Here's a dirty little secret that is just now being bruited about in the privy sanctums of government: Before it disbanded last month, the legislature planted a medium-sized time bomb in the vault at the state treasury. It's set to go off in 15 months.
Don't bother waking up the Department of Homeland Security. It's perfectly legal. It doesn't even run afoul of the USA Patriot Act. Besides, those who will be hurt are apt to be mainly poor people.
This is how it happened. When the legislature recessed a special session called to improve public education, it thought it had taken care of the problem in its own minimal way. It enacted 109 laws to make learning both adequate and uniform for kids across the state, which the Arkansas Supreme Court had ordered it to do. It raised the sales tax almost a penny on the dollar, shifted the state's dollars to help poor schools a little more and then passed a sweeping law requiring all the state's public education programs to be funded 100 percent from now on, even if money had to be taken away from the rest of government: colleges, prisons, public health programs, law enforcement, cities and counties.
But not to worry. Legislators thought the modest tax program they had passed along with the economic boom that President Bush had been promising for more than three years would cover everything except the cost of modernizing school buildings across the state, which was another mandate from the Supreme Court. They or at least those who were re-elected would come back next year and figure out a way to float a billion-dollar bond issue to pay for the buildings.
The professionals have sifted through all the detritus of the long session now and figured out that the legislators fell $87 million short of funding their modest education improvements in the fiscal year that starts July 1, 2005, even if they consume virtually all the natural yearly growth in state revenues. The deficit could be far more than $87 million if the long-awaited Bush economic boom remains elusive.
That is the time bomb. The law requires that the $87 million shortfall for the schools - or $100 million, $200 million, or whatever the figure is - be taken away from the rest of government services and given to the schools. The legislature passed that law hoping that it would persuade the Supreme Court that it was living up to its duty. The Supreme Court had virtually required such a law. It said the old excuse that the state had to meet other obligations as well as education from its limited money would not fly any more. A good education is required by the Constitution; most other government services aren't.
William W. Goodman Jr., the state's fiscal guru for 35 years, calculated that the legislature funded the schools in the fiscal year that begins July 1 with some $107 million of one-time money - cash that won't recur the following year. Much of that is from the sales tax increase that the state started collecting the first of this month. Most of the money collected through June will be added to the receipts next year to swell the total. But starting the following July 1, that extra cash will be missing. So will money from an income tax surcharge enacted in 2001, which will be phased out next year, and from the state's inheritance taxes on the rich, which President Bush and Congress have ordered the state to abolish next year.
The president of the University of Arkansas asked Goodman and other state budget officials to come out to the system campus last week to spill the secret and the ramifications for his board and chancellors.
Goodman calculated the amount of the school shortfall in fiscal '05-'06 by assuming a healthy growth in tax collections of 4 percent and the Supreme Court's accepting the legislature's modest school reforms as sufficient, both problematical assumptions. If both prove optimistic, the deficit will soar.
A university official wanted to know if the legislature would likely spread the cuts in all other budgets by the same percentage. Not likely, Goodman said. Legislators next year are likely to sock it to higher education first because the colleges and universities can raise tuition to make it up. A college education in Arkansas is about to become a lot more expensive.
Medical services for the poor is an almost certain target simply because it's so large. The Bush administration may force cuts there before the legislature gets a chance. Prisons are spending $250 million a year and growing but they can't be cut without putting convicts back on the street.
Another tax increase is the other option but no one was encouraging. Legislators thought they might have finally overdone it on the sales tax, which now approaches 10 percent in much of the state, and the government for five years has been cutting, not raising, taxes on big business and the rich. A longtime legislative employee observed that those are the people who pay for political campaigns and, besides, he said, any lawmaker who votes to restore some of the tax obligations of the rich and corporations knows now for sure that he will be savaged mercilessly by the state daily newspaper. Who wants that?