Arkansas financial office says more cuts likely

AP News
Posted: Jan 05, 2010 5:39 PM

Arkansas' chief fiscal officer said Tuesday that the state collected $20.9 million less than expected in tax revenues in December, a shortfall that could mean more budget cuts for agencies that have already trimmed $100 million in spending.

The state's net available revenues in December were $22.7 million lower than December 2008, the Arkansas Department of Finance and Administration said. State revenue for the year is below forecast by $54.9 million.

Department Director Richard Weiss said he would call for a cut in the state's revenue forecast for the current year, and cuts for the coming fiscal year were also likely.

"I just don't see how we can build our way out of this hole this year," Weiss told reporters "Next year, we still have to look at."

Sales, individual income and corporate income tax collections were all below last year's figures and below forecast in December.

Reducing the forecast could lead to further budget cuts. Lawmakers are to begin hearings next week on the budget for the coming fiscal year.

The Legislature in February plans to hold its first session dealing primarily with the budget under a constitutional amendment that required lawmakers to meet annually, rather than every other year. Weiss said he hoped to make recommendations on the revenue cuts by the start of budget hearings next week.

Weiss did not say how much of a cut the state would need to make in the forecast, but said that tapping into surplus money that had been set aside was a possible answer. Gov. Mike Beebe has $40 million from the state surplus that he could tap to fill shortfalls.

Beebe is expected to present his balanced budget proposal for the fiscal year that begins July 1 to lawmakers at next week's hearings. The governor called the latest figures a reminder to lawmakers of the state's tough economic picture as they prepare next year's budget.

"We'll make whatever belt-tightening and cuts we have to make to live within our means," Beebe said. "Our families are having to do it."

Individual income tax collections totaled $178.6 million, a $12 million decrease from last year and $10.1 million below forecast. Sales tax collections totaled $159.9 million, a drop of $18.8 million from last year and below forecast by $14.4 million.

Corporate income tax collections totaled $63.4 million, a $5.2 million decrease from last year and $5.4 million below forecast.

Arkansas' agencies had cut their budgets late last year after a reduction in the state's revenue forecast, but had avoided layoffs. Most agencies cut their budgets by holding vacant positions open or reducing expenses such as travel or supplies.


Associated Press Writer Jill Zeman Bleed contributed to this report.