EDITORIALS : It’s good to be frugal
Posted on Wednesday, October 8, 2008
URL: http://www.nwanews.com/bcdr/Editorial/66577/
You gotta look before you leap, and Gov. Mike Beebe is doing just that as he weighs whether to restore some of the budget cuts he ordered earlier this year.
In May, Beebe slashed $ 107 million from the budget for fiscal year 2009, which started July 1. Last month brought the state some good news: general revenue in September was about 5 percent higher than was originally forecast. Individual income-tax collection hit $ 266. 2 million, nearly 10 percent higher than forecast.
The bad news is that sales-tax collection was down $ 1. 3 million in September compared to the same month last year. Salestax numbers are “ kind of an early indicator a lot of times of what is going on, ” said Richard Weiss, director of the state Finance and Administration Department.
Factor in the stock market’s erratic behavior of late, and some caution is in order.
Who knows where the economy will take us. A depression is unlikely, but we wouldn’t rule anything out. In uncertain times, it’s best to err on the side of caution. Unless there is some overwhelming reason to pump more dollars into state agencies, Arkansas is probably better off sticking close to its original budget.
One of the victims of this year’s budget cuts was the state’s higher-education system. Colleges and universities are receiving $ 703 million this fiscal year, down from $ 709 million the previous year.
Such a drop normally would be cause for concern; by investing in higher education, we promote higher salaries across the state, which brings us higher income-tax collections. Ranked 49 th nationally in the percentage of adults with college degrees, Arkansas obviously needs to concentrate on raising its standing in that category.
But, as Beebe has noted, higher education was treated well in fiscal year 2007; of the 1, 140 employees added to the state payroll that year, 665 were for the state’s colleges and universities. There was room for cuts.
Beebe seems to have the right approach to this subject; he said if some budget cuts are reversed it will be a “ frugal” restoration. That’s preferable to having to come back and cut again.