LITTLE ROCK Arkansas built a $176.5 million surplus over the yearlong budget year that ended Monday, beating officials' original projections by $81.7 million, the state's fiscal chief said Wednesday.
The latest numbers mean the state faces the possibility of a roughly $240 million surplus available when the Legislature convenes in January, said Richard Weiss, director of the Arkansas Department of Finance and Administration.
"We're obviously pleased at it being on the upside rather than the downside. ... In what we do, you've got to err on the side of being conservative," Weiss said.
The surplus amounts to nearly 4 percent of the state's $4.5 billion in net available revenue for the year.
The state already had about $70 million in money that would be available for the General Improvement Fund in the 2009 session. Gov. Mike Beebe hailed the latest figures as signs of the state's economic gains.
"Even though Arkansans are struggling with skyrocketing fuel prices and other increasing expenses, our state's economy continues to show signs of strength in spite of the national downward trend," Beebe said. "Our conservative budgeting and careful planning have put Arkansas in an advantageous economic position compared to many other states."
Although the projected surplus pales in comparison with the nearly $1 billion surplus lawmakers had available to allocate in last year's session, it comes as state agencies face a $107 million cut in their budgets for the fiscal year that began Tuesday.
Beebe said the state may revisit those cuts.
"If we continue to hold steady in the next two to three months, we will consider revising our economic forecast upward and restoring at least some of the funding that our state agencies have been asked to do without in the new fiscal year," Beebe said.
The excess money may also give Beebe ammunition if he pushes for another cut in the state's sales tax on groceries, which was cut in half by the Legislature last year. Beebe has said he would eventually like to eliminate the remainder of the grocery tax. The $121 million cut in sales tax on groceries went into effect last July 1. It was Arkansas' largest tax cut ever.
Beebe said earlier this year he would consider cutting state services to continue reducing Arkansas' sales tax on groceries, but said he won't touch education, human services or law enforcement. Beebe said he would first like to restore cuts previously made this year, mostly affecting money for state colleges and universities, before deciding whether to pursue a further cut in the grocery tax.
"In terms of going forward with the new legislative session and the new budgets, where you get to establish your priorities, we'll first fund education, like we said we would always do, and our second priority would be to continue to cut the grocery tax," Beebe told reporters after an event in Conway. "How fast we can do that will be dependent on two things: What is the revenue situation and what is the requirement of public education."
In April, state finance officials inadvertently released the revised forecast early and said the state will only be able to fund 53.9 percent of appropriations listed in the B category of Arkansas' $4.3 billion budget for the fiscal year.
The state's two-year budget prioritizes spending based on expected revenue. The A category programs are funded first, followed by the A1 category, then the B category. Only the B category services and programs were affected by the revised forecast.
Net available general revenue for the fiscal year totaled $4.5 billion, up $61.3 million over the previous year for a 1.4 percent increase.
Individual income taxes totaled $2.76 billion, up $226.8 million over the previous year for an 8.9 percent increase. The individual income tax collections were $54.6 million, or 2 percent, above forecast
Sales tax collections totaled $2.1 billion for a decrease of $76.9 billion, or a 3.5 percent drop, over the previous year. Sales tax collections were $14.7 million, or .7 percent, above forecasts.
Corporate income taxes for the year totaled $354 million for a decrease of $36.7 million, or 9.4 percent, below the previous year. Corporate tax collections were $24.8 million, or 6.5 percent, below forecast.
