Arkansas will finish its fiscal year with $360 million more in revenue than was expected, Gov. Asa Hutchinson announced Tuesday at his daily briefing on the state’s response to the COVID-19 pandemic.
The fiscal year ends today.
“We have gained in terms of our economy in Arkansas; it did not take the dip we expected it to. And, because of that, we’re $360 million dollars ahead,” Hutchinson said.
What that means, he said, is the $120 million cut from the state’s public school fund will be restored.
Another $42.4 million cut from funding for higher education will be restored, and that includes additional funding earned by institutions that did well under the state’s new outcomes-based funding formula, he said.
The Medicaid fund will be restored as well, with $72.2 million, to its pre-pandemic level balance of $255 million. Hutchinson said the fund had been depleted by needs and rising costs.
After all that, he said Arkansas will still be left with a projected $225 million in unallocated reserve funds as it enters Fiscal Year 2021. The Legislature will decide in its session how those reserve funds will be spent, he said.
Hutchinson also said the state’s long-term reserve fund is at $152 million.
“So that’s the financial condition we are in as a state as we go into the next fiscal year,” he said, adding that state employees will now receive a merit pay raise of 2.2%.
In addition, the state’s revenue forecast will be revised up, to $5.62 billion. The forecast had been revised down earlier in the year in anticipation of a coronavirus-caused economic downturn.