Arkansas Has Budget Surplus of $402 Million

The bad news is: Arkansas has a reputation as a relatively poor state with a long list of needs from roads, sewers, and infrastructure in general to improvements in education, helping the needy, and everything in-between.

The good news is: Arkansas has a budget surplus of more than $402 million for the fiscal year ended June 30, 2006. As you can imagine, everyone wants a piece of the pie.

Many of the ideas are worthy of consideration. Using part of the surplus to create a “rainy day fund” is certainly an excellent idea. Just because income exceeded expenses this year doesn’t necessarily mean next year will as rosy.

Governor Mike Huckabee believes a good portion of the surplus should be refunded to taxpayers. The governor says the refund could be handled in various ways: state income tax reduction, reducing or eliminating the sales tax on food, or even a direct rebate to taxpayers. So far the legislature has been in no hurry to do anything.

Arkansas has become increasingly dependent on the sales tax. Arkansans pay sales tax on just about everything except medical care and prescriptions. The bare essentials - food, clothing, and utilities - are taxed by the state, county, and city. Add those taxes together and you will quickly see that cities such as Fayetteville and Springdale have sales tax rates in excess of 9%.

As we all know, the sales tax is regressive. Poor people need essentials just as much as their more affluent neighbors but they have to pay a proportionately higher percentage of their income for them.

I’ve also heard talk about eliminating the sales tax that manufacturers pay on utilities. Most states do not have a similar tax so this makes Arkansas less attractive to manufacturers who may be considering a move.

Education is another high priority. In recent years, we’ve spent a lot of money for improvements from kindergarten through university levels but capital improvements have been falling through the cracks. It’s reasonable to assume the entire surplus could be spent for education without fulfilling every need.

Other ideas also have merit, especially for NW Arkansas: infrastructure and affordable housing. I have written previously about both subjects but I can’t say it too often. NW Arkansas is in gridlock. New roads, widening of existing roads, toll roads, overpasses, bypasses, etc., no matter what you call it, we need to build it. Large projects such as the Highway 412 bypass are only dreams at this point. Funding does not exist to even buy the land.

NW Arkansas has a growing population of homeless people and affordable housing is practically non-existent. Part of the surplus could be used to help feed and train people so they can get jobs. Then help them with down payments and/or subsidized interest rates to get them off the streets and into housing.

As I understand it, the state used to give turnback funds to the cities, but they have not been awarded since 1986, when cities were allowed to enact local sales taxes to add on to the state sales tax.

Perhaps it is time to turn back some or all or the surplus to the cities to use as they see fit. They know better than the state what is needed at the local level.

While I know it cannot happen, I would love to see the entire surplus sent to NW Arkansas. NW Arkansas’ booming economy helps the entire state. We pay a proportionately higher percentage of taxes to the state than the other areas. We need help with infrastructure now if our economy is to continue expanding.

For more information:

http://www.nwaonline.net/articles/2006/07/06/news/05lrrevenuereport.txt

http://www.nwaonline.net/articles/2006/07/08/news/03lrhuck.txt

http://nwanews.com/bcdr/News/33242/