By Rob Moritz
Arkansas News Bureau

LITTLE ROCK — The state Legislature recessed its first-ever fiscal session today after passing bills that set lottery scholarship amounts for students and prioritize state spending for the next fiscal year.

But lawmakers prepared to leave for home under Gov. Mike Beebe’s threat to veto $1.6 million in appropriations that dipped into the state’s General Services Fund rather than use surplus money to pay for one-time state needs through the end of the current fiscal year June 30.

“I’ve got money concerns,” Beebe said.

During the three-week fiscal session mandated by a 2008 voter-approved constitutional amendment requiring annual budgeting, the Legislature passed Beebe’s $4.5 billion balanced budget, which restores most of the $206 million in budget cuts the state has made since October and increases spending overall by $176 million next year.

Lawmakers also approved legislation setting state lottery-funded scholarships at $5,000 for students attending four-year schools and $2,500 for students attending two-year institutions, beginning this fall.

“We balanced the budget,” House Speaker Robbie Wills, D-Conway, told reporters after gaveling the session to a close. “In a tough economic time like we’re in, that’s a challenge. Many other states around the country have had to raise taxes or dramatically cut services. We haven’t had to do that.”

Sen. Gilbert Baker, R-Conway, described it as “a good session,” and noted that along with hammering out a budget, lawmakers solidified their role in addressing a looming $400 million cut in future Medicaid growth.

“We’ve addressed the Medicaid issues with the Legislature to have full involvement in discussions moving forward,” he said.

The Legislature is to reconvene March 4 for formal adjournment and to consider overriding any vetoes the governor may issue.

Beebe told reporters today he has serious questions about the Legislature’s decision to use $1.6 million from the General Services Fund to plug budget holes this fiscal year instead of accepting his recommendation to use surplus money set aside to fund projects in lawmakers’ home districts.

The governor recommended using $9 million from the Legislature’s share of the General Improvement Fund and $3 million from his share to shore up the current state budget. Lawmakers instead voted to use the governor’s $3 million portion and about $6 million of the legislative share on state needs, including $7.2 million to reimburse counties for housing of state inmates.

Lawmakers balked at using the remaining $3 million out of their fund. They opted to dip into the unclaimed property fund to pay $200,000 for school defibrillators, $500,000 for the Department of Human Services’ Division of Youth Services and $600,000 for the Department of Health’s information exchange program.

Lawmakers tapped the General Services Fund to pay $1.6 million needed for reapportionment following this year’s census, despite testimony earlier this week by Richard Weiss, director of the Department of Finance and Administration, that the fund is expected to end the budget year with a $1.9 million deficit.

A spokesman for the governor said today Beebe did not object to the Legislature’s tapping the unclaimed property fund, citing the state auditor’s report that the fund has $52 million in it.

Legislative leaders said they doubted there would be an attempt to override any veto by the governor.

“I’m not going to be a party to any movement to override anything,” said Senate President Pro Tem Bob Johnson, D-Bigelow.

Johnson said he did not understand why lawmakers supported using money from the Unclaimed Property Fund and the Central Services Fund when part of the agreement was that any GIF money used could be replenished at the end of the fiscal year with any excess state revenues.

“It doesn’t make any sense,” the Senate leader said. “In all likelihood there’s a 99 percent chance it would be paid back.”

Wills also said he would not support a veto override attempt.

“I respect the executive branch as part of our process we go through. I don’t sense any strong support to attempt to override the governor’s veto on that particular issue,” the House speaker said.

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Reporter John Lyon contributed to this report.

One lawmaker took a humorous jab at Beebe in a poem read on the Senate floor.