HARRISON, Ark. (KY3) – As the fiscal year came to an end in June, Arkansas set a record in state income surplus at more than $1.62 billion.
Last week, Governor Asa Hutchinson reacted to the record state surplus and announced his intent to call an Extraordinary Session of the Arkansas General Assembly.
“This represents the largest surplus in Arkansas history and demonstrates the state is collecting too much in tax revenue,” said Hutchinson. “Our collections are above last year, despite the tax reductions enacted last year. This growth is attributable to the state’s dynamic job creation coming out of the pandemic and increased consumer buying power.”
Hutchinson says the main concern is addressing immediate tax relief. In December of 2021, Arkansas passed the largest tax cut in state history which will go into effect over the next several years, dating to 2025.
“There are so many things that could be done with this 1.6 billion, then also you have the state reserve fund, the governor and legislature have discretion over that funding,” said Scott Hardin with the Arkansas Department of Finance and Administration. “There is widespread to keep money in the pockets of Arkansans.”
Hardin said several legislators have made a push to see if surplus funds can also be funneled to assist school security improvements and teacher salary. According to the Arkansas State Senate, teachers in the natural state are currently ranked 47th in average pay, which has declined since 2018.
“I think schools will welcome that, security measures at schools are very expensive and anytime we can get some kind of relief or support to have improved access control, improved response times in response to situations, any of those types of measures we can have some support we’ll take it,” Stewart Pratt told KY3 during an interview in December.
Meanwhile, other local sectors like small businesses hope some funds may be used to boost the economy.
“As a retail business with clothing, we’re one of those things, it’s not a necessity so when people begin watching their money a little closer we do notice that,” said Emily Powers, owner of Frenzy of Harrison. “Luckily, since the pandemic and with stimulus checks we’ve had enough loyal customers who have a desire to support local business.”
While economic stimulus may not come in the form of a check, it could come through accelerated income tax cuts.
“4.9% would be the top rate now as opposed to 2025 which would keep about $300 million in the pockets of Arkansans next year,” said Hardin. “There is also talk of a low-income tax credit that would also give benefit to many Arkansas in the near future.”
Gov. Hutchinson formally announced the special legislative session will be held the week of August 8 to discuss the state surplus.
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