Emphasizing that fallout from the poor economy poses the greatest challenge this legislative season, Gov. Beebe nevertheless gave a hopeful State of the State address this morning. Arkansas is in an 'enviable position' fiscally and can afford to increase funding for education and the Department of Children and Family Services (DCFS), Beebe said. As expected, he also asked for a one-cent cut to the grocery tax and an increase to the per-pack cigarette tax. At 56 cents, the cigarette tax increase is slightly higher than the 50-cent figure that has been bandied about in the media of late. He also said the legislature may have to tap rainy-day funds in order to maintain spending priorities.
Though Beebe said spending at most state agencies should remain level, he called for increased funds for K-12 education in order to better prepare students for college. His education plans would increase per-student spending by $234 over the next two years. Beebe was emphatic that the new lottery and the college scholarships it will fund must be efficient and transparent. "When we promise scholarships, money must remain available if the student remains qualified," he said. He also stressed that state colleges must must emphasize graduation rates, not enrollment. The relative importance of enrollment numbers has become an issue in the wake of an exploding student population at UCA.
Beebe said greater DCFS funds should be used to increase caregiving resources and reduce caseloads at the department. He also encouraged legislators to change state law in order to increase transparency at DCFS. The availability of DCFS information to the public became an issue last year when four children died in foster care. The department cited state law in refusing to release information about the deaths. Beebe spokesman Matt DeCample said he was unsure of whether the governor's proposal touches on that law. He said he did not know which specific laws the governor has in mind for revision.Beebe was at his fieriest when asking for a one-cent cut to the grocery tax. Though some have questioned whether the state can afford the cut, Beebe insisted it is affordable and appealed to lawmakers to keep the widely circulated promise to eventually eliminate the tax.
Tax raises will also be in order, Beebe said, specifically a 56-cent-per-pack hike to the cigarette tax. The new funds will be used to fund a statewide trauma system. Beebe's general proposal, if not the number, has received vocal support from House Speaker Robbie Wills and conflicting reviews from Senate President Pro Tem Bob Johnson. While Beebe acknowledged that revenue from a cigarette tax is bound to decline, he also stressed that smoking cessation must remain a priority in light of an estimated $620 million in annual smoking-related health-care costs.
Beebe briefly mentioned that the legislature may need to change the tax on smokeless tobacco in order to ensure that smokers don't switch to a different poison. According to DeCample, the industry is having an internal debate over how it would prefer to be taxed. While the governor's office is currently deferring to those discussions, it will propose a tax increase even if the industry doesn't come to an agreement, DeCample said.
Other of Beebe's health care proposals included raising a family's income threshold from 200 percent to 250 percent of the federal poverty line in order to become eligible for ARKids First assistance. More vaguely, he said there should be an increased resources for community health centers and in-school mental services, new ways to care for autistic children, and continued funding for a UAMS residency program in Northwest Arkansas.
Beebe was also vague on energy. Though he said Arkansas must increase its production of alternative fuels, he gave no indication of how it might do so. Though decreasing natural gas prices mean the severance tax will bring in less money than expected this year, Beebe estimated that 'tens of millions' of severance tax revenue will help fund new inspectors for the Arkansas Department of Environmental Quality. Environmental groups have been concerned that an increase in natural gas drilling is not being matched by adequate oversight.
And, of course, it wouldn't be a Mike Beebe speech without some mention of economic development. Claiming $2.7 billion in new investment and 19,000 jobs for the state, Beebe asked legislators to replenish his quick action closing fund with another $50 million.
The full text of the speech is available here.
(This entry cross-posted at The Legislative Beat.)