Governor calls for another budget cut for next year | Arkansas Blog

Wednesday, May 3, 2017

Governor calls for another budget cut for next year

Posted By on Wed, May 3, 2017 at 7:53 AM

Belatedly, here's the news from Gov. Asa Hutchinson yesterday that sluggish state tax receipts (exacerbated by continuing tax cuts) will require a budget reduction for the year set to begin July 1.

According to the Arkansas News Bureau report,  the forecast for the next year has been cut  by $43 million, effectively a cut in the amount budgeted to be spent. The governor said the government can afford that without a loss of jobs or reduction in services. (Every  time that is said zi wonder what the money was budgeted for if not for jobs and services. Isn't something going to have to give?) Said the governor:

“These cuts just reflect the fact that the budget for 2018 will be tight; however, no layoffs are expected and services will go on uninterrupted,” he said in a statement. “I will continue to monitor the budget, as I’ve always done, as we enter a new fiscal year.”

The reduction is on a $5 billion-plus budget and follows a recent reduction in spending of $70 million for last two months of this budget year. Historic high employment and the governor's proclamation of a vibrant economy haven't moved the needle much in income and, particularly, sales tax collections.

The forecast anticipates a dip in the budget year that begins July 1, 2018 as well. The state will be feeling the impact of a new round of tax cuts then.

The governor also hopes to trim millions out of state spending by throwing 60,000 people off the state-backed portion of Medicaid expansion enabled by Obamacare. As several said yesterday, this could have collateral damaging consequences, particularly in stress on hospitals for a rise in uncompensated care for the newly uninsured, the amount depending on how many are able to afford continuing coverage in the health insurance market places with new premiums and questions about who will be covered and even whether federal subsidies will continue at all. That last is a matter still being debated in Congress, along with how much states may be able to "waive" of Medicaid coverage — from pre-existing conditions, to basic health care services now mandated (including maternity care and treatment for drug addiction).

David Ramsey's encyclopedic rundown on the iffy health coverage picture -- an enormous component of the state budget and, thus, a huge economic stimulus in its own right — is worth a read.

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