Lawmakers proposed 2026 fiscal budget of $6.49 billion; $750 million prison proposal fails on fifth try

By the Arkansas Black Vitality Staff

April 18, 2025—The Arkansas Legislature closed out the 95^th General Assembly on Wednesday (April 16) with a flurry of last-minute bills highlighting the state’s standing as a conservative stronghold for the Make America Great Again (MAGA) movement.

During the 2025 session, which convened on Jan. 13, Arkansas lawmakers approved more than 650 bills and strongly backed Gov. Sarah Sanders’s broad agenda, except for appropriations to build a $750 million prison in northeast Arkansas.

After recessing on Wednesday, the House and Senate have until noon on May 5 to consider vetoes, correct errors or oversights, and complete work on proposed constitutional amendments or other business. If lawmakers needed to extend the regular session further, they would need a three-fourths affirmative vote in both chambers.

During a ceremony at the State Capitol, Sanders called the 90+-day assembly “a great session for the people of Arkansas.” She also told lawmakers that she appreciated their work in “helping our state to come out better than where we started.”

“This session has reinforced that Arkansas’s conservative majority is delivering on our promises to the people of this state,” Sanders said of the GOP veto-proof supermajority in the Arkansas House and Senate.

Sanders highlighted several “wins” during the session, including her higher education reform bill, Arkansas ACCESS. Like the LEARNS Act that overhauled the state’s K-12 education system during the 2023 session, Act 340 was the governor’s signature legislation for the 2025 assembly. The 123-page acronym plan revamps the way the state’s universities and colleges operate and stands for acceleration, common sense, cost eligibility, scholarships, and standardization. It was signed into law on March 19. 

In many ways, Act 340 mimics President’s Trump federal overhaul of diversity, equity and inclusion (DEI) programs at higher education institutions. Under the new Arkansas law, state colleges and universities are now prohibited from collecting and reporting DEI-related information for accreditation. They also may not comply with any accreditation requirement related to DEI.

The act also allows the Arkansas Division of Higher Education to establish new rules for implementing a productivity-based funding model for the state’s higher education institutions.

Earlier in the session, Sanders signed Senate Bill 3 into law, banning affirmative action in Arkansas. Affirmative action is defined as discrimination or giving preferential treatment based on a person’s race or gender. Act 116 by Sen. Dan Sullivan, R-Sullivan, was the second attempt at banning affirmative action in Arkansas after a similar bill failed during the 2023 session.

In another attempt during the session to address so-called “reverse discrimination,” House and Senate lawmakers also approved HB1365, which removes racial and gender quotas and membership qualifications for certain boards, committees, councils, and commissions. Rep. Karilyn Brown, R-Sherwood, sponsored that bill.

Other parts of Sanders’ broad agenda that received strong backing from the Republican majority at the State Capitol included her proposal to repeal the state’s grocery tax, legislation that would overhaul the regulatory process to build new utility plants across the state, and a plan to address maternity health in rural Arkansas.

After several revisions in the House and Senate, lawmakers approved Sanders’ Grocery Tax Relief Act on the final day of the session. House Bill 1685 repeals the state grocery tax, which now stands at 1/18th cent. Based on state revenue calculations, the legislation will return nearly $10.9 million to the taxpayer annually, which amounts to $3.06 per Arkansas resident. This bill will not impact county and municipal grocery taxes. 

Lawmakers also revamped and approved Senate Bill 307, which Sanders and a bipartisan group of lawmakers touted as a way to attract large artificial intelligence (AI) data centers and economic development super projects to Arkansas.  Now Act 373, the Generating Arkansas Jobs Act of 2025 will allow utilities and electric cooperatives to file annual riders with the state Public Service Commission (PSC) to increase rates annually before a new plant is fully capitalized or built. Currently, the PSC considers a rate increase near the end rather than the beginning of the construction process.

Earlier in the session, Gov. Sanders signed Act 140, the “Healthy Moms, Healthy Babies Act.” One of the governor’s key proposals heading in the legislative session in January. Under the new law, the legislation unbundles Medicaid payments for pregnancy care, paying for up to 14 prenatal and postnatal care visits, encouraging providers to work with pregnant women so they attend more appointments, and increasing Medicaid’s investment in pregnant women by $12.2 million.

