The Arkansas Senate and House of Representatives voted Thursday to send Gov. Sarah Huckabee Sanders identical bills that would boost the state’s general revenue budget by $109.3 million to $6.31 billion in the coming fiscal year.

Before the Senate and the House went into a recess for this year’s fiscal session, the Senate voted 33-0 to approve House Bill 1097 by state Rep. Lane Jean, R-Magnolia, and the House voted 88-1 to approve Senate Bill 80 by state Sen. Jonathan Dismang, R-Searcy. State Rep. Austin McCollum, R-Bentonville, voted against SB80.

SB80 and HB1097 would amend the state’s Revenue Stabilization Act for fiscal 2025, which starts July 1, 2024, and ends June 30, 2025.

With “our partners in the Legislature,” Sanders said “we continued to advance our promises to the people of Arkansas — chief among them is slowing the growth of government,” in this year’s fiscal session.

The state’s general revenue budget will increase by 1.76% in fiscal 2025 — below an average of 3% a year in recent years — and that is half of the current inflation rate, Sanders said at a news conference in the governor’s conference room.

“At the same time we are still making critical investments in public safety and education,” the Republican governor said.

“And we are paving the way to cut taxes in the future and eventually and responsibly phase out our state income tax to let Arkansans keep more of their hard-earned money,” she added.

The state would accumulate a general revenue surplus of $376.6 million in fiscal 2025 if the state’s general revenue collections meet the state Department of Finance and Administration’s Feb. 1 forecast of $6.68 billion for net general revenue based on the state’s general revenue budget of $6.31 billion in fiscal 2025.

In its Feb. 1 forecast, the finance department projected a $240.5 million general revenue surplus in fiscal 2024 that ends June 30.

“With two months remaining in Fiscal Year 2024, (Department of Finance and Administration Secretary Jim) Hudson is confident the state revenue surplus will surpass $400 million,” finance department spokesperson Scott Hardin said Thursday.

Senate President Pro Tempore Bart Hester, R-Cave Springs, told reporters he suspects that, if the state’s surplus general revenue exceeds $300 million or $400 million at the end of fiscal 2024, the Legislature will consider cutting income taxes in a special session in August or September. He said he hopes the income tax cuts could be made retroactive to Jan. 1, 2024.

“What we are not interested in is putting ourselves in a position where we are cutting essential services for the people of Arkansas,” he said Thursday.

Asked about plans for a special session later this year to consider tax cuts, House Speaker Matthew Shepherd, R-El Dorado, told reporters: “I wouldn’t say at this point that there’s any significant discussions at this point.

“I think that what has been said in the past by House and Senate leadership and the governor’s office is that, well, we wanted to get a little further down the road this year and take a look at potentially there may be an opportunity for a special session later this summer or early fall to potentially pass an additional income tax reduction,” he said. “That’s my hope. That’s my expectation.”

The Revenue Stabilization Act measures — SB80 and HB1097 — would increase general revenue for the state’s Education Freedom Accounts by $65.7 million to $97.4 million in fiscal 2025. Education Freedom Accounts are vouchers designed to help students attend private school, parochial school or homeschooling.

Sanders’ signature education initiative — the LEARNS Act, which was enacted in the 2023 regular session — created the Education Freedom Accounts. Among other things, the LEARNS Act also increased starting teacher pay from $36,000 to $50,000 a year and authorized $2,000 raises for other teachers.

SB80 and HB1097 also would increase the state’s general revenue for the public school fund by $38.2 million to $2.48 billion, including a $34.2 million increase in general revenue to $2.44 billion for the state Department of Education’s Division of Elementary and Secondary Education and a $4 million increase in general revenue to $26.8 million for career and technical education.

Sanders said the state will grant educational freedom to more families than ever in Arkansas’ history and pay for the highest starting teacher salaries in the nation after factoring in the cost of living.

House Democratic leader Tippi McCullough of Little Rock said in an interview: “I know the governor says this was one of the smallest percentage-wise raising of the budgets ever as far as extra spending, but this is still the largest budget ever.”

“I’m not sure — a lot of the money’s now going to private schools who there’s not much accountability for yet,” she said. “We have some highly paid staff people. We haven’t done enough for the people that feed our kids at school.”

The $109.3 million, or 1.76%, increase to $6.31 billion in the state’s general revenue budget in fiscal 2025 will be the smallest increase since fiscal 2022, state records show.

In fiscal 2022 that ended June 30, 2022, the state’s Revenue Stabilization Act was reduced by $50.4 million, or 0.85%, to $5.84 billion based on state records. State government reported a $1.628 billion general revenue surplus at the end of fiscal 2022.

