What do end-of-year revenue numbers really tell us?

We ended up with more revenue than we spent this fiscal year, but don’t let the surplus fool you. No one should be proud of the surplus at the end of this fiscal year, because it was on the backs of the children in foster care whose social workers have twice the recommended caseload, the pre-K students who aren’t getting the quality programs they need to succeed, and the kids whose local libraries might lose their summer reading programs because of budget cuts. Any 2017 tax cuts could put up-to-date schools, quality after-school and summer programs, and a functioning child welfare system out of reach.

The general revenue report for the last 12 months showed gross tax collections sinking by $19.2 million (or -0.3 percent). A large part of that drop was due to lower individual income tax collections (down $40 million). After including tax refunds and other off-the-top adjustments, net available revenue showed a moderate 2.2 percent growth compared to last year, however.

The fiscal impact of the $242 million dollars in tax cuts over the past two legislative sessions is still unknown. Many Arkansans are still working jobs at pre-recession wages. The only real certainty right now is the desperate need for investments in programs that help kids succeed. Lawmakers should not consider any further tax cuts until those needs are met.

If lawmakers feel certain that we are on the way to fiscal prosperity, they should be planning increases in teacher salaries, cost of living raises for state employees, and funding for more caseworkers next year. Unfortunately, any future economic growth is unlikely to be invested back into community programs that need help. Instead, executive administration plans for 2017 include even more tax cuts. If those cuts are anything like the ones we saw in 2015, average Arkansans will have nothing to celebrate. The 2015 tax cuts saved median income families only about $40 a year while millionaires got a windfall.

Starting next year, 25% of surpluses will also go towards highways. If this year’s surplus is the same next year, it won’t be enough to fund the Governor’s current highway plan. That leaves even more questions about what programs will get cut if our highway surplus is not enough.