Governor Beebe introduced two separate budget proposals this month, depending on whether legislators choose to put off nearly $30 million in tax cuts for two years. The tax cuts, if implemented, would reduce taxes for manufacturers and many wealthy folks who have capital gains income. It would also make a big dent in the state revenue budget.

Beebe argues that delaying the tax cuts would reduce dependency on one-time surplus money to keep Medicaid afloat. The proposed budget includes a cost of living wage increase for state employees and an across the board cost of living increase for institutions of higher education only if tax cuts are delayed. If the tax cuts take effect, there would be no cost of living raise and many state agencies and institutions of higher education would face a one percent across the board budget cut.

Both proposals increase Medicaid funding by about $80 million and give roughly $50 million new dollars to the Public School Fund. Beebe assumes in both scenarios that lawmakers will keep the Private Option, which would add a $90 million hole in the budget if it is not re-approved. Unfortunately, neither budget addresses the long overdue need for additional pre-K funding.

Newly elected governor Asa Hutchinson’s proposed budget will come out sometime in January, and is likely to be the starting point for deliberations by the Joint Budget Committee. Check back for our detailed analysis of his proposal.