In fiscal 2025, SB80 and HB1097 also would increase the general revenue allocated to the Division of Arkansas State Police by $3.9 million to $92.5 million in fiscal 2025. The proposal funds an additional Arkansas State Police trooper school.

“We’ll put more state troopers on our roads, making sure that we provide them with the resources and the training they need to keep our communities safe and secure,” Sanders said.

Under the measures, the general revenue for the Department of Corrections’ Division of Correction would increase by $536,285 to $434.8 million and by $571,631 to $105.3 million for the department’s Division of Community Correction in fiscal 2025.

The general revenue allocation for county jail reimbursement would remain at $25.7 million in fiscal 2025. The Legislature and the governor have enacted Act 117 to appropriate $4.2 million more to the state Department of Corrections for reimbursing counties for holding state inmates in county jails and fund the appropriation with $4.2 million in state surplus funds in fiscal 2024 that ends June 30.

The state Department of Human Services’ general revenue allocation would increase by $4.4 million to $1.83 billion under the bills, including a $3.6 million increase to $57.4 million for county operations. State officials said most of the increased general revenue for the Department of Human Services stems from the transfer of the Temporary Assistance for Needy Families program from the state Division of Workforce Services.

The bills also would reduce the total general revenue allocation to the state’s institutions of higher education by $2.4 million to $778.8 million, but also allocate $4.5 million in general revenue to fund a sustainable building maintenance revolving loan program for the state’s higher education institutions in the coming fiscal year.

In total, the measures for fiscal 2025 would increase the University of Arkansas at Pine Bluff’s general revenue budget from $26.1 million to $27.7 million in fiscal 2025, with a $2 million increase to $5.8 million for the university’s land grant matching program.

Under the identical bills, the University of Arkansas, Fayetteville’s general revenue budget would increase by $387,468 to $134.5 million and the University of Arkansas at Medical Sciences’ general revenue allocation would stay flat at $93 million.

The measures also would amend the Infrastructure Investment and Jobs Grants Matching Set-Aside in the Restricted Reserve Fund to provide for matching funds for the Infrastructure Investment and Jobs Act as well as “the Inflation Reduction Act, the CHIPS Act and other infrastructure and certain projects that are majority federally funded” in a sum not to exceed $200 million.

There is $194.8 million remaining in this Restricted Reserve Fund set-side account, said Hardin.

The overall balance in the state’s Restricted Reserve Fund is $2.05 billion, including $710.6 million in the Arkansas Reserve Fund established in legislation enacted in the September special session, Hardin said. The state’s Catastrophic Reserve Fund balance is $1.5 billion, he said.

Hester said, “We held the line on the (general revenue) budget,” and “we have got a lot of reserves and a lot of money in reserves right now.”

He said every lawmaker has water and sewer project needs in their legislative district, “so I am really going to be pushing to spend some surpluses on water and sewer projects across the state.”

Legislative leaders said lawmakers will return to the state Capitol on May 9 to adjourn the fiscal session, which started April 10. May 9 will be the 30th day of this year’s fiscal session, which is the state’s eighth fiscal session.

The state’s shortest fiscal session was 17 days in 2020 at the onset of the covid-19 pandemic, with the state House of Representatives meeting at the Jack Stephens Center at the University of Arkansas at Little Rock. Most lawmakers wore masks and spread out to maintain the recommended distance between them.

The state’s longest fiscal session was 38 days in 2014, the last year that Mike Beebe, a Democrat, served as governor and the second year since Republicans had gained majority control of the Legislature for the first time since Reconstruction.

Information for this article was contributed by Josh Snyder of the Arkansas Democrat-Gazette.

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Arkansas lawmakers on Wednesday gave final approval to two bills regulating cryptocurrency mining operations in the state and delivered them to the governor’s office to be signed into law.

Both bills are meant address what proponents say are shortcomings in 2023’s Act 851, the Arkansas Data Centers Act, which bars local governments from regulating crypto mining operations.

Act 851 passed easily in 2023’s regular session but has since come under fire for allowing crypto mines to operate without sufficient oversight. Many members of the General Assembly say that they didn’t fully understand aspects of the law when it was passed.

Crypto mines face widespread criticism for the loud noise that they often produce as well as the large amounts of water and electricity they consume.

Many lawmakers voiced worry that the facilities could put a strain on already overtaxed aquifers, hurting farmers, and potentially overburden the energy grid.

Some lawmakers voiced concerns about cybersecurity risks related to foreign ownership.

