- Associated Press - Wednesday, March 12, 2014

LITTLE ROCK, Ark. (AP) - Giving final approval to a $5 billion budget for the coming year, Arkansas lawmakers wrapped up a session Wednesday that focused on the fight to reauthorize a compromise Medicaid expansion that is extending health coverage to nearly 98,000 people.

The House and Senate recessed this year’s session after both chambers passed identical versions of the budget bill, formally known as the proposed Revenue Stabilization Act. The Legislature is set to meet March 19 to consider any veto overrides and formally adjourn the session.

The budget easily cleared both chambers with little fanfare, unlike the debate over reauthorizing the “private option” program that was approved last year as an alternative to expanding Medicaid under the federal health care law. Under the private option, Arkansas is using federal Medicaid funds to purchase private insurance for low-income residents.

After four failed votes before the House, the program survived a defunding attempt and will continue for another year. But backers of the program said they’re worried this year’s private option fight was a preview of how difficult it’ll be to keep the program.

“There’s essentially no room for error, and I think even some of the people who voted for it this time are very questionable on whether they’ll continue to vote for it,” said Senate President Michael Lamoureux, R-Russellville.

Opponents of the program vowed to try again with their defunding attempt when the Legislature returns in January for its regular session.

“I think it has problems going forward,” said Sen. John Cooper, R-Jonesboro, who won his seat in a special election in January where he campaigned promising to vote against the private option.

House Speaker Davy Carter, R-Cabot, said he was appointing a subcommittee to study options if the private option ended. The reauthorization bill includes provisions that would end the program if the federal government doesn’t approve changes to the program by early next year.

“We need to know what we’re going to do if the private option stops for whatever reason,” said Rep. John Burris, R-Harrison, an architect of the private option appointed by Carter to head the panel.

This year’s fiscal session was the third under a constitutional amendment voters approved in 2008 requiring the Legislature to meet and budget annually. Under that amendment, lawmakers hold regular sessions in odd-numbered years and abbreviated fiscal sessions focused on the state’s budget in even-numbered years.

The budget closely mirrors the proposal Gov. Mike Beebe laid out to the Legislature in January and calls for increasing state spending by $108 million. Arkansas schools receive the biggest boost in funding, receiving an additional $65 million in the coming year.

Lawmakers also gave final approval to bills tapping nearly $22 million from the state surplus for various one-time needs, including school broadband and reimbursement to counties for housing state prisoners.

It’s unclear whether lawmakers will have a veto override to consider when they return to formally adjourn the session next week. Beebe wouldn’t say whether he planned to veto a proposal to exempting the sand used in the drilling of oil and natural gas from state sales taxes. The exemption was included in the budget bill for the Department of Finance and Administration’s revenue services division.

Beebe has line-item veto authority to strike the tax exemption from the division’s budget bill. A Pulaski County circuit judge has ruled that sand qualifies as equipment, meaning taxes can’t be collected on it. Lawmakers say they’re clarifying the law to follow the judge’s decision.

Beebe said inserting the tax break in the division’s appropriation violates the amendment on fiscal sessions and was an end-run around the requirement that two-thirds of the Legislature approve introducing any nonbudget bills.

“I think it’s clearly unconstitutional,” Beebe told reporters. “Now the question is, am I going to do something about it or am I going to let the court do something about it?”

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Associated Press writer Christina Huynh contributed to this report.

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Follow Andrew DeMillo on Twitter at www.twitter.com/ademillo

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