UPDATE Beebe’s $5 billion budget would raise education, prison funding

LITTLE ROCK — Legislators got their first glimpse of Gov. Mike Beebe’s proposed $5 billion budget for the coming fiscal year Tuesday and were told it includes about $89 million in savings from the “private option” plan to expand health care coverage to low-income Arkansans.

The proposed budget for the fiscal year that begins July 1 also includes a $105.8 million increase in spending over the current fiscal year, with $65 million of it to pay for a 2 percent increase in base funding for public schools and a 1.8 percent increase in all adequacy categories.

State prisons also would get additional funding, including $7 million to reimburse counties for housing state prisoners and about $3 million to open nearly 300 prison beds across the state.

The governor’s proposed balanced budget also takes into consideration about $85 million in tax cuts the Legislature approved last year and go into effect in the coming fiscal year.

“The budget presupposes that (private option funding) continues because (ending) it wreaks havoc. You’d have to cut all those funds we saved and moved and we didn’t have to spend because of the private option,” Beebe said Tuesday in Washington, D.C., where he met with President Obama as part of a contingent of the National Governors Association.

Richard Weiss, the state’s chief fiscal officer, told reporters at the state Capitol that repealing or defunding the private option, as some lawmakers have suggested, would create an $89 million hole in the budget, “and we’ll have to come up and redo a whole lot of budgets.”

Duncan Baird, R-Lowell, co-chairman of the Joint Budget Committee, said after the meeting that the proposed $5 billion budget the starting point for the budget process. Members want to find out the specifics and some of the assumptions about the numbers, he said.

“We’re going to start with his ideas and our ideas and work in a direction that results in a balanced budget at the end of the fiscal session,” Baird said, adding that many questions still remain about the overall cost of the private option, the state’s program for using federal Medicaid money to subsidize private health insurance for the state’s working poor.

The private option review is expected Thursday when lawmakers take up the state Department of Human Services’ budget.

”I think members who voted for and against the private option are anxious to have a discussion into some of the specifics into what kind of progress the Department of Human Services has made,” said Baird, who voted for the private option that narrowly passed during the 2013 regular legislative session.

Baird said the administration’s emphasis on budget savings from the private option “starts to define some of the budget characteristics, the effects (the private option) has on the current year budget.” Ultimately, he said, lawmakers will look at the program in broad terms and decide whether it’s better for Arkansas or has a negative effect on the people.

In Washington, Beebe said he anticipated the private option would come under intense fire from “tea party” Republicans who have a philosophical opposition to Obamacare.

Sen. Bart Hester, R-Cave Springs, a staunch opponent of the plan, acknowledged repealing the private option or cutting its funding probably would have negative affects on the budget, but he said that could made up with reductions elsewhere.

“That money wasn’t there when we grew government, and I think we’d be OK if we cut it back,” he said.

Beebe’s budget proposal includes $10 million for the state teachers insurance program, part of a package to hold down premium increases, an additional $5 million for the state Higher Education Coordinating Board, which would be distributed to some state colleges and universities that saw sharp enrollment growth this year, and about $5.25 million for a 1 percent cost-of-living increase for state employees.

Brandon Sharp, budget director for the state Department of Finance and Administration, also presented to lawmakers requests for supplemental funding to help several agencies make ends meet between now and the end of the fiscal session on June 30.

The money for the requests would come out of about $126 million the state has remaining in the General Improvement Fund from last fiscal year.

Those supplemental requests included $10 million to help the state Department of Correction pay prison guards for their banked pay; $719,873 to help the department open nearly 300 new beds through the end of the current fiscal year; and $7.9 million to help the department repay county jails for housing state inmates because of prison overcrowding.


Stephens Washington Bureau reporter Peter Urban contributed to this report.