Little Rock, Arkansas – Arkansas Governor Sarah Huckabee Sanders presented her proposed balanced budget to state lawmakers earlier this week, outlining nearly $7 billion in spending while emphasizing education, healthcare, public safety and the possibility of additional income tax cuts.
The governor’s executive recommendation calls for a total budget of $6,969,073,258, representing an increase of $311,625,372, or 3.94%, compared with the previous year’s budget.
Sanders described the proposal as another effort to fund important state programs without allowing government spending to grow too quickly. Her administration believes controlling that growth will create opportunities to reduce taxes further while continuing to support services used by Arkansas residents.
“This year’s balanced budget continues my administration’s record of fiscal responsibility on behalf of the people of Arkansas, making investments in key priorities while still holding the line on the growth of government to provide room for tax cuts,” said Governor Sanders. “I’m excited to work with our legislature to make these investments in education, public safety, healthcare, and more, and when we pass this budget, I’m confident we’ll be able to cut taxes and continue to lower costs for Arkansans.”
The proposal comes after Arkansas reported a $655 million state surplus during the previous fiscal year, one of the largest in state history.
Revenue collections have also remained above expectations during the current fiscal year. During its first four months, state revenue exceeded forecasts by more than $150 million, including $45 million above expectations in October alone.
The state has since raised its revenue forecast to reflect the stronger collections.
Healthcare and education receive major funding increases
Healthcare accounts for one of the largest proposed spending increases, with Sanders recommending an additional $150 million for Medicaid.
The funding would help provide supportive living services for people waiting to receive assistance through the Community and Employment Support Waiver program.
The proposal also includes $6.1 million for operations at the state’s Human Development Centers, which serve people with developmental disabilities.
Another $25 million would support the Division of County Operations, including administrative costs connected to the Supplemental Nutrition Assistance Program.
Department of Human Services Secretary Janet Mann welcomed the proposal, emphasizing its support for vulnerable residents and important state services.
“We are grateful for the Governor’s balanced budget proposal. This plan provides critical resources our agency needs to strengthen operations at our Human Development Centers, support families on the CES Waiver and the waitlist, and support the long-term sustainability of Medicaid for those who need it,” said Secretary of the Department of Human Services Janet Mann. “By also reinforcing our teams in County Operations, Youth Services, and Children and Family Services, this budget allows us to better protect vulnerable children and adults while building a stronger, more efficient state. DHS will continue identifying internal efficiencies and ensuring our Medicaid dollars are being spent correctly and on those clients who need services the most.”
Education is another major part of the governor’s plan.
Sanders is recommending $70 million for Education Freedom Accounts, a program established through her LEARNS Act.
The budget also includes $20 million for early childhood education and $9 million for higher education institutions, with the latter amount reflecting increases in institutional productivity.
Education Secretary Jacob Oliva said the proposal continues the administration’s work through the LEARNS and ACCESS initiatives.
“Governor Sanders is investing in what we already know is working in education,” said Secretary of Education Jacob Oliva. “This budget builds upon the foundation of LEARNS and ACCESS while continuing to empower families, increasing access to high-quality early learning programs, and ensuring higher education institutions offer degrees that prepare students for success in life. The Arkansas Department of Education is proud to work with a Governor who puts students and families first.”
Public safety and family services included in spending proposal
The governor’s recommendations extend beyond healthcare and schools.
An additional $4.4 million would support operations within the Division of Youth Services, while $1.5 million would go to the Crime Information Center to help ensure law enforcement agencies have access to accurate information in real time.
The proposal also calls for shifting $1.5 million from Fair Funding to Children’s Advocacy Centers, which provide services to vulnerable children.
Sanders is additionally recommending the targeted restoration of funding under the fiscal year 2027 Category B budget.
Those recommendations include $9.8 million for the Division of Children and Family Services, $4.6 million for the Division of Developmental Disability Services and $3.7 million for the Division of Youth Services.
Municipal Aid would receive $2 million, while County Aid would receive $1.5 million.
Another $970,000 would support Rehabilitation Services and the Division of Services for the Blind.
Governor proposes additional investments using state surplus
Alongside the regular budget increases, Sanders identified several priorities that would receive money from one-time surplus funds.
The largest proposed allocation is $200 million for Medicaid sustainability, aimed at supporting the program’s financial future.
Another $50 million would support operations at Human Development Centers.
The governor also proposed setting aside $50 million for the state’s potential share of SNAP benefit costs.
A separate $50 million investment would help advance recommendations from Arkansas’ updated State Water Plan.
Agriculture Secretary Wes Ward said the water funding would benefit communities, businesses and farmers across the state.
“Agriculture is Arkansas’ largest industry, and today’s balanced budget demonstrates Governor Sanders’ commitment to making strategic investments that strengthen our state’s future,” said Arkansas Secretary of Agriculture Wes Ward. “Water is one of Arkansas’ most valuable resources, and protecting it requires long-term planning and action. The Governor’s leadership in updating the state’s water plan, coupled with this $50 million investment to advance its recommendations, will help safeguard water resources, support economic growth, and ensure Arkansas producers, businesses, and families have access to reliable water for years to come.”
The administration is also directing $75 million in annual interest earnings toward Medicaid.
State officials highlight tax reductions and financial reserves
Department of Finance and Administration Secretary Jim Hudson pointed to the state’s financial position since Sanders took office in 2023.
He said Arkansas has reduced income tax rates by more than 25% during that period while increasing financial reserves to nearly $3 billion.
“Since taking office in 2023, Governor Sanders’ budgets have been people-focused and fiscally conservative,” said Secretary of the Department of Finance and Administration Jim Hudson. “Through her leadership, we have reduced income tax rates by over 25%, increased our reserves to almost $3 billion (one of the highest in the nation), and funded key programs that are important to so many Arkansans. This budget builds on that approach, with responsible investments in health care, education, and public safety, while continuing to reduce Arkansans’ income taxes. DFA looks forward to working with the Governor, members of the General Assembly, and leaders across state government on this budget.”
The governor’s spending plan now requires legislative consideration before it can be adopted.
Sanders has made clear that her administration wants to maintain funding for essential services while limiting the growth of government spending.
Although the proposal does not establish a specific new income tax reduction, the governor expressed confidence that passing the budget would leave room for further tax cuts.
The coming legislative discussions will determine which proposed investments move forward and how Arkansas balances additional spending on public services with the administration’s goal of lowering taxes.
