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Reduced spending bill likely will equal $6 million.

Penny-Pinching by 'Budget Hawks' May Pay Dividends

EARLY SUCCESS OF A BILL that may save the state close to $6 million this fiscal year proves state government can tighten its belt and may foreshadow a new approach to the state budgeting process, state lawmakers say.

When President Clinton's budget plan squeaked through Congress last month, he said the sound of gridlock easing could be heard. But some Arkansas legislators would say it was first heard in Clinton's former Capitol, when a coalition of fiscally conservative lawmakers -- many of them freshmen and sophomore House members -- banded to rebuff the rubber-stamp approach traditionally taken in approving budget appropriations.

"We started holding up those appropriation bills, and the first thing we did was try to make a point that government has to pull back," says Phil Wyrick, a second-term legislator and lead sponsor of Act 494, known during the session as the "95 percent bill."

Wyrick and other supporters of the bill recently learned that the legislation could result in the roughly $6 million windfall.

Act 494 requires state agencies that have more than 10 employees to spend only 95 percent of the available budget.

Initial projections by the state Department of Finance and Administration are that state agencies operating as "cash agencies" -- those funded through the fees they charge -- could save nearly $4.7 million this fiscal year, which started July 1 and ends June 30, 1994. "General revenue" agencies -- those that receive a majority of state funding from general revenues -- could save almost $1.2 million.

Fresh off the campaign trail, Wyrick and other first- and second-term legislators such as Reps. Mark Riable of Little Rock, Tim Wooldridge of Paragould and Dennis Young of Texarkana carried a message from the campaign trail into the House chamber.

It went something like this: "We've tightened our belt; now it's government's turn."

"With that in mind," says Wyrick, who operates a family-owned marble company with his brother, "what we were trying to do is say, 'Look, put the brakes on this thing, and let's start trying to slow down spending. Let's start looking at our budgets just as we have in business.'"

A coalition of about 20 hard-nosed fiscal conservatives emerged. Dubbed the "House budget hawks" in a headline in the state newspaper, they began stalling various appropriation bills by questioning requests for additional employees and funding.

During one day the mavericks bucked four separate bills. That led Rep. Lloyd George of Danville, presiding over the House, and Rep. John Miller of Melbourne, the House chairman of the Joint Budget Committee, to agree publicly that they "might as well wait awhile" before trying to pass any more bills.

Striking a Deal

Miller finally struck a key deal with the reduced budget proponents in which he would give the "95 percent bill" his blessing and they would quit being so contrary.

"The only reason I think we were successful is because we had a large number of people, and we developed a strategy to demonstrate to them that we were serious," Riable says.

Skeptics didn't immediately embrace the bill for a variety of reasons. Some thought it pointless because agencies would simply skirt the bill with padded appropriation requests. Others felt the bill's "don't spend everything available" premise was at odds with how government really works, and many veterans were put off by what seemed a naive attempt by political novices to cut spending.

"Whatever feeble attempt they thought it might be, at least it's saving some money, and I think that's a victory for the taxpayers of Arkansas," Wooldridge says.

However, the good news about the potential savings to the state can't be separated from questions about whether the state will be able to maintain such spending controls.

It's considered a given that state agencies will try to outsmart the system in the next biennium by padding their budgets to compensate for the forced savings.

But Riable says the early indication that agencies can function without using their entire budgets means they will have a harder time justifying increased budgets. Strong supporters of Act 494 say its savings potential guarantees their continued vigilance over the appropriation process.

"We intend to watch those budgets very carefully to be sure they're not padded," Young says. Although most of the "budget hawks" don't sit on the Joint Budget Committee, which reviews appropriations, Young says he believes the fiscal conservatives can find innovative ways to be "watchdogs."

Supporters say another way to realize the act's positive potential is by finding another way the savings can help the state overcome inevitable rough spots.

Money Trails

Another bill passed in the last session requires the state to funnel "unobligated or unallocated funds" from general revenues into an account for building projects, most of which are related to the Department of Correction.

Wyrick says that bill, Act 1137, means that savings from general revenue agencies, which this fiscal year is estimated at $1.2 million, must go toward construction projects.

