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It's all money to you Saturday, Apr 12, 2008 by John Brummett The e-mail popped up early Thursday morning, only minutes after I had digested the article in question in the Little Rock newspaper. Gov. Mike Beebe's budget people had been caught on some Web site advising state agencies to prepare for a possible reduction of $100 million or so in operational spending authority for the next fiscal year starting July 1. That sounds like a lot of money, but it's not such a severe cut for state government. The reduction wouldn't touch public school spending, which is in a protected category. It would affect higher education, prisons, the State Police and the like. It also would come out of welfare programs, although Medicaid, the lifeblood of health care for a poor state, has its own dedicated dollars, such as the soft drink tax, that have produced reserves. This e-mail inquired - rather smugly, I thought - as to what had happened to that billion-dollar surplus that Mike Huckabee bequeathed Beebe. "Spent it," I replied, which, actually, is not altogether correct. All of it was indeed appropriated in the regular session of early 2007. Very nearly half was reserved to meet the court mandate for school facilities upgrades. Much of that remains unspent because planning and procedures for such things take time. But we'd be fools to invite more litigation by abandoning a spending plan that the court approved in closing the Lake View case. Not all the other half of the billion has been spent. Legislators took some for local pork, of course. The governor has some spending authority from these surplus appropriations that he is releasing in stages, thereby leaving some dollars temporarily idle. Not a cent was set aside for a rainy-day fund, since, regrettably, there's not much political currency in collecting tax money and not doing anything with it. Redirecting any of that temporarily unspent money from the one-time surplus to next year's operating budget would require a special legislative session. Anyway, it would amount to plugging one-time money - nonrecurring, that is - into the ongoing operations budget, a fiscally unsound practice that state government usually, but not always, eschews. State government tries as a rule to keep separate its ongoing operations budget from collections that come in over that budget, and thus compose surplus accounts that get used for one-time capital expenditures. That is to say that state government prefers to use cash collected in excess of operating budget amounts to build things and make physical improvements. It is to say we do most of our building and physical improving only when we have flush operating budgets with money to spare. We were lucky to have a billion dollars extra with the court breathing down our necks on school facilities. Otherwise, we'd have had a tax increase, not a cut in our grocery tax. Many taxpayers don't get these distinctions. It's all out of their pockets as far as they're concerned, and they want to know how you could have a billion dollars extra one day and a budget shortfall the next. I've just explained it, but I doubt the explanation was satisfactory or calming for all. Now state budget experts are looking at the next fiscal year, to start July 1, and they're worrying a bit. This year's budget was shored up by a windfall of corporate and personal income tax collections that won't recur next year. Apparently a few people and a few companies cashed in nicely this year. And, to hear the big-time economists tell it, we may see a pervasive and deep slowdown in coming months. So, being prudent, state budget people are asking state agencies to prepare for a little less spending authority next year than they were previously expecting. This is hardly a matter for despair. Buoyed by that aforementioned income tax manna this year, we'll end this fiscal year June 30 with about $150 million over budgets. Though it's bad practice, we could always plug that into next year's operations. And, yes, if desperate, there's some of that old billion-dollar surplus that we could go back and tap for operations. For example, Beebe still has $43.5 million of that $50 million he persuaded the Legislature to give him for a quick-action closing fund to lure economic development projects. He thought he might need it to land Toyota. It turned out he didn't. ------- John Brummett is a columnist for the Arkansas News Bureau in Little Rock. His e-mail address is jbrummett@arkansasnews.com; his telephone number is (501) 374-0699. |