Sanders also said Medicaid will increase reimbursements for traditional deliveries and c-sections by 70%, investing an additional $25.7 million in care for pregnant women and encouraging more providers to participate in the Medicaid program, increasing access to care.

increases the state’s per-student public school funding for the upcoming school year by increasing the per-pupil amount by 5%, raising it to $8,162 for the 2025-2026 school year. Now Act xxxxxx, the —— new law sponsored by Rep. Keith Brooks, R-Little Rock, was unanimously approved in the Senate by a vote 34-0. It was earlier approved in the House on April 10 by a 93-3 vote.

According to a fiscal impact study from the state Department of Education, Act xxx will increase the education funding by $161.5 million in the new fiscal year that begins on July 1, 2025.

The one bill backed by Sanders that did not get across the finish line was Senate Bill 354 by Sen. Jonathan Dismang, R-Searcy, which would have appropriated up to $750 million to the Arkansas Department of Corrections’ Division of Corrections for costs associated with prison construction in Frankly County.  After five failed attempts to gain approval in the Senate, including a 21-9 vote on April 8, the measure was unable to get the necessary extraordinary majority of 75% approval required for an appropriations bill

The Legislature had previously set aside $330 million for the proposed 3,000-bed penitentiary, plus an additional $75 million. It also included an emergency clause allowing it to take effect on July 1, the start of the state’s fiscal year. The Legislature had previously set aside $330 million for the proposed 3,000-bed penitentiary, plus an additional $75 million.

As noted, Sanders signed dozens of new bills into law on Tuesday. The biggest included the upcoming appropriations budget proposed in the Revenue Stabilization Act (RSA) for fiscal year 2026 that begins on July 1, 2025. Under SB637 and HB2003, the legislature proposed a $6.49 billion budget and another $299.5 million in surplus funds.

The RSA, which prioritizes the distribution of state general revenue and maintains a balanced budget, was advanced from the Joint Budget Committee. The budgets in SB637 and HB2003 provide funding for general and higher education, human services, corrections, and other state agencies. The spending outlined is roughly $182 million above last year’s total.

In closing the session with her two vetoes, Sanders took another swing at DEI by striking out a budget line item approving a “Director of Institute on Race & Ethnicity” with a maximum salary of $191,605 at the University of Arkansas at Little Rock.

“This session I championed Arkansas ACCESS, my plan to make college more accessible for all and get indoctrination out of college classrooms. Arkansas will not waste nearly $200,000 in taxpayer dollars on DEI administrators who promote woke nonsense,” Sanders said after vetoing HB 1265, the appropriation bill for UALR’s operating expenses for the upcoming fiscal year.

Despite Sanders’s hyperbole, UALR records show that the institute’s director’s position has been vacant for several years, and no attempts have been made to hire a new director. The last director, Dr. John Kirk, is still employed at UALR and serves as the Donaghey Distinguished Professor of History.

Kirk, a native of Great Britain, has garnered international acclaim for his research and writings on race and the civil rights movement, with a particular focus on Little Rock.

Sanders also vetoed HB 1889, a new law that would allow medical marijuana dispensaries to operate drive-thru windows or deliver their prescription orders to patients via a cannabis transport service, similar to Door Dash, Instacart and Uber Eats.  Before Sanders’ veto, several Arkansas medical pot locations were already advertising drive-through and delivery services for their patients.

Overall, Gov. Sanders signed over 130 new bills into this week, including the following: 

• SB123, now 553, amends the law concerning coverage for mammograms and breast ultrasounds, including ensuring that certain cost-sharing requirements are not included  under an individual’s health benefit plan.
• HB1794, now Act 559, changes the law concerning continuing education requirements for real estate licensees; to create continuing education exemptions for certain real estate broker licensees; and for other purposes. 
• HB1630, now Act 599, amends the law concerning capital murder, murder in the first degree, and manslaughter; to add a misdemeanor controlled substance offense to the predicate offenses for capital murder, murder in the first degree, and manslaughter; and for other purposes. 
• HB 1150 – An act to prevent pharmacy benefits managers from holding a permit or direct or indirect ownership in retail pharmacies in Arkansas.
• HB1572, allows the legislature to create a technical feasibility study on new nuclear energy generation.
• HB1062, now Act 565, prohibits a student who is removed from a classroom due to violent or abusive behavior against a teacher from being place in the class with that teacher again.
• SB421, now Act 578, allows the state to authorize up to $500 million in obligation bonds to finance and refinance local water infrastructure projects across the state.