By Conduit for Action
The Arkansas General Assembly is meeting in its Fiscal Session. Normally, this session only deals with appropriation bills, which are budget bills, but a non-appropriation bill can be approved for consideration.
When the session is over, no matter which party is in control, the legislators and the Governor always brag about balancing the budget and holding down the state budget. First, the budget always has to be balanced, so that is not actually an accomplishment. Second, when they say they have held down spending, they are only talking about how much of a spending increase there will be out of the General Revenue Fund. But general revenues only amount to about 18% of Arkansas’ government spending.
The Bureau of Legislative Research categorized 2021 spending as follows: General Revenue 18%, Cash Funds 10%, Special Revenues 6%, State Central & Constitutional Officers Fund 1%, Other State Funds 25%, and Federal Funds 40%.
Setting the budget for just 18% of spending, and then saying, “The rest of state spending will take care of itself,” is not responsible budgeting. It leaves open the possibility of uncontrolled spending growth.
The mainstream media always reports on politicians bragging about the balanced budget and on their efforts to hold down increased spending of general revenues, but the media doesn’t tend to dig further to tell you how much the combined state spending is increasing.
Let’s ignore the spending of federal funds for now and focus only on the spending of state funds from all sources.
Here are some questions you need to ask.
- How much money from all state sources (not federal) was spent in previous fiscal years and how much is projected to be spent in the 2024-2025 fiscal year?
- By how much did the total state spending (not federal) increase or decrease in each of the fiscal years and how much did spending increase or decrease in each of the state fund sources?
At the end of most fiscal years, the politicians also brag about being frugal enough to have a surplus from the General Revenue Fund. But you need to be aware of the General Revenue Fund Magic Trick. At the end of a fiscal year, money left in the General Revenue Fund are designated as surplus and are transferred to another fund and “poof” when the money from surplus is spent, the expenditure is not included in determining how much state spending has increased.
The General Assembly normally designates some of the surplus for specific purposes, for example, a construction project. Other surplus funds (formerly general revenues) are transferred to the Long Term Reserve Fund but the reserve fund can be tapped at any time. This means millions of dollars are spent out of the reserve fund by the Governor asking for the money and one committee of the Arkansas General Assembly saying “okey dokey.” Because of the General Revenue Fund Magic Trick you need to ask:
- How much was spent when you combine spending from the General Revenue Funds and spending from general revenues transferred to surplus funds, and how does that spending compare with the amount in previous fiscal years?
You shouldn’t even have to ask these questions. State office holders who believe in limited government should be publishing these numbers right along with the information on the General Revenue Fund spending.
Taxpayers deserve to know the full extent of state spending, not just the spending from the General Revenue Fund. Only with the full spending picture can you know whether there is reason to brag about holding down state spending.
