Dear Arkansas, Where do you see yourself in five years?

We need to look farther ahead, at least five years into the future, to get a realistic look at how revenue and tax changes will affect funding for parks, roads, libraries and all the other programs that benefit our communities. Some recent Arkansas tax cuts take three or more years to get fully implemented, but we use budget forecasts that only look two years out. It is not uncommon for revenue impacts to balloon up in later years. For example, a capital gains tax cut passed in 2013 more than doubled in cost from year two to year three, and the price tag of a recent income tax exemption also doubled in the third year.

Another long term tax change is coming down the line in the form of highway funding. We need to fix our roads, and it will be very expensive (there is a $400 million dollar a year shortfall). Most of the ideas getting kicked around involve changes to the tax structure over very long periods of time. The Arkansas State Highway and Transportation Department themselves have their ultimate budget goal set 6-10 years away. One funding plan involves changes to the gasoline tax and income tax over the period of five to seven years. Other plans stretch into year ten, long out of sight of revenue forecasts.

Only looking two years down the road means we risk getting side swiped by revenue losses we should have anticipated. Policy makers and the public need to know the long term realities of choices we make each year. We should be able to answer this question before any major tax change: “In five years, will we still have enough to fund other important investments for vulnerable kids and their families, like community health centers, juvenile justice reform, child welfare, libraries, and pre-K?” Many of these service providers worry year-to-year if they will get the funding to keep their doors open. If we don’t look farther ahead, budget killers could hide just outside our line of sight.

Fewer budget surprises mean less uncertainty about funding for programs. Arkansas lacks several of the most important elements of budget planning according to new state by state analysis by the Center on Budget Policy Priorities .With better forecasting practices, it is easier for lawmakers and state departments to plan for the future. It also gives us a better shot at keeping funding for important programs. See other budget best practices recommendations for Arkansas from the Center of Budget Policy Priorities.