Ark. governor says he’ll cut 2010 budget by $106 million after revenue shortfalls deepen

Gov. Beebe agrees to cut Arkansas budget by $106M

LITTLE ROCK, Ark. — Arkansas Gov. Mike Beebe announced a state budget cut of 2.4 percent on Monday, but said the $106 million reduction would not lead to job cuts.

“Right now, it does not appear as though we will have to lay people off,” Beebe said.

The governor said he would tap a “rainy day” fund created by the legislature to blunt the effect of the cuts to prisons and social services. State funding for public schools is protected and will not be touched by the cut.

The state Department of Finance and Administration said revenues came in below forecast in the second quarter of the fiscal year, which runs through June 30. The agency said it was likely that revenues would continue to come up short in the second half of the year, considering the slow pace of the economic recovery.

The cut is the second of the fiscal year. Beebe announced a cut of about $100 million in October.

Beebe said what amounts to a hiring freeze among state agencies can keep expenses under control.

“We thought that was preferable to laying people off, which only makes the situation worse. We won’t be filling a lot of positions,” Beebe said.

Also, Richard Weiss, the state’s chief fiscal officer, lowered the projected budget for fiscal 2011 by 0.4 percent, a reduction of $19.4 million from the forecast issued last December.

Beebe said about $8 million in rainy day money would go toward keeping prisons and Department of Human Services functions from feeling as much of the cut. He said Arkansas would not have to free prisoners early to cope with the reduction.

“They (the Department of Correction) won’t open a new prison, but they probably will be able to function at their current level,” he said.

Next month, the Legislature will conduct its first fiscal session to meet terms of a voter-approved measure to have the General Assembly meet annually.

The Legislature used to develop the state budget for two years at a time. Beebe said the annual sessions would give Legislators a clearer fiscal picture.

“It’ll mean they’ll (have) more up-to-date information than they might otherwise have,” Beebe said.

On Tuesday, the governor is to put forth his proposed fiscal 2011 budget during a legislative committee meeting.

In October, Beebe ordered a $100 million state budget cut, which many agencies met by trimming programs. The state prison system handled its $6.3 million cut by not hiring for open positions. The Arkansas Health Department said half of its $3.6 million cut was taken from ambulance services for a statewide trauma system, defibrillators for public schools and community health centers. A cigarette tax increase was supposed to have covered increased health spending, but the revenues didn’t come in as high as expected.

Some agencies said in October they would rely on one-time funds to offset the cuts.