"In the Department of Correction alone, we've got $23 million worth of projects to be built," Wyrick says.

But he and others would like to see a "rainy-day fund" set up that could absorb savings from the cash agencies. Because of the Revenue Stabilization Act, state law now dictates that any remaining monies among those agencies must be spent.

These two money-handling requirements don't accommodate emergency situations such as the Medicaid shortfall the state experienced last year.

"If we had a rainy-day fund a little over a year ago, we would never have been in special session for that," Wyrick says. "Instead we created taxes on soda pops and anything else that didn't move."

Wooldridge notes that a rainy-day fund would be a safety net that would prevent lawmakers from carrying out "knee-jerk reactions," like the soft-drink tax, when inevitable crises arise.

"A rainy-day fund would give us that time to be more thoughtful about our expenditures," he says.

Regardless of what tactics are used, Wyrick and other proponents of reduced spending vow that the early promise of Act 494 means it won't be business as usual when the next session rolls around.

"My aim was to slow down the growth of government, and this was a mild attempt to do that," Wyrick says. "The opposition to this tried to discredit it as being absolutely ineffective, and I think what the |savings projections~ do is prove that indeed it is effective, and whether it be small business people or just individual taxpayers out there, they're interested in seeing us do some more of this."

House Sponsors of 95 Percent Bill

The following state representatives sponsored House Bill 1641 that became Act 494 of 1993. Listed are their names, party affiliation, residences and the term they now are serving.

Phil Wyrick (D), Mabelvale, second term

Tim Wooldridge (D), Paragould, second term

Ralph "Buddy" Blair Jr. (D), Fort Smith, seventh term

Doyle R. "Buddy" Wallis (D), Malvern, first term

David L. Choate (D), Beebe, first term

Jerry E. Hinshaw (R), Springdale, seventh term

Veo Easley (D), Sheridan, sixth term

Ray Stalnaker (D), Little Rock, first term

Armil Curran (D), Clarksville, first term

William "Bill" Hendrix Sanson (D), Vilonia, ninth term

James T. Jordan (D), Monticello, fourth term

Carol O. "Coach" Henry (D), North Little Rock, second term

James Dietz (D), North Little Rock, third term

Jerry King (R), Greenwood, eighth term

Owen Miller (D), Marked Tree, sixth term

Jacqueline Johnson-Roberts (D), Pine Bluff, second term

Bobby Wood (D), Jonesboro, ninth term

Louis McJunkin (D), Springdale, sixth term

Dennis Young (R), Texarkana, first term

Bob Watts (R), Harrison, fifth term

Charles Bryant (R), Rogers, first term

Claud Cash (D), Trumann, first term

Mark Riable (D), Little Rock, first term

Joseph Molinaro (D), Sherwood, first term

John L. Hall (D), Rudy, first term

Judy Smith (D), Camden, second term

Christene Brownlee (R), Gilmore, second term

Bill Townsend (D), Little Rock, 11th term

William J. "Billi" Fletcher Jr. (D), Lonoke, first term

W.R. "Bud" Rice (D), Waldron, ninth term

Larry Mitchell (D), Bryant, eighth term

Albert "Tom" Collier (D), Newport, 12th term

Dave Bisbee (R), Rogers, first term

Marian Owens (D), Warren, first term

Jim Hill (D), Nashville, first term

Donald G. (Greg) Wren (D), Conway, first term

Donald Bruce Hawkins (D), Morrilton, sixth term

Ben McGee (D), Marion, third term

Keith Wood (D), Blevins, fifth term

Gus Wingfield (D), Delight, seventh term

Jimmie Don McKissack (D), Star City, 12th term

Ted Mullenix (R), Hot Springs, sixth term

At a Glance

* Act 494 of 1993 requires most state agencies to spend no more than 95 percent of the total amount they are appropriated, unless the governor declares an emergency.

* Exemptions include: appropriations made payable from the public school fund, those made to state-supported institutions of higher education, and State Highway and Transportation Department appropriations.

* Agencies, boards or departments with 10 or fewer employees are required to spend 2 percent less than their appropriation, rather than 5 percent.
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Article Details
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Author:Walters, Dixie
Publication:Arkansas Business
Date:Sep 6, 1993
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