LITTLE ROCK -- Arkansas Gov. Asa Hutchinson said Tuesday his budget is relying on revenue growth, surplus funds and cuts to state agencies to pay for his campaign promise to cut taxes for the middle class by $102 million a year.
The Republican governor began briefing lawmakers on highlights of his budget, but delayed until next week his plan to unveil the proposal. He said he wants to address the future of the state's compromise Medicaid expansion before outlining his budget.
"I wanted to make sure we're able to focus on that sufficiently," Hutchinson, who was sworn in last week, told reporters after a series of closed-door meetings with legislators.
Hutchinson's meetings were aimed at urging legislators to move quickly on his proposal to cut income taxes by 1 percent for those making between $21,000 and $75,000 a year. The proposal is estimated to cost the state $33.7 million in the upcoming fiscal year and $102.1 million when fully implemented the following year.
Senate President Jonathan Dismang, R-Beebe, said he planned to bring the proposal before a Senate committee Wednesday morning and was adding all but a handful of the Senate's 34 members as co-sponsors.
Hutchinson said that the tax cut would be paid for by growth in state revenues, but would also require cuts to some agencies and tapping part of the state's surplus.
"It's a combination of some savings, some efficiencies there, part of it using the one-time money in the surplus," Hutchinson said. He said money wouldn't be cut from public schools or higher education.
Arkansas legislative leaders said the cuts Hutchinson's proposing don't give them pause.
"It's nothing that the state cannot live with," Rep. Lane Jean, co-chairman of the Joint Budget Committee, told reporters after the closed-door meeting.
The briefings appeared to ease concerns from some key Democrats in the majority-Republican Legislature who had expressed concerns about taking up the tax cut measure before seeing Hutchinson's budget plans.
"I would still prefer to wait, but am comfortable enough I will support the package in committee," said Sen. Bruce Maloch, D-Magnolia, a member of the Senate Revenue and Taxation Committee.
Hutchinson remained mum on whether his budget calls for delaying or repealing some of the tax cuts lawmakers approved two years ago. Hutchinson has already proposed delaying portions of an income tax cut approved in 2013. His Democratic predecessor, former Gov. Mike Beebe, had warned lawmakers they went too far in cutting taxes, and urged delaying $29.4 million in already-approved tax reductions on capital gains and manufacturers' utility bills.
Hutchinson is expected to announce his plans Thursday for the future of Arkansas' "private option," which uses federal funds to purchase private insurance for low-income residents. The program was crafted as an alternative to expanding Medicaid under the federal health law, and faces an uncertain future after several opponents of it were elected to the Legislature.
Hutchinson said he didn't view the program's future as tied to tax cuts. Supporters of the program say that the private option helped pay for the tax cuts two years ago by reducing the amount of money hospitals paid to care for patients without insurance.
"Don't presuppose my position on the private option based upon this draft budget we have," he said.
State Desk on 01/21/2015