Arkansas government is like the kudzu plant. It grows when the private economy is contracting. It grows when the private economy is expanding. Through rain or shine Arkansas government grows, advancing policies that interfere with private sector entrepreneurs, job creation and income growth.
The majority of Arkansans recognize there is a fiscal problem that must be solved with spending cuts. But within the Capitol Beltway in Little Rock calls for fiscal conservatism are dismissed because they would impose restraints on the government sector. In sum, the wants of less than 200,000 non-federal Arkansas government employees (state, county, local, K-12) are deemed more important than more than 900,000 Arkansans working in various private sectors.
Gov. Beebe’s proposed budget would increase state spending 2.5 percent, a percentage rate greater than inflation. The Consumer Price Index, in the last 12 months expanded only 1.1% (non-seasonally-adjusted), while it has increased only 0.4% since March (seasonally-adjusted), according to the Bureau of Labor Statistics. A state spending freeze would save $109 million that could be applied to tax cuts, and demonstrate to Arkansans that the incoming freshman class of legislators is sincere about delivering on promises to pursue fiscal conservatism.
Tax cut opponents are fond of challenging fiscal conservatives to identify specific spending cuts. The Policy Foundation is happy to oblige. First, state spending should be frozen at current levels. Second, Gov. Beebe should enact a hiring freeze for new state employees. The legislative branch of government should advance this policy when exercising their constitutional power in the appropriation process. Third, independent audits and performance reviews should be used within every state department. Fourth, the 15 Education Service Co-ops and six related agencies should be merged into one Educational Resources-Service Center under the Education Department or a state university.
The Policy Foundation estimates $150 million in savings to taxpayers if these policies are enacted. Savings should be applied to reduce the grocery tax by one cent, and to start the process of cutting income tax and capital gain rates.
Recommendations
∙ State spending and hiring should be frozen at current levels.
∙ Performance reviews should be undertaken in each state department to identify potential cost savings.
∙ Merge all educational co-ops into one unit.
