Arkansas lawmakers refuse to give up project money

Arkansas lawmakers on Tuesday declined to give up $2.9 million in money intended for local projects to help pay for budget needs, instead tapping the state's unclaimed property proceeds and the fund for the state's constitutional officers.

Gov. Mike Beebe's office called the move risky, and the state's chief fiscal officer said one of the funds being tapped is projected to end this year with a $1.9 million deficit. But Beebe said he would still sign the measure into law if it reached his desk.

A Senate panel, meanwhile, endorsed legislation that would use lottery revenues to fund $5,000 college scholarships for eligible students attending four-year schools in Arkansas and $2,500 scholarships for those in two-year schools.

The Joint Budget Committee advanced proposals that would tap $1.6 million from the state's Central Services Fund — which finances the state's constitutional officers, Supreme Court and several other agencies — to pay for redistricting costs. The panel also endorsed taking $1.3 million from the state's unclaimed property proceeds trust fund to pay for defibrillators for public schools, the Health Department's electronic record-keeping program and the state Division of Youth Services.

Beebe had sought to borrow $9.2 million from the Legislature's portion of the General Improvement Fund — surplus money typically sent to various one-time projects around the state. The loan would pay for several budget needs, but the panel has only supported loaning $6.3 million from that fund. Most of that money would go toward reimbursing counties for housing state inmates.

Richard Weiss, the director of the Arkansas Department of Finance and Administration, said that the Central Services Fund is already projected to end the year with a $1.9 million deficit. If the fund comes up short, the state may have to cut money from other agencies, Weiss said.

Arkansas has cut $206 million from its budget over the past year.

The unclaimed property fund is managed by the state auditor's office. Chief Deputy Auditor Larry Crane told lawmakers that the fund has about $52 million in it, and Beebe's budget has already called for taking $21 million for schools.

The budget panel spent most of the morning debating the proposals to tap into the funds, with some lawmakers saying they were concerned about what it would mean for the state's budget in the future.

Lawmakers agreed last year to hold back $15 million of their $60 million General Improvement Fund in case of an economic downturn. Beebe had proposed borrowing the money, to be repaid using any fund balances agencies have at the end of the next fiscal year.

"I think we're arguing about nothing. I think we look petty," said Rep. Bruce Maloch, co-chairman of the Joint Budget Committee. "We have legitimate local projects, but we need to get our state budgets taken care of. We need to be willing to contribute more than that."

Rep. Curren Everett, who had proposed taking the money from the funds, said he believed there was enough money in other accounts to pay for the budget needs. Everett, D-Salem, has argued that the one-time GIF projects are vital for smaller communities around the state.

Beebe spokesman Matt DeCample said he believed lawmakers were backtracking from the agreement to hold off on the project money in case of an economic downturn. DeCample said the governor believed it was risky to tap into the other funds.

"He'll sign it, but he won't like it," DeCample said.

The lottery scholarship legislation that advanced in the Senate is identical to a bill endorsed Monday by the House Rules Committee. The measure backed by the Senate State Agencies and Governmental Affairs Committee now heads to the 35-member Senate for a vote.

The legislation would fund scholarships for more than 20,000 incoming freshmen, current college students and nontraditional students. Arkansas began selling lottery tickets in late September, and is expected to raise $112 million for the scholarships in its first year.

To receive scholarships, students must complete the state's Smart Core curriculum and either obtain a 2.5 grade-point average or score a 19 on the ACT. Arkansas will begin awarding the scholarships this fall if the legislation is signed into law.

Sen. Kim Hendren of Gravette was the only lawmaker on the panel to vote against the legislation. Hendren had proposed that the lottery fund $4,000 scholarships for four-year schools and $2,000 for two-year schools, but his proposal did not get enough support for a vote.

Hendren, a Republican, said he was worried that lawmakers were promising too much with the scholarship amounts.

The Joint Budget Committee on Tuesday also recommended passage of Lt. Gov. Bill Halter's budget. The panel's personnel subcommittee rejected a proposal to cut Halter's budget from $366,695 a year to $129,580. The move would have laid off three of Halter's four full-time staffers.