Rainy Day spending skyrocketing under Governor Hutchinson

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Spending of Rainy Day Funds has skyrocketed under Governor Asa Hutchinson.  In the past eighteen months, he has spent more than was spent in the previous six years combined. With another six months to go in the biennium he has almost doubled Rainy Day spending from the previous two years.

Rainy Day Funding (renamed Long Term Reserve Fund at the request of Governor Hutchinson) is a discretionary fund given to the Governor for a variety of purposes. The money is not saved for a rainy day and there is nothing long-term about it.  It is the Governor’s slush fund.

According to the Arkansas Democrat-Gazette, “Hutchinson said he uses the rainy-day fund for emergencies, and for special needs and his priorities that aren’t included in the state’s $5.1 billion general revenue budget.”[i] Whether to spend the money does not go to the full legislature, instead it is okayed by only a legislative committee that has traditionally rubber stamped any requests by Governors Hutchinson and Beebe.

One of primary jobs of the Arkansas Legislature is to decide how to spend the state’s money…and that is what they are to do. Yet they have turned over more and more money to the Governor for him to decide what should or should not be funded.

One of primary jobs of the Arkansas Legislature is to decide how to spend the state’s money…and that is what they are to do. Yet they have turned over more and more money to the Governor for him to decide what should or should not be funded.

According to the Bureau of Legislative Research (BLR) Governor Hutchinson spent $94,103,251 during the period July 1, 2015 to October, 2016.[ii] Since the October report Governor Hutchinson has spent at least another $13 million[iii] in Rainy Day funds which would bring his total for the first eighteen months of the twenty-four months of the biennium to more than $107 million. The spending in the last eighteen months exceeds Rainy Day Fund spending in the previous six years, which according to the BLR was $99,351,464. Those six years include five and one-half years under Governor Beebe and six months under Governor Hutchinson.

EXPENDITURES FROM RAINY DAY SET ASIDE
Biennium	Total Number of Releases	Total Amount Released / Expenditures
2009-11	8	$29,500,000
2011-13	7	$14,939,066
2013-15**	27	$54,912,398
2015-17*	26	$94,103,251
Total Released	68	$193,454,715

Source: Bureau of Legislative Research

* Only 14 months of the 24-month period is covered by this number
** Governor Hutchinson was Governor for the last one-fourth of the 2013-1015 biennium.

Discretionary funding for the Governor in the form of the Rainy Day Fund (Long Term Reserve Fund) is a relatively new experiment which begin in 2009.  Until 2009, Governors had to go to the legislature to get approval of new spending.

Governor Hutchinson’s nephew, Senator Jim Hendren, filed SJR1 of 2017 proposing doing with the fiscal session of the legislature held in even numbered years.  If the budget shifts from a one year cycle to a two-year cycle, we expect the Governor’s discretionary funds to explode to provide more money for unforeseen circumstances, some of which are now handled by the legislature actions revising the budget during fiscal sessions.

Here are some important issues to consider.

1. How much is enough discretionary funding for the Governor? (Governors will never think it is enough.)
2. How much more power over the budget will the legislature give up to the governor?
3. Is this discretionary fund even constitutional? (If it is the legislature could put ALL state funds in the Rainy Day Fund and let the Governor make ALL the budget decisions on who gets money and how much.)

Here are a couple of examples of the Governor’s discretionary spending that illustrate the issue of whether the full legislature should be bypassed in these expenditures.

1. The Governor has used his discretionary funds to reverse the decision of the legislature. Less than three months after the legislature adjourned in 2015, the Governor reversed the legislature’s decision rejecting the Division of Agriculture’s request for an additional $3.5 million. In July 2015, he gave the division $3 million in Rainy Day Funds.[iv] His request for funding only had to be approved by a legislative committee and not by the full legislature.
2. In November 2016 Governor Hutchinson released $3 million dollars to two agencies responsible for regulating medical marijuana. Is this the kind of decision the Governor should make with just the approval of one legislative committee, or is this an issue and an amount of money that should have been decided by our state Senators and Representatives in a short special session.  (A short special session is no longer an expensive proposition because many of the legislators are at the Capitol anyway due to them scheduling many legislative meetings every month.)

In 2015 the legislature got over a 150% salary increase[v] claiming it had become a full-time legislature.[vi]  Perhaps legislators should hand over their salary increases to the Governor, since they are letting him make more and more of the state budget decisions.

 

 

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[i] Rainy-day’s $122,084 shifted to Parole Board, Arkansas Democrat Gazette, 02/20/2016

[ii] 2016 B Book – Selected Statistical Financial Data for Arkansas, Bureau of Legislative Research, 10/7/2016

[iii] $10 million to the Department of Human Services’ Children and Family Services Division to help the state’s foster care program. (See Private firms OK’d to tend DHS finances, Arkansas Democrat Gazette, 11/19/2016) and $3 million to implement medical-marijuana (see Rainy-day $3M allotted to get nod for marijuana going, Arkansas Democrat Gazette, 11/19/2016)

[iv] “In December in advance of this year’s session, House Speaker Jeremy Gillam, R-Judsonia, said boosting state funding for the Agriculture Division is one of his top priorities. The division had been unsuccessful in getting a $3.5 million increase in its $62.8 million general budget in fiscal 2016. Hutchinson said in a written statement that ‘this [request for $3 million in rainy-day funds] is certainly supportive of the speaker.’” State panel OKs $9.6M allocation governor sought, Arkansas Democrat Gazette, 07/15/2015

[v] “Legislators would see salaries more than double — going from $15,869 to $39,400 — and the governor would get a salary increase of more than $50,000 if commission members stick with the figures they set Friday.” Bump legislators’ pay to $39,400, panel says, Arkansas Democrat Gazette, 01/31/2015

[vi] Legislating not a part-time job, Gillam tells salary commission, Arkansas Democrat Gazette, 01/08/2015