Arkansas News Bureau
LITTLE ROCK — A new study ranks Arkansas 12th among the states in economic outlook.
Results of the study released Wednesday by the Washington-based American Legislative Exchange Council, entitled “Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index,” offers a road map for economic recovery based on state policies it says have a proven impact on growth.
The study praises Arkansas for its low level of debt and below-average property taxes, and for what the study refers to as “good labor policy” — Arkansas is a right-to-work state.
On the downside, the study says above-average income taxes and high sales taxes hurt Arkansas’ economic outlook.
Among states bordering Arkansas, Tennessee ranks ninth, Texas 10th, Oklahoma 15th, Louisiana 18th, Mississippi 19th and Missouri 23rd in economic outlook.
State Rep. Mark Martin, R-Prairie Grove, a member of the ALEC’s Fiscal Policy Task Force, said while the study results are encouraging for Arkansas, fiscal decisions made by the Legislature this year could hurt the state in the long run.
Martin noted the use of $60 million from the state surplus to balance the budget for the current fiscal year at the same time lawmakers raised tobacco taxes to increase spending on health-related programs by $71 million, including creation of a statewide trauma system.
“We spent one-time money to balance the budget. Rather than taking a hard look (at spending), we just continued on hoping we would grow out of the (recession),” Martin said.
Gov. Mike Beebe, who as governor and over 20 years as a state senator has opposed using surplus revenue to plug holes in the state budget, said the deep national recession warranted an exception this year.
“It’s not commonly our practice to use one-time money to shore up ongoing programs, but if this year isn’t a prime example of a ‘rainy day’ that you make an exception for, then I don’t know what is,” Beebe said.
Martin admonished lawmakers to more cautious in spending when the Legislature meets for its first fiscal session next year.
“We need to make sure that we don’t continue our (spending) growth during an economic downturn just because it can be sustained by stimulus funds,” he added.
The state is expected to receive $2.9 billion in federal stimulus money and has already earmarked some funds for more than 100 temporary workers to shore up state human services personnel. The jobs end when the money runs out, by the end of 2010.
“We’re already … in debt to the federal government. We’re taking on employees that are guaranteed a job for only two years,” Martin said. “The stimulus money does not cover their unemployment costs, and we know they’re going to be unemployed. That’s irresponsible.”
“What should we be using stimulus money for?” Beebe spokesman Matt DeCample said. “They’re jobs that wouldn’t be there otherwise.”
Among the study’s conclusions was that federal stimulus dollars may encourage out-of-control state spending “without requiring states to make the tough decisions needed to bring about financial stability.”
