Making Arkansas fiscally stronger

Making Arkansas fiscally stronger

The 91st General Assembly has just adjourned from a special session called by the Governor. In addition to making changes to Arkansas Works, the legislature also approved the creation of a long term reserve fund. The Governor requested this legislation citing the need to improve the state’s bond rating.

Arkansas is just one of only a few states without a long term reserve. We are tied with five other states for being the least prepared for a recession according to a study from George Mason University.

The legislation we approved for the fund transferred $105 million from The Arkansas Healthy Century Trust Fund.

Through an initiated act campaign, Arkansas voters passed the Tobacco Settlement Proceeds Act of 2000.

The act funded the Arkansas Tobacco Settlement Commission and programs including tobacco control and cessation activities. In addition, moneys from the tobacco settlement provided core funding for the Arkansas Healthy Century Trust Fund.

The trust fund itself does not fund any current projects or programs but rather builds interest. The main concern with transferring the money is that the fund was set up for healthcare by a vote of the people. It will now be used for general revenue.

The Governor said in his opening remarks this week that the state has been unable to receive lower interest bonds because of the lack of a reserve fund. He believes by transferring money from the trust fund to a long time reserve, the state will be able to receive a lower interest rate over time and therefore reduce spending on projects.

SB5 specifies that the long term reserve can only be used for educational adequacy, Amendment 82 (economic development) projects, or if revenue growth is less than 3 percent.

It cannot be used for general improvement projects.

SB5 would also require a 2/3 vote by either the Joint Budget Committee or Arkansas Legislative Council before any of the money could be spent.

This bill passed both chambers and is now on the Governor’s desk awaiting his signature.

The Extraordinary Session lasted three days. We also passed a measure directing the Department of Human Services to seek a waiver from the federal government to lower the income eligibility and implement a work requirement for Arkansas Works. Another measure passed gives the legislature more oversight to the health insurance marketplace.

Committees will begin meeting in the interim later this month. I will continue to keep you updated on developments from the Capitol.

From State Representative Deborah Ferguson