Economic recovery highlights fiscal session

By submitted, 04/18/20 8:16 AM

LITTLE ROCK – The legislature completed the 2020 fiscal session in record time, approving a balanced budget that funds state government spending of $5.68 billion.

An additional $212.2 in spending is authorized in the event that economic activity rebounds from the slump caused by the coronavirus outbreak. Tax revenue goes up and down, depending on the health of the economy.

Arkansas operates under a balanced budget law called the Revenue Stabilization Act, which prioritizes spending categories and guarantees the state will balance its budget at the end of every fiscal year. If revenue declines, spending is cut proportionately.

The most essential state services are in Category A of the Revenue Stabilization Act. For the fiscal year that begins July 1, there will be five categories. They are A, A-1, B, C and D.

The $212.2 million in spending that has been authorized in case the economy rebounds is in Category D.

Category A is by far the largest, with authorized spending of $5.3 billion. The next category, A-1, has $184 million in authorized spending. Categories B and C each authorize $91 million in state agency spending.

In late March the state’s top budget officials put in motion a series of spending reductions because of the sudden and severe economic slump caused by the coronavirus. They reduced the official forecast for the current fiscal year by about $353 million, to a total of $5.38 billion.

The total for the previous fiscal year was $5.62 billion.

The Medicaid program, which is administered within the state Human Services Department, is authorized to spend $9 billion, although the vast majority of that comes from federal matching funds.

A change in the federal match rate will help Arkansas balance its budget while maintaining Medicaid services. Previously, federal funding accounted for about 71 percent of Arkansas Medicaid spending, but for the remainder of this year the match rate will go up to 77 percent.

Arkansas received good news from federal Medicaid officials. The state’s request for a waiver was partially approved, which means that Medicaid funds can be spent on supplemental pay for nursing home staff and others who care for people who are elderly or who have disabilities.

Supplemental pay will be more for workers at a facilities where a resident has tested positive for the coronavirus. As of last week, 28 Arkansas nursing homes had at least one case.

Supplemental payments are available to nursing homes, ARChoices, personal care providers, Area Agencies on Aging, assisted living facilities, hospice providers, children’s extensive support waiver providers for supported living services, and agencies that provide care outside of institutional settings for people in their homes.

Federal approval of the Medicaid waiver was very important because Medicaid pays for the majority of long-term care in Arkansas. Also, Covid-19, the potentially serious illness associated with coronavirus, is especially hard on senior citizens and people with certain chronic health conditions.

Staff who are eligible for the supplemental pay include nurses, nurse aids, respiratory therapists, personal care aides and home health aides, direct care workers and assistive personnel.

A similar plan for supplemental pay is being developed for hospital direct-care workers.