on groceries by half, from 6 cents to 3 cents, as part of an overall $400 million tax relief package the Legislature adopted in 2007.

Since then, the nation has slipped into a recession and the governor has acknowledged Arkansas won’t escape the effects, a likelihood first signaled early in 2008 when the Beebe administration cut $107 million from the current state budget as a hedge against a possible shortfall by the end of the fiscal year next June 30.

The 2009 session convenes Jan. 12 in a far different economic climate, one that will challenge Beebe and lawmakers to make the state’s ends meet with a leaner budget that still covers essential services.

Beebe has seen the pendulum swing before. He spent 20 years in the state Senate before being elected Arkansas’ chief executive and was often at the forefront in steering the state’s budget, in good times and bad.

In the closing days of the 2001 regular session, after former Gov. Mike Huckabee’s administration overestimated state revenue in a souring economy, it was Beebe as Senate leader and state budget guru who helped guide the Legislature through $59 million in last-minute budget cuts. Lawmakers then approved a temporary beer tax increase to help restore slashed funding for early childhood education and libraries.

In a special session just weeks later, Beebe led the way in scouring the state budget for unallocated revenue to plug a $56 million Medicaid deficit. He also shepherded legislation to tap Arkansas’ tobacco settlement reserves to avert a potential future shortfall in the government health program for the poor, elderly and disabled.

At the time, Sen. Shane Broadway, D-Bryant, was House speaker in just his third term, leading a largely inexperienced chamber depleted of institutional knowledge by the first wave of term limits. In a recent interview, Broadway said Beebe’s leadership and experience — and patience — were critical in tempering the budget crisis.

“He was the expert. He knew where all of the pots (of money) were, where they weren’t. He provided a great deal of leadership, but he also understood it wasn’t just the Senate, not always his ideas and his thoughts.He would always bounce things off of me,” Broadway recalled.

“It was a conversation I had with him early on. They (in the Senate) were loaded with experience and we didn’t have much,” Broadway said. “I went to him early on and said there’s going to be times when we’re going to have to slow the train down. It’s going to take us some time. The good thing about it was, he understood that and he respected it.”

As governor, Beebe has likened his relationship with the Legislature to a partnership, an approach that could be tested during the upcoming session.

For one thing, his proposal to cut the grocery tax by another penny could meet legislative resistance in a deepening national recession, particularly with Beebe also proposing to use one-time state surplus revenue to fund up to $150 million in ongoing essential state services — a budgeting method he strictly opposed when he ran the show in the Legislature.

Also, legislators are left to ponder Beebe’s public opposition to some suggestions by Lt. Gov. Bill Halter, chief architect of Arkansas’ newly approved state lottery amendment, for implementing the games to fund college scholarships. The amendment leaves implementation to lawmakers.

Chiefly, the governor is cool to Halter’s proposal to use a surplus in existing scholarship funds to start a lottery scholarship program before the first tickets are sold. Generally, the governor opposes having a separate lottery scholarship program at all.

Then there is the test that could come of Beebe’s oft-stated philosophy that environmental responsibility need not conflict with economic development.

In the fall, a governor-appointed commission submitted dozens of recommendations to Beebe and the Legislature on reducing Arkansas’ contributions to climate change, some of which could be unpopular with the state’s business community.

Soon after, a new group comprised largely of energy companies announced it would advocate for energy, environmental and economic development policies in the state. The head of the group Progress Arkansas said recommendations by the Governor’s Commission on Global Warming would provide fodder for analysis and that the group would lobby its positions on the recommendations during the upcoming legislative session.