The beginning of July brings with it a new fiscal year in Arkansas and a new budget to accompany it. This year, we'll see added funding for key state services, some targeted tax relief, and, thanks to voters, a new revenue stream for our highways.
What has not changed is keeping education our top priority. We've again allocated more money toward Educational Adequacy to continue furthering improvements in our K-12 schools. We've bolstered assistance for growing higher-ed institutions and provided ongoing revenue for college and research programs.
We have also increased Medicaid funding. This was a necessity with rising care costs and a depleted trust fund. However, between our payment-improvement initiative, the lowest Medicaid growth rate in more than two decades, and savings from the Arkansas Private Option, the Department of Human Services will not have to cut any of its Medicaid services.
Arkansas's unique approach to the private option will bring more federal funds into our state and help provide private insurance policies to 250,000 uninsured Arkansans. That funding will generate savings in general revenue, and much of that savings is destined to provide future tax relief.
Tax cuts for fiscal year 2014 will be about $10 million. The biggest portion of these cuts will benefit our men in women in uniform. Active-duty members of the military will now be entitled to a tax credit on their service pay. Our new budget also has a mechanism in place to complete our final cuts to the sales tax on groceries once funding is freed up. This is primarily money currently still being spent as a result of school-desegregation court rulings.
We will also provide our state employees with a two percent cost-of-living adjustment in the next fiscal year. These dedicated professionals have gone without a pay increase for the past two years. Providing a COLA can also help reduce turnover in state government. Less time spent replacing and training employees helps make providing state services more efficient and effective.
One other major change to our funding was made not by the General Assembly, but directly by the people of Arkansas. Last year, voters approved a temporary half-cent sales tax that takes effect in this new fiscal year. It will fund a $1.8 billion highway program to help expand and update roads to keep up with growing populations. Our transportation system is important to economic development, tourism and daily life in Arkansas. Voter approval of this measure in a generally anti-tax climate shows that Arkansans are committed to the State's ongoing progress.
Arkansas continues to have a national reputation for stable, responsible budgeting. What that means for you is consistency in the state services your tax dollars pay for, even in the face of sequestration and deficits in Washington, D.C. We will remain good stewards of our taxpayers' dollars as they allow us to serve them, and use those dollars to make Arkansas a better place now and in the coming years.