Arkansas

State Fiscal Briefs

March 2020

Arkansas’s budget basics

According to the National Association of State Budget Officers (NASBO), Arkansas’s total expenditures in fiscal year (FY) 2019 were $25.8 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2019 were $2.1 trillion, ranging from $4.5 billion in South Dakota to $311.3 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Arkansas’s combined state and local direct general expenditures were $25.1 billion in FY 2017 (the most recent year census data were available), or $8,357 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $9,449.

Arkansas’s largest spending areas per capita were public welfare ($2,499) and elementary and secondary education ($1,709). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Arkansas’s combined state and local general revenues were $25.6 billion in FY 2017, or $8,538 per capita. National per capita general revenues were $9,573. Arkansas uses all major state and local taxes. After federal transfers, Arkansas’s largest sources of per capita revenue were general sales taxes ($1,511) and charges ($1,259), such as state university tuition and highway tolls.

Arkansas’s politics

Governor Asa Hutchinson, a Republican, was elected in 2018 with 65 percent of the vote. The next gubernatorial election is in 2022.

Republicans control both the House of Representatives (75 Republicans to 23 Democrats) and Senate (26 Republicans to 9 Democrats), with veto-proof majorities in both houses. Control of the governor’s mansion and each house of the legislature gives Republicans a trifecta in Arkansas. All Arkansas House seats are on the ballot in 2020 because representatives serve two-year terms. Senators serve a combination of two- and four-year terms during each decade’s legislative district apportionment cycle. This 2-4-4 term system ensures all Senate seats are up for election after new legislative district boundaries are drawn. Roughly half the senators are up for election in 2020, and all senators are up for election in 2022.

Arkansas’s budget institutions, rules, and constraints

Arkansas uses a biennial budget. The legislature must pass a balanced budget, but it can carry a deficit into the following year. Arkansas also limits annual revenue increases and requires a three-fourths legislative supermajority for any legislation that increases property, excise, privilege, or personal income taxes. The state does not have any limits on either debt service or authorized debt.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Arkansas’s recent fiscal debates

Arkansas’s current budget

In November 2018, Governor Hutchinson presented his FY 2020 budget to the state’s legislative Joint Budget Committee. In a separate budget letter, the governor requested $60 million be transferred from one education fund to another to fund higher teacher salaries. The governor also highlighted the hiring of additional state troopers and ongoing tax cuts ($111 million over the biennium) in his budget announcement. The legislature passed its budget in April 2019 and approved most of the governor’s proposed tax cuts. The legislature’s budget was “pretty much what the governor wanted to do,” said Representative Lane Jean, co-chair of the Joint Budget Committee.

For more on Arkansas’s budget, see