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Arkansas governor’s budget includes teacher raises, tax cut

November 14, 2018

FILE - In this Nov. 6, 2018 file photo, Gov. Asa Hutchinson speaks at his election night victory rally in Little Rock, Ark. Hutchinson on Wednesday, Nov. 14, 2018, proposed increasing state spending in the fiscal year that begins July 1 by more than $129 million. The proposal includes a $111 million plan to cut the state's top income tax rate over the next two years, simplifying tax tables and brackets and increasing the standard deduction. (AP Photo/Gareth Patterson, File)

LITTLE ROCK, Ark. (AP) — Arkansas’ governor on Wednesday proposed a $5.7 billion budget for the coming year that sets aside money to raise minimum salaries for public school teachers and for his plan to continue cutting state income taxes.

Gov. Asa Hutchinson, a Republican who was re-elected last week, proposed increasing state spending in the fiscal year that begins July 1 by more than $129 million, or about 2 percent. The biggest spending increases go toward the state’s Medicaid program and its public schools, and the proposal also calls for hiring more parole officers and state police troopers.

“There are always other ways to spend money, but this budget meets our state obligations, funds necessary services, increases teacher pay, meets the needs of public safety and continues to reform our tax code,” Hutchinson told a legislative panel.

Hutchinson said the budget includes a $111 million plan to cut the state’s top income tax rate, as well as simplify tax tables and brackets. Under Hutchinson’s proposal, the state’s top income tax rate will be cut from 6.9 percent to 6.5 percent in 2020 and to 6.3 percent the following year. The proposal will cost the state $47 million the first year and $111 million when fully implemented. The proposal also calls for raising the standard deduction for taxpayers.

Hutchinson also proposed setting aside $60 million to raise the minimum teacher salary in the state from $31,800 to $36,000 over the next four years. Hutchinson said the money will be available to 174 school districts that are paying less than the new proposed minimum salary.

Hutchinson’s tax cut plan is likely to face competition in the majority-Republican Legislature from lawmakers who say they’d like other reductions to be considered.

“I think there’s substantial interest in the governor’s proposal. I’ve also heard from others who have maybe other things they want to look at in addition to that, or other possible alternatives,” House Speaker Matthew Shepherd, a Republican, said.

Democrats have expressed concern about the impact the tax cuts could have on other state needs. House Minority Leader Charles Blake said Democrats in that chamber will again push for a tax credit aimed at helping low-income residents.

Hutchinson said the state’s revenue will take a $38 million hit from a measure voters approved last week legalizing casinos in four counties. The measure allows full casinos at a Hot Springs horse tack and a West Memphis dog track that already offer electronic gambling. The tracks will pay a lower tax rate on the casino gambling proceeds than the electronic gambling under the amendment. Supporters of the amendment have argued the casinos will generate far more income with the additional gambling. Hutchinson said the reduction won’t lead to a cut in any state services, but will mean less money the state could put in reserve funds or other savings.

Hutchinson did not outline any plans to call for additional highway funding. The governor on Tuesday said a highway funding plan is a priority for the legislative session that begins January, but stopped short of endorsing any specific proposals yet.

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Follow Andrew DeMillo on Twitter at www.twitter.com/ademillo

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