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Fiscal office explains $107 million cut in state budget next year Thursday, May 8, 2008 By Jason Wiest Arkansas News Bureau LITTLE ROCK - An anticipated drop in individual income tax collections and sales tax collections in line with an economic downturn are the reason for a $107 million cut in Arkansas' budget forecast for the 2009 fiscal year, state fiscal officers said Wednesday. The Department of Finance and Administration officially announced the cut, news of which leaked out last month after fiscal officials inadvertently posted the projections online. John Shelnutt, the state's chief economic forecaster, said the cuts were in line with the national average during the economic downturn. "I think compared to the national average, we'll be right there with it, which will make us look better than some of those states that are leading the drop through the housing problem and subprime issue," Shelnutt told members of the Joint Committee on Economic and Tax Policy. The forecast shows a slow first half of fiscal 2009, which begins July 1, but slight improvement in the second half, said Tim Leathers, deputy director of the state Department of Finance and Administration. If tax collections are better than predicted, the state will revise the budget to better fund state needs, not accumulate the money in the form of a surplus, Leathers said. The state is projecting net available revenues of $4.447 billion for the fiscal year that ends June 30. That level is $20.4 million below the previous fiscal year but $94.8 million greater than forecast. The surplus will be transferred to the General Revenue Allotment Reserve Fund, which already contains about $70 million from a surplus in the previous fiscal year, and made available to lawmakers in the 2009 legislative session. |
