One of the major issues the Arkansas General Assembly will have to consider during its December special session is how to pay for education reform. According to a study adopted by the Joint Legislative Committee on Education, the cost of education reform will be $847 million annually. This estimate does not include the cost of facilities, to be determined next year.
While it’s unlikely the legislature will raise all of the $847 million during the December session, a major increase in education spending will likely be necessary to show compliance with the Arkansas Supreme Court’s mandate in the Lake View case. One of the options the legislature will consider is a one-cent increase in the state sales tax, which would raise an estimated $360–$370 million annually.
Relying only on a sales tax to fund education would have major impacts for the state’s low- and middle-income families. Before examining these impacts, let’s briefly review the basics of the current Arkansas tax system.