With the 2013 Legislative session winding to a close, the Arkansas House of Representatives overwhelmingly approved and sent to Gov. Mike Beebe more than a dozen tax cuts Friday that will reduce state general revenue by more than $90 million during the next two years.
There was little discussion of the measures in either the House or the Senate, which passed the bills Thursday. Some representatives said the cuts should be bigger and take effect immediately. No representatives voted against the bills Friday.
Along with a bill that would eventually cut the state sales tax on groceries if certain conditions are met, House members passed a collection of bills that would reduce general revenue by$9.9 million in fiscal 2014, $84 million in fiscal 2015 and $140 million in fiscal 2016.
The bills range from a capital-gains tax reduction to a sales-tax exemption for twine.
Beebe said he intends to sign the tax-cut measures, although he said lawmakers are relying “on some pretty good revenue growth” to fund the tax cuts in fiscal 2016.
House Bill 1585, sponsored by Rep. Charlie Collins, R-Fayetteville, would phase in cutting state income-tax rates by 0.1 percent. It passed by a vote of 85-5.
The bill would reduce state general revenue by $2.5 million in fiscal 2014, $30.4 million in 2015 and $55.7 million in 2016, according to the Department of Finance and Administration.
Rep. David Meeks, R-Conway, told the House he had wanted to make the income-tax cuts immediately,instead of phasing them in.
“I’m going to be voting for it today because Arkansas does need relief, and this gives them just a little bit of relief, but we could’ve done and should’ve done better,” Meeks said.
Several tax bills passed the House on Friday.
HB1966 by House Speaker Davy Carter, R-Cabot, was approved by an 87-1 vote. It would cut the state’s capital-gains taxes and increase the standard deduction from $2,000 to $2,200 starting in the tax year beginning Jan. 1, 2015.
It would increase the existing 30 percent income-tax exemption on capital gains to a 50 percent exemption in the tax years starting Jan. 1, 2015. It also would exempt capital gains exceeding $10 million from a gain on or after Jan. 1, 2014.
The bill would cut state general revenue by $600,000in fiscal 2014, $18.1 million in 2015 and $24.5 million in 2016.
Senate Bill 791 by Sen. Bill Sample, R-Hot Springs, passed by a 90-0 vote. It would reduce the sales tax on energy used by manufacturers to 1.625 percent, effective July 1, 2014, and to 0.625 percent, effective July 1, 2015.
Under existing law, the rate is 2.75 percent through June 30. It will increase to 3.25 percent on July 1 as a result of voters approving a proposed constitutional amendment in November to increase the sales tax by a half-percentage point for roads.
The bill would cut state general revenue by $12.6 million in fiscal 2015 and $18.3 million in 2016.
HB1832 by Rep. Darrin Williams, D-Little Rock, was approved 88-0. It would use tax credits to encourage private businesses to invest in poor communities. It wouldreduce state general revenue by $19.9 million in fiscal 2016, according to the Department of Finance and Administration.
SB334 by Sen. Jake Files, R-Fort Smith, was approved 89-0. It would phase in a refund of part of the sales taxes paid by manufacturers on repair and replacement parts and services.
SB463 by Sen. Jim Hendren, R-Sulphur Springs, was approved 93-0. It would exempt military pay and allowances from Arkansas income taxes, starting Jan. 1, 2015. All active-duty members of the armed services, including National Guard and Reserve units, would qualify.
HB1039 by Rep. Jeff Wardlaw, D-Hermitage, passed 90-0. It would grant a sales-tax exemption for energy used in agricultural structures such as breeding houses and hatching units.
SB299 by Sen. Larry Teague, D-Nashville, was approved 85-0. It creates a sales-tax exemption for new and used timber-harvesting equipment, effective July 1, 2014. Under current law, machinery, equipment and related attachments purchased by timber harvesters are exempt on the first $50,000 of the equipment’s purchase price