Governor Sanders presented her balanced budget to the Arkansas Legislature, a nearly $7 billion plan that adds money for education, public safety and health care while holding the line on the growth of government to leave room for future tax cuts.
Governor Sarah Huckabee Sanders’ executive recommendation totals $6,969,073,258, an increase of $311,625,372, or 3.94%, over last year’s budget.
“This year’s balanced budget continues my administration’s record of fiscal responsibility on behalf of the people of Arkansas, making investments in key priorities while still holding the line on the growth of government to provide room for tax cuts,” Sanders said. “I’m excited to work with our legislature to make these investments in education, public safety, healthcare, and more, and when we pass this budget, I’m confident we’ll be able to cut taxes and continue to lower costs for Arkansans.”
State Revenues Running Ahead of Forecast
Arkansas recorded a $655 million surplus last fiscal year, one of the highest in state history. In the first 4 months of this fiscal year, state revenues beat forecasts by more than $150 million, including $45 million in October alone. The revenue forecast has also been revised upward.
Department of Finance and Administration Secretary Jim Hudson said the state has cut income tax rates by more than 25% since Sanders took office in 2023 and built its reserves to almost $3 billion, one of the highest in the nation.
“This budget builds on that approach, with responsible investments in health care, education, and public safety, while continuing to reduce Arkansans’ income taxes,” Hudson said.
Where the New Money Goes
The governor’s proposed increases include:
- $150 million for Medicaid, including supportive living services for people on the Community and Employment Support (CES) Waiver waitlist
- $70 million for Education Freedom Accounts, created by the LEARNS Act
- $25 million for the Division of County Operations to cover Supplemental Nutrition Assistance Program (SNAP) administrative costs
- $20 million for early childhood education
- $9 million for colleges and universities, reflecting increases in productivity
- $6.1 million for the Division of Developmental Disability Services to fund operations at the state’s Human Development Centers (HDCs)
- $4.4 million for Division of Youth Services operations
- $1.5 million for the Crime Information Center to give law enforcement accurate, real-time data
- $1.5 million reallocated from Fair Funding to Children’s Advocacy Centers
The budget also includes a targeted restoration of FY27 Category B funding:
- $9.8 million for the Division of Children and Family Services
- $4.6 million for the Division of Developmental Disability Services
- $3.7 million for the Division of Youth Services
- $2 million for Municipal Aid
- $1.5 million for County Aid
- $970,000 for Rehabilitation Services and the Division of Services for the Blind
$350 Million in One-Time Surplus Spending
Sanders also wants one-time surplus money used for:
- $200 million for Medicaid sustainability
- $50 million to support the State Water Plan
- $50 million for the state’s potential share of SNAP benefits
- $50 million for Human Development Centers
The governor is also directing $75 million in interest earnings to Medicaid each year.
Cabinet Leaders Back the Plan
Secretary of Education Jacob Oliva said the budget “builds upon the foundation of LEARNS and ACCESS while continuing to empower families, increasing access to high-quality early learning programs, and ensuring higher education institutions offer degrees that prepare students for success in life.”
Department of Human Services Secretary Janet Mann said the plan “provides critical resources our agency needs to strengthen operations at our Human Development Centers, support families on the CES Waiver and the waitlist, and support the long-term sustainability of Medicaid for those who need it.” She said DHS will keep identifying internal efficiencies and make sure Medicaid dollars are spent correctly.
Arkansas Secretary of Agriculture Wes Ward said the $50 million for the State Water Plan “will help safeguard water resources, support economic growth, and ensure Arkansas producers, businesses, and families have access to reliable water for years to come.”
Lawmakers in the Arkansas General Assembly will now take up the governor’s proposal.
SOURCE: Office of Governor Sarah Huckabee Sanders
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