Legislative leaders said they are willing to work with Beebe toward a compromise on Medicaid, but that they're worried about the long-term impact of adding 250,000 people to the program. House Speaker Davy Carter, R-Cabot, told reporters he's worried about whether the federal government would expect Arkansas to pay more than 10 percent of the costs later.
"There aren't any guarantees that it's going to be a 90-10 split forever, and I think they're going to have to address that," Carter said after Beebe's speech.
House Majority Leader Bruce Westerman, R-Hot Springs, said the expansion would "a very tough sell" in the Republican-controlled House.
"We need to focus more on reforming the existing system that is somewhat broken before we talk about expanding anything new," he said.
Beebe also called on lawmakers to pass his proposal to cut the state's grocery tax from 1.5 percent to .125 percent if certain budgetary triggers are met. He said the proposal will allow the state to cut the tax in a financially responsible way, even if it's after he leaves office in 2015.
Beebe's proposed tax cut would take effect if the state's obligations in several areas, including court-mandated desegregation payments to three school districts, declined by $35 million over six months. Republicans have said they want to see if there's room for other tax cuts in Beebe's proposed $4.9 billion budget.
"I proposed that we pass legislation to make grocery tax relief the first call on this money when it becomes available," Beebe said. "It may not be another year or two years or even more, but when it happens the mechanism will be in place to make that final cut on the grocery tax and put money in the pockets of Arkansas taxpayers."
Beebe said he expected to have a good working relationship with the Republican-led Legislature, noting that former President Bill Clinton was able to balance the federal budget when the GOP controlled both chambers of Congress in the 1990s.
"We must resolve to not let Washington's animosity seep in and poison our well of civil discourse. Arkansas cannot change the way things are done in D.C., but we can continue to set the example of how men and women with different views can still come together in the best interest of our citizens," the governor said.
Associated Press writer Michael Stratford contributed to this report.