The intense backlash to the passage of Act 851 has now led to the passage of the first major pieces of substantive non-budget legislation ever passed during a fiscal session, according to several lawmakers.

The final passage in the House on Wednesday comes after the sponsors of the two bills appeared before a legislative committee Tuesday for a final round of questioning and debate.

Rep. Rick McClure, R-Malvern, and Sen. Joshua Bryant, R-Rogers, the sponsors of Senate Bill 78, as well as Sen. Missy Irvin, R-Mountain View, and Rep. Jeremiah Moore, R-Clarendon, the sponsors of Senate Bill 79, fielded questions from members of the House City, County and Local Affairs Committee.

Most agreed that something had to be done to address the many disparate concerns related to crypto mining and the bills were an acceptable start, though there was not a consensus that the bills presented a perfect or permanent solution.

Noise reduction in new bills

Senate Bill 78 requires crypto facilities to use noise reduction, listing methods such as liquid cooling, submerged cooling, building at least 2,000 feet from the nearest building or “fully enclosing the envelope” — meaning building solid walls on all sides of the crypto mine.

The bill also requires noise reduction and bans crypto operations from using water to cool their servers.

Some lawmakers, including Rep. Tippi McCullough, D-Little Rock, and Rep. Andrew Collins, D-Little Rock, pointed to language they said didn’t require these specific noise mitigation measures explicitly enough. They said the language is ambiguous as to whether other noise reduction might also technically meet the letter of the law.

McCullough asked whether the bill mandates the specific types of noise reduction listed, or might “open it up to maybe just putting some cotton balls outside the walls and saying ‘we tried to reduce the noise.’”

Bryant said the bill should be read to mean that noise reduction must be as effective as those methods.

Foreign ownership barred

Both bills would bar many foreign nationals from owning any interest in crypto mining.

Nationals of countries on the list of countries subject to the International Traffic in Arms Regulations would not be able to own a stake in a crypto mine.

Bryant and Irvin worked together to merge the sections of SB 78 and SB 79 regarding foreign ownership so that they are compatible. Bryant lowered the percentage stake that a foreign national can own from 15% to 0% in order to match SB 79.

Bryant said that using the list of countries in the regulations as opposed to barring nationals of particular countries was not a perfect solution but an efficient one.

“[As] a legislative body, we don’t have time to react to everything that’s happening in the world. Is it the best way to handle it? I’m not sure. But as it’s been said, we just don’t know and this is a step to try to control that.”

An owner of a crypto mine whose country is added to that list would have to divest from the mine, Bryant said.

Hobby mining allowed

Bryant said that under SB 78, crypto mining would be allowed as a hobby “within the four walls of the castle of your home.”

A handful of lawmakers asked how home crypto mining would be defined and differentiated from commercial crypto mining. Bryant and Entergy’s Director of Public Affairs John Bethel said that the scale of crypto mining out of a residence will be necessarily limited by the constraints of residential grade electrical service.

“It’s almost like going to the diamond mines out here and having a good fun day, and you might get lucky that day, versus buying a diamond mine with all the equipment, all the employees and everything else. It’s just two different things,” McClure said.

Skepticism and criticism

“These are really stopgap bills until we get to the ’25 general session?” asked Rep. Carol Dalby, R-Texarkana.

Bryant agreed, saying that “there’s going to be a lot more discussion unfolding in 2025 and also between now and then.”

Rep. David Ray, R-Maumelle, said of SB 78: “Everybody can probably find something that they’re not 100% on board with but with the big issues as it pertains to this bill, those being noise, vicinity and foreign ownership, I think it address all the big things.”

Collins appeared to be the only “no” in the final voice votes that passed both bills.

“I think in a lot of ways, it’s positive,” he said of SB 78, but “the reason I have to be a ‘no’ on it is that it goes too far in taking away liberties. In restricting foreign ownership in this way, we are casting a net that is both too wide and too narrow. It’s going to catch people up who are totally innocent and it’s going to miss a lot of people who are either home grown or from one of the countries not on this list.”

“We can’t really put that back in the bottle if we pass this,” Collins said.

Others disagreed, saying that there would be opportunities to improve upon the legislation.

“We’ve got between now and January to work with the sponsors and with other members of this body and the Senate, to get us there,” said Rep. David Whitaker, D-Fayetteville. “The people who are calling me say at least get started… I urge you not to let the perfect be the enemy of the good.”

“I’m not sure whether we’re helping or hurting but I’m going to support it because I know we need to do something,” said Rep. Mike Holcomb, R-Pine Bluff.