Arkansas lawmakers will convene the state’s eighth fiscal session Wednesday, beginning the process of finalizing the state budget for fiscal year 2025, which starts July 1 and ends June 30, 2025.
The fiscal session lasts a maximum of 30 days unless three-fourths of the House and Senate vote to extend it. Sen. Jonathan Dismang, R-Searcy, said he expects the session to be straightforward and wrap up in less than three weeks.
“As long as there aren’t any surprises, we should be able to conclude business pretty quickly,” said Dismang, co-chair of the Joint Budget Committee.
Gov. Sarah Huckabee Sanders revealed the $6.3 billion general revenue budget proposal last month. Dismang said he does not “foresee there’s going to be a significant amount of changes” to Sanders’ proposal as it moves through the Legislature.
Arkansas Gov. Sarah Huckabee Sanders proposes state budget with 1.76% increase
The proposed 1.76% increase of $109 million, if approved by the Legislature, would be a significantly smaller increase to the state budget than what has been proposed in recent years.
The proposed increase doesn’t keep up with inflation and therefore might not be enough to meet Arkansans’ needs, said Pete Gess, economic policy director at Arkansas Advocates for Children and Families.
“Depending on which economist you ask or which consumer price index you check out, [inflation is] 5.5%,” Gess said. “When you’re talking about a 1.76% increase, you’re moving backwards.”
In a change from past budget proposals, the FY 2025 proposed budget predicts more revenue than expenses. State economic officials have projected $6.44 billion in available general revenue in fiscal 2025 — an increase of $245 million, or 3.8%, over the current year’s projections.
The fiscal session will primarily consist of the Joint Budget Committee and both chambers passing appropriations bills. Appropriations are not allocations of funds but rather the spending authority given to each state agency in advance of the Legislature passing the full state budget.
During the last few days of the session, the Legislature will pass the budget, also known as the Revenue Stabilization Act. In addition to allocating money to each state agency, the act also forecasts the amount of revenue the state is expected to bring in during FY 2025. The forecasted revenue amount will include room for tax deductions.
The Revenue Stabilization Act dictates the maximum amount of money the state can distribute to agencies and spend during the fiscal year, and it will set aside reserves and rainy day funds.
Lawmakers have the option of introducing legislation during the fiscal session that does not pertain to the budget, but it can only be taken up with the approval of two-thirds of each chamber by the end of the first day of the session.
Sen. Bryan King, R-Green Forest, said he hopes to introduce legislation that would regulate cryptocurrency mines, in response to a 2023 law that prevents regulations of these mines and other data centers, according to Little Rock Public Radio.
Dismang said any potential crypto legislation would have more support in the Senate than in the House.
“It’s pretty widely supported that a change needs to happen [regarding crypto regulations],” Dismang said. “There’s just some disagreement on what that should look like.”
At the end of the fiscal session, members of each party in both chambers will choose their leaders for the 2025 legislative session, including Speaker of the House and Senate President Pro Tempore.
Republican Reps. Johnny Rye of Trumann, Brian Evans of Cabot and Jack Ladyman of Jonesboro are running to succeed House Speaker Matthew Shepherd, R-El Dorado, who is running for reelection but stepping down from the speakership.
Senate President Pro Tempore Bart Hester, R-Cave Springs, is seeking another two-year term and faces a challenge from Sen. Terry Rice, R-Waldron.
Budgetary priorities
In a letter to state lawmakers last month, Sanders said the proposed budget “puts an end to government’s spiraling growth, while still fulfilling the priorities Arkansans elected me to implement.”
The largest proposed increase would go toward the school voucher program created by the LEARNS Act, a 2023 wide-ranging education law championed by Sanders. The program received $31.7 million in FY 2024 and is projected to receive $97.5 million in FY 2025.
This $65.8 million proposed spending increase accounts for roughly 60% of the proposed budget’s overall increase.
The second-largest proposed funding increase is an additional $4.1 million, totaling $28.7 million, to the state Department of Human Services for administrative needs.
Meanwhile, the Division of Children and Family Services within DHS is projected to receive a 0.03% increase of $43,118, and the line item for child care and early childhood education is left blank for the second year in a row on the proposed budget.
Gess said Arkansas’ child care shortage means directing state funds toward it should be a priority.
“We don’t believe there is a [budget] surplus,” Gess said. “We believe there are lots of underfunded programs.”
Dismang said the state has trust funds for both public education and Medicaid that have been accruing money to be spent in those areas if necessary, and the state budget will not reflect those funds because they are not general revenue.
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Gess suggested that the state budget could allocate more money to preventative medicine or maternal health care. Many Arkansas counties had very few full-time primary care physicians per 10,000 residents in 2020, according to the Arkansas Center for Health Improvement.
Additionally, Arkansas has the nation’s highest maternal mortality rate and the third highest infant mortality rate, according to ACHI.
Sanders signed an executive order in March that created a committee tasked with increasing access to quality maternal health services as well as improving education; maternal health before, during and after pregnancy; and statewide coordination for maternal health data and reporting.
Meanwhile, the state’s four-year public colleges and universities are projected to receive a cumulative $1.8 million decrease in funding, based on a decline in the state’s higher education productivity model, which has been in place for years and began with input from colleges and universities.
The University of Arkansas’ flagship campus in Fayetteville is expected to receive $387,468 more than the current year, and the Pine Bluff campus is expected to receive a net increase of $1.55 million, according to the proposed budget.
Additionally, the Arkansas State Library’s proposed share of funds is $3.86 million, an increase of 0.03% from the current fiscal year.
Over the last few years, conservatives in Arkansas have tried to tie library funding to whether certain books, primarily those with LGBTQ+ content, are available on shelves.
Sen. Dan Sullivan, R-Jonesboro, said last year that the state should withhold funding from the Arkansas Library Association (ArLA), a nonprofit trade association that supports unrestricted access to library materials and does not receive state funding.
