Leader Blues

Friday, August 11, 2006

TOP STORY >> Officials still battling over surplus

IN SHORT: Legislators debate what to do with the state’s $402.7 million surplus when the 86th General Assembly convenes in January.

By RICK KRON
Leader staff writer

Rep. Will Bond, D-Jacksonville says giving taxpayers a rebate check with the state’s $402.7 million surplus isn’t going to help the state’s residents as much as tax reform would.

“I think it would be smarter to have tax reform to reduce tax burden not just have a one time check ranging $30 to a couple of hundred dollars,” Bond told The Leader.

Arkansas ended the previous fiscal year June 30 with a $402.7 million surplus, the largest in the state’s history. Revenue officials have projected a $234.5 million surplus for the end of this fiscal year. That, plus surplus money left over from state budgets, would give Arkansas a projected surplus of roughly $721 million.

“There’s different type of reforms to look at such as elimination of grocery tax to reduce the burden on citizens,” Bond said.
Above all, Bond doesn’t want to see taxes go up. “My number one goal for the rest of my career as a legislator is to not raise taxes,” Bond said.

Bond agrees with putting some of the money aside into a rainy day fund for the state as well as funding building improvements for the state’s ailing and aging schools.

Since learning of the state’s surplus earlier this year. Gov. Mike Huckabee has been pushing for a tax refund for residents. “We’ve got to move very, very cautiously,” said state Sen. Bobby Glover, D-Carlisle. “I think we need to leave it up to the next governor and legislature.”

Glover said that he was not in favor of a rebate.” Once we give it back or do anything with it, it’ll be gone. We need to act appropriately so we don’t have to raise taxes in the future.” The senator added he was not going to vote for any type of a tax increase in the foreseeable future.

Glover said that if the surplus continues to grow, he would like to see the state phase out the tax on groceries. “That’s better than a rebate,” he said. “Any rebate amount we give back would be small per individual, but would cost the state a large sum.”

Glover said some of the surplus needs to be put into a rainy day fund, and he expects some will have to be used to fill the funding requirements for education and prison reforms and needs. “We also have to fill in what the federal government has pulled out of its Medicare funding.”

District 15 Rep. Lenville Evans, D-Lonoke, says he’s undecided and will probably stay that way until after state budget meetings in September and October. “We really won’t know how much of a surplus we truly have until we get the education and Medicare issues settled,” Evans said.

He added that every state department would now be asking for more money.

And to prove his point, Arkansas colleges and schools recently asked for an additional $239 million for their budget and another $318 million in capitol improvement projects. “Wanting is one thing, getting is another,” Evans said.

District 43 Rep. Jeff Wood, D-Sherwood, said he agrees with most of the other legislators about holding on to some of the surplus.

“Consensus is that we need a rainy day fund,” Wood said. He recalled a special session a few years ago where the legislature had to come up with about $120 million or cut state services. “It was not fun to be in that position,” Wood said, “and I don’t won’t us to go through that again in the future.”

Wood said there would need to be very specific regulations governing the rainy day fund. “After establish that fund, I’d like to see us put more into education, then I’d take a wait and see position on remaining funds,” Wood said.

District 14 Rep. Benny Petrus, D-Stuttgart, the incoming House Speaker, recently told Lonoke leaders that the legislature would take a slow, studious and sensible approach to the surplus.