Mike Beebe agrees with Lioneld Jordan about the importance of protecting reserved fund

The Morning News
Local News for Northwest Arkansas

Beebe: Economic slowdown expected to hit Arkansas next year
http://www.nwaonline.net/articles/2008/11/03/news/110408lrbeebeecon.txt
By John Lyon
THE MORNING NEWS
LITTLE ROCK -- State revenue forecasts suggest the current national economic slowdown is likely to affect Arkansas in the coming fiscal year, Gov. Mike Beebe said Monday.
The forecasts highlight the need to keep surplus funds available in case of budget shortfalls, Beebe said.
"We use a number of forecasts ... and of them projects in the next fiscal year that the national slowdown ultimately will affect Arkansas, although it hasn't yet," Beebe told reporters. "We would use surplus, if that occurs, for those essential services such as Medicaid or such as higher ed."
In April state finance officials cut $107 million from state agencies' budgets for the current fiscal year. Beebe has said previously he would restore at least some of that money if state revenues permit, but last week he said he wants to use the state's $310.5 million surplus as a "rainy day fund."
Beebe said Monday the term "rainy day fund" may give the incorrect impression that the money might not be spent.
"If the forecast is accurate that we're having to use, that reflects a national downturn affecting Arkansas, then I would contemplate we'd use that money to plug the one-time gap created by a recession," he said. "A recession by its nature is temporary, by the very definition, so that's one of the few exceptions for using one-time money for ongoing programs."
Beebe declined to say how much of an effect the national economic slowdown is expected to have on Arkansas, saying he would not discuss specifics before releasing his balanced budget proposal on Nov. 13.
Speaking Monday to a joint meeting of the state Board of Education, the Higher Educating Coordinating Board and the Board of Workforce Education and Career Opportunities, Beebe said he had "good news and bad news."
Beebe said Arkansas has not followed national downward economic trends, so far at least.
"Even though we had the largest tax cuts in history (in 2007), we're still running ahead of forecasts for the first four months of the (2009 fiscal) year. Now I'll tell you this: October isn't as far ahead as the other months, so you may be seeing some of that starting to catch up. But nevertheless, we have been bucking those trends," he said.
Despite losing a number of jobs, the state had a net gain in the past year of 36,200 jobs, 14,000 of them manufacturing jobs, Beebe said.
"Will that last? According to the experts, no," he said.
Beebe said the economic outlook may prevent the restoration of any budget cuts, but if the outlook improves and some cuts can be restored, the areas that received the largest cuts -- higher education, Medicare, prisons and state police -- would be at the top of any restoration list.
Whatever happens, Beebe said public schools are the state's No. 1 budget priority.
"K-12 doesn't need to sweat," he said. "Higher education and work force (education) probably need to sweat a little more," the governor said.