Arkansas Goes from Flush with Cash to Uncertainty About Future

LITTLE ROCK, AR - Legislators are fresh from a session in which they met new spending needs and managed to cut the state sales tax on groceries in half.

Now, with signs that the state economy is slowing, legislators say they may have a tougher time with the next budget they have to put together.

Last year, as the state surplus was about $500 million, then-Governor Huckabee suggested giving taxpayers rebates.  When the Legislature went into session, the projected surplus was approaching $1 billion.

About half went toward court-ordered school building improvements and none of the money went toward rebates.  A variety of other wants and needs were covered with the surplus, from a sports hall of fame in North Little Rock to a new airplane for Governor Beebe's travels.  There was nothing left for emergency purposes.

Representative Bruce Maloch of Magnolia had suggested setting $200 million aside as a reserve fund.

State finance director Richard Weiss says the state could soon face an economic slowdown.

Governor Beebe says the state will not necessarily hit hard times if the economy continues to cool down.  Beebe says the state is spending money for economic development and that the tax base is broadening.

(Copyright 2007 by The Associated Press.  All Rights Reserved.)