Following the success of former Governor Beebe’s 2012 blockbuster “Budget Hole Scare”, Governor Asa Hutchinson has released his sequel “Budget Hole Scare 2.”
The plot of the original “Budget Hole Scare” was impending doom from a $400 million Medicaid shortfall, unless the state adopted Obamacare’s Medicaid Expansion. Although the original “Budget Hole” was successful at the box office it was highly panned because: 1) No one other than Governor Mike Beebe and the DHS Director ever saw the monster; and 2) Despite no federal money showing up for another year, the legislature was even able to spend hundreds of millions on discretionary projects “($300M-GIF)”.
In “Budget Hole Scare 2” we are shown a blurry picture of a $100 million monster in the form of a report by the Stephen Group. Unfortunately for movie goers, the Stephen Group report numbers are less believable than a Saturday matinee featuring Godzilla with the costume’s zipper showing.
A liberal movie fan described the sequel using his favorite X-Files quote, “I want to believe.”
Conduit for Action does not believe the “budget hole” scare and finds the Stephen Group numbers flawed.
Even if there was a budget hole, here are three reasons not to worry about it.
- Arkansas Premium Tax – Arkansas has been skimming money from the federal government in the form of the insurance premium tax on Private Option policies and putting the money in a trust fund. By the end of the 2016 calendar year the trust fund may be approaching $90 million or more (three years of PO). If the Private Option/Arkansas Works version of Obamacare expansion goes away there is no reason to hold back the money from covering the alleged shortfall next fiscal year.
- General Improvement Funds – Quit spending hundreds of millions of dollars on discretionary spending of surplus (General Improvement Funds) or at least cut out the $20 million that is divided among individual legislators, the $20 million for the Governor, and the millions in Rainy Day funds given away by the Governor for items such Taekwondo headquarters. There is no need for all those “discretionary” funds especially when the budget is considered every year. (Note: the discretionary funds for legislators is being challenged in court as unconstitutional.)
- State Revenue Forecast – State Revenues are expected to grow by $100 million this year.
House Speaker Jeremy Gillam, R-Judsonia, said House leaders are developing an alternative general revenue budget for fiscal 2017, factoring in an estimated $100 million and $122 million budget shortfall, “if you stop” the Medicaid expansion on June 30.
He said the budget plan in the works envisions roughly $30 million in cuts to discretionary state funds for public schools and a 3 percent to 5 percent reduction to other agency budgets.[i]
These scare tactics are reminiscent of President Obama having barricades erected to keep citizens off the lawns of public monuments in order to try to make the federal shutdown look worse.
Take a look at CFA’s assessment of the Stephen Group’s wild estimates. Their estimates include such things as the liberal philosophy that bigger government is always better and the more you spend on big government the more the economy will grow and bring in more taxes. (By the way, the Stephens Group was required to be supportive of the Private Option). See CFA articles: 1. Claimed Private Option savings doesn’t withstand scrutiny 2. Private Option Budget Hole & Other Mythical Creatures
[i] Medicaid plan funds fiscal session’s target, Arkansas Democrat-Gazette 4/10/2016
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