LITTLE ROCK It's a dilemma most states would relish having in this national economic downturn what to do with nearly $260 million in excess cash?
Despite spiraling gas prices and other grim economic news that caused them to cut money from some agency budgets, Arkansas officials announced last week that the state ended the fiscal year with a $176.5 million surplus. That amounts to a little under 4 percent of the $4.5 billion in revenue the state pulled during the fiscal year that ended June 30.
In other words, imagine if your annual salary was $50,000 and you ended the year being paid about $52,000. That's the situation the state is in.
The extra money, plus another $83 million the state already had left over, means lawmakers will return to the Capitol with $259.5 million available in the state's General Improvement Fund typically used to fund one-time projects.
The number pales compared to the nearly $1 billion surplus the state accumulated when lawmakers met last year funds that helped the state end a long-running school funding lawsuit by setting about half of the surplus aside for school building repairs.
But that isn't keeping lawmakers from eyeing the money that awaits them when they return for their regular session in January for a variety of uses.
School buildings again may be at the top of the list if lawmakers learn that more money is needed to help construct new buildings and repair crumbling ones around the state.
Sen. Shane Broadway, the architect of the facilities program, said it's too soon to say how much may be needed from the surplus to help pay for the school repairs. That need may be covered in ongoing funds the state has included in its budget for school repairs.
"There will be some need for facility funds every session," said Broadway, D-Bryant.
Gov. Mike Beebe is also eyeing the extra money as a way to continue one of his programs, a fund he controls to lure new businesses to the state and help existing ones expand. Beebe said he plans on asking lawmakers to continue funding the "Quick Action Closing Fund," but says he'll probably ask for significantly less than the $50 million set aside during last year's session.
Beebe has also noted that there are capital needs for the state's colleges and universities that may need to come from the General Improvement Fund, commonly referred to as the GIF.
The surplus also gives Beebe some leverage to push for another cut in the state's sales tax on groceries his signature campaign promise. If the state ended the year with $176.5 million left in the bank, surely it can afford eliminating all or some of the remaining grocery tax, he can argue.
State officials predicted last year that cutting the tax from 6 percent to 3 percent would cost the state about $122.1 million last fiscal year. Final figures on the actual cost of the grocery tax decrease aren't in yet.
House Republicans have other tax cuts in mind.
Rep. Bryan King, who will serve as the House minority leader in next year's session, said he thinks the surplus shows the state could afford other tax cuts as well. King said Republicans in the House would like to see cuts in the state's income and property taxes.
"It's money (taxpayers) gave us that gave us this surplus," said King, R-Berryville. "We need to figure out a way to give it back to them to help stimulate the economy."
During last year's session, the surplus went toward a laundry list of projects around the state, including money for a cancer research center at the University of Arkansas for Medical Sciences and extra funds for state roads and highways.
What lawmakers didn't do was follow the tradition of using the money to fund their own pet projects, following an Arkansas Supreme Court decision that said such projects violated the state Constitution's ban on funding local projects.
Instead, they directed money toward state agencies and commissions and left the decision up to them on how to disperse grants around the state. It's a model they're likely to follow again next year.
Beebe said he's tried to let lawmakers know they should lower their expectations on what can be funded.
"We've at least been sending the message and if they're listening they'll know that they can't expect anything even close to what we had last time," Beebe said in June, before the latest surplus figures were released.
Despite that message, the wish list will probably be another long one. The Arkansas Highway and Transportation Department has said they still have growing needs despite money expected to come in from a severance tax increase passed this year. And the state Department of Correction says it wants to build a new, $160 million prison to help the state deal with its increasing prison population.
House Speaker Robbie Wills, D-Conway, said he's been more concerned about the potential downturn in the state's economy than worried about what to do with the surplus money lawmakers face next year.
"I think up until now everyone had been so cautious about the economy we haven't had much time spent on considering how to spend a surplus," Wills said. "We were just hoping to avoid heading into the other direction."
DeMillo covers Arkansas government and politics for The Associated Press.
