Arkansas Governor Asa Hutchinson presented his $5.6 billion budget proposal to state lawmakers Tuesday ahead of this year’s fiscal session and outlined his longer-term vision for reducing taxes.
Hutchinson says there is a projected surplus of $64 million in the new state budget, partly because of higher than expected revenues. He says he’s using the majority of the extra money to create a reserve fund that only the legislature can tap into.
"The goal is to create a surplus that will be a cushion for future economic changes, and they will come someday, but it will also be the foundation and sets the stage for future tax cuts and increasing the competitiveness of Arkansas tax rates," he said.
Since 2015, the governor has successfully passed $150 million in tax cuts for lower and middle -income people. He has said future cuts would benefit higher earners.
The governor’s plan would increase spending on education, county jails, foster care caseworkers, prisons and public safety. He also asked Arkansas universities to freeze their tuition rates.
And the plan proposes $142 million in increased spending on Medicaid.
Hutchinson emphasized that the program will cost less than expected, since about 116,000 people have been taken off the rolls. According to the governor, that's because they are now working.
“More people are working and increasing their income. So again, this is not a severe tactic, it is simply good news as a result of a growing economy and improved transformation efforts within DHS.”
Whether to re-approve the state’s Medicaid expansion plan for low-income people, called Arkansas Works, is expected to be the biggest sticking point this session.
Bill filing began Monday for 2018 fiscal session which convenes February 12.
*Correction: A former version of this story said that the governor is calling for education spending reductions. That is within the context of an overall $1.3 million dollar proposed education spending increase.