Leader Blues

Saturday, October 24, 2009

EDITORIAL >> Crisis? Look to employees

Gov. Mike Beebe has accepted the recommendation by the Arkansas Department of Finance and Administration to cut the state budget by $100 million for the second time in a year because of lower revenues.

Beebe said the revised budget forecast comes after revenues fell below those predicted for the first three months of the fiscal year, which started in July.

The reductions have been mild so far — 2.2 percent from the overall budget of $4.5 billion. Cuts will come mostly from the departments of Correction, Community Correction and Health, with the Arkansas State Police seeing the largest reductions.

Most department heads say they can do the cuts by not filling vacant positions and doing less traveling.

If the state can reduce its budget twice in one year, do you suppose it could cut twice that much — $200 million per fiscal year? You bet it could, however painful those cuts may be. These are hard times, and the governor should consider furloughing state employees, especially expensive department heads, whose bloated numbers are one of the reasons there’s a budget crisis.

The fiscal picture is ominous: Revenues in September were $464.2 million, or $76.6 million less than the year before. That was a 14 percent decrease, the biggest in 20 years.

“Just like any family or business, state government must live within its means,” said Beebe, who will likely run for re-election next year and wants voters to know he shares their pain. “Despite our conservative budgeting, it appears that our recovery from the recession has been slower than anticipated. There are still positive signs in the revenue numbers, and we maintain hope that the recovery will accelerate.”

Few economists share Beebe’s optimism. This recession could last well into next year and perhaps longer in our poor state. The governor should plan for another possible cut on Jan. 1 in case the fiscal picture worsens. Following the lead of other hard-pressed states, furloughs may not be far behind.

Let this serve as a warning to state employees who think the government has endless resources to preserve their jobs, because it does not.