BENTONVILLE — A capital-gains tax cut approved in the Arkansas House of Representatives last week could drain millions from the state budget and hurt higher education funding, a NorthWest Arkansas Community College trustee said Saturday.
“Would you please look at what the shortfall would be for higher education?” Johnny Haney asked seven legislators attending a breakfast forum at the Bentonville Doubletree Guest Suites. “It could be detrimental to higher education.”
Haney was one of about 60 people attending the 90-minute event hosted by the Rogers-Lowell Area Chamber of Commerce and the Bentonville/Bella Vista Chamber of Commerce.
Haney stressed he was not taking a position on the tax cut but cautioned a state Department of Finance and Administration report shows the cut could cost the state $40 million to $60 million.
In an interview after the event, Haney said the Bentonville college receives 26 percent of its funding from the state. Finance Department figures indicate the tax cut could wipe out 4 percent to 6 percent of the state money the college receives, he said. The college’s budget, including federal money and other sources, is about $38 million, he said. Haney said the college received about 40 percent of its money from the state when he became a Board of Trustees member eight years ago.
Sen. Kim Hendren, R-Gravette, said he has not decided whether to vote for the tax cut because the state needs money for projects such as the development of alternative energy sources, including wind power.
“Nobody loves taxes, but taxes are the price we pay in our society for freedom,” he said.
The 73-year-old legislator joked his position on taxes would not make him popular with the chamber members in attendance.
“If I can’t whip you, I can probably outrun you,” he said as attendees laughed.
Rep. Duncan Baird, R-Lowell, said any lost revenue from the tax cut should be taken from $110 million in new spending Gov. Mike Beebe has proposed this year.
“I think you should give money back to the people wherever you can,” Baird said.
The bill would eliminate the capital-gains tax on profit from the 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 House approved the measure on Wednesday. It must win approval in the Senate before going to the governor for his consideration.
Beebe has said the state cannot afford additional tax cuts beyond his proposal to reduce the grocery tax by a half-cent. That proposal would cost about $20.8 million.