FAYETTEVILLE — About 20,000 jobs could be created for every $10 million lost in state revenue from this week’s capital gains tax cut by the state House of Representative, Rep. Charlie Collins, R-Fayetteville, told a group at the Fayetteville Chamber of Commerce 0n Friday.
Sate legislators, including Collins, discussed an income tax cut passed by the House and opposed by Gov. Mike Beebe at the chamber’s Legislative Forum.
The bill, passed by the House on Wednesday would exempt capital gains from the proceeds of a sale of Arkansas property acquired after July 1 and owned for at least one year. The bill defines “Arkansas property” as real estate, tangible property and investments in a company with its primary headquarters in Arkansas.
The tax cut still needs to be passed by the Senate before reaching the governor’s desk.
Collins told the group the cut would entice business growth, and over time create more jobs.
“I'm not predicting that we’re going to lose $10 million,” Collins said. “I’m not predicting that we’re going to lose $20 or $30 million. But if we lost $30 million and created 60,000 jobs in Arkansas, that would be like building another Walmart here in terms of creating jobs for this state.”
Rep. Uvalde Lindsey, D-Fayetteville, said Arkansas will not have enough new revenue to make up for the potential $44 million tax cut. Beebe’s budget will bring in an extra $110 million in new revenue, but most of it will be spoken for, Lindsey said.
A court-imposed formula for how the state spends on education gets first crack at the $110 million, Lindsey said. That could amount to about half of the new revenue.
Government spending on education, prison overcrowding and health care could reduce that $110 million to about $27 million, Lindsey told the crowd as he did the math on some paper.
The $27 million in new revenue is not enough to cover the $44 million tax cut, Lindsey said.
“Then you’re in the red,” Lindsey said after the meeting. “You’ve got to cut someplace else, because there has to be a balanced budget.”
A cut to prenatal health care to illegal immigrants had been suggested to state Sen. Sue Madison, D-Fayetteville, through at least five e-mail this week, she said.
“Which I have pointed out that when the baby is born, it is an American and if it hasn’t had good prenatal care, it may end up at a children’s hospital where it could cost us $2,000 a day,” Madison said, who happened to have brought her toddler grandson to the event.
The news of the tax cut was a surprise to senators this week, Madison said. Sen. Bill Pritchard, R-Elkins, said the Senate’s review of the bill will more than likely be held up at the Senate’s Revenue and Tax Committee.
“It’s four-four in there — four Republicans and four Democrats,” Pritchard said. “That’s not a bad place to be. We all got to work together.”