Arkansas Legislature Holds Special Session to Address Pandemic-Related Budget Shortfalls

by Kristin Higgins - March 26, 2020

Arkansas legislators met in a special session Thursday to address anticipated 2020 budget shortfalls  and to create a special fund specifically to respond to COVID-19. 

House members held a quick session at the basketball stadium at the University of Arkansas-Little Rock, spacing themselves out across the arena. Senators met for over an hour in their chambers, but some members sat in galleries usually reserved for the public to maintain a safe distance from each other as they walked in and out of the rooms. (Watch the House Session or the Senate Session)

Both chambers considered an identical bill, which would:

• Create a COVID-19 "Rainy Day Fund"
• Transfer money from the state's general revenue reserve fund to the COVID-19 Rainy Day Fund
• Allow additional revenues to be transferred to the new fund as "provided by law."
• Allow the new rainy day fund to be used to offset general revenue reductions, fund unanticipated needs created by the COVID-19 crisis. 
• Require prior approval from specific legislators for any of the rainy day funds to be spent. 

The bill, which the House and Senate will consider at 3 p.m. Friday, would allow for the transfer of $173.6 million from general reserves to the COVID-19 Rainy Day Fund. A "rainy day fund" is similar to a savings account. States set aside surplus funds for unexpected events, deficits or emergencies.

The state's reserves are not enough, however, to cover the 2020 budget legislators previously approved. State budget officials expect a $350 million shortfall for 2020. 

The state's budget has three categories - an A, B and C category - for state agencies, education and other organizations funded by the state. The A category is usually funded 100%, and the next two categories are funded as additional revenue comes in. Due to the shortfall, the B and C categories will be completely unfunded. Category A will also be cut.

Budget officials said Thursday that $236 million will be cut from Category A, though the governor and legislators will have some flexibility to ensure departments such as the health department will not be cut as  much. The $236 million accounts for 4.2% of the Category A, but the cuts will be more difficult because they're being made at the end of the fiscal year when state agencies were not expecting it. 

The bill being considered does not address the state's 2021 budget, which legislators were expected to discuss next month during a regularly-scheduled fiscal session. The fiscal session is separate from a general session. Voters in 2008 passed a constitutional amendment mandating a fiscal session every other year. However, the governor can call a special session when needed, like he did this week.

Gov. Asa Hutchinson said Thursday that the House of Representatives' meeting at UA-Little Rock was historic and that legislators have met outside the Capitol only two times since it was built in 1915.

Watch Arkansas legislative meetings

Find Arkansas state budget information