Beebe: Prisons, Medicaid programs need money first

LITTLE ROCK (AP) Arkansas prisons and Medicaid programs likely will get more money first as what looks to be a recession finally reaches the state, Gov. Mike Beebe said Monday.

However, Beebe warned that other state programs probably need "to sweat a little more."

Arkansas heads into its two-year budgeting cycle with a nearly $260 million surplus. However, Beebe said national estimates provided by the state Department of Finance and Administration show the economic slowdown reaching Arkansas in the next fiscal year, starting July 1.

Last week, Beebe suggested setting aside a "rainy day" fund to meet potential budget shortfalls.

"'Rainy day' fund implies you're not going to use it. Rainy day implies you're just going to stick back," Beebe told reporters Monday. "What I really have in mind ... is we'll have it available to use. I would use that money to plug a one-time gap created by a recession."

Lawmakers began fall budget hearings last month in preparation for the legislative session that begins in January. Both the budget proposal and forecast for the next two-year budget cycle are expected to be released Nov. 13.

Beebe declined to offer any budget specifics Monday, saying that would come later. However, Beebe did name two immediate areas where money could go funding shortfalls in the state's Medicaid programs and to the state prison system. The governor said the prisons may need the money to hire more guards.

Dina Tyler, a state prison spokeswoman, said officials requested $6 million for a fund that pays county jails for housing state inmates. Tyler said the system also would need more guards to staff a 854-bed expansion to the Ouachita River Unit near Malvern.

"We're a need that isn't going away anytime soon, just like Medicaid and education and those," she said. "We're all in the same boat."

Beebe's warning comes after state finance officials in April cut $107 million from state agencies' budgets for the current fiscal year. The cuts included about $32 million lopped away from spending for the state's two- and four-year colleges and universities.

Speaking to a meeting of higher education officials Monday, Beebe said restoring that money to colleges and universities would be at the top of any list if forecasts improve. However, he warned lean times could prevent that.

"K-12 (education) doesn't need to sweat," Beebe said. "Higher education and workforce (services) probably need to sweat a little more."

Despite the warning, Beebe said he "is still committed" to further cutting the state's grocery tax a major campaign promise. Beebe and lawmakers halved the tax in 2007, resulting in a $121 million cut in sales tax on groceries. It was Arkansas' largest tax cut ever.

However, Beebe said he didn't know whether the entire reserve would be depleted during the next session.

"We're preparing for the worse and hopefully, that won't occur," he said.