State financial report ominous | Arkansas Blog

Friday, September 2, 2011

State financial report ominous

Posted By on Fri, Sep 2, 2011 at 9:17 AM

The monthly state revenue report does not bring good news for state government. Gross revenues down in August against the same month a year ago and below forecast. I'm expecting more from the governor before long.

The full report.

This fits, of course, with bleak national jobs picture.

UPDATE: Gov. Mike Beebe called to say he's not pushing the panic button just yet.

"It's cause for concern," he said. "Where it's soft is in sales tax. Actually what's pretty good is [income tax] withhholding. That shows people are working. That's actually above forecast. But what is below forecast is sales tax. Most of the pundits — and that's about all we've got to go by — are saying people are holding their money because they're uncertain or scared about the national economy."

Beebe said one month's result, even with the $7 million shortfall against forecast, isn't a cause for action, "but a trend does cause action. We will monitor it very closely. I look at numbers in detail every morning. We'll make appropriate adjustments if the trend continues."

How soon might that be? "There's no artificial time frame," he said. "When you get a sense you need to adjust, you make that call."

The state has had to reduce spending several times during the recession. State agencies were nervous this morning, having heard in advance of disappointing numbers. Beebe acknowledged that. He notes that public school spending is generally fully protected when cuts occur, because of the Lakeview school ruling. So that means roughly half the budget — spent on agencies other than public schools — has to absorb 100 percent of cuts when they are made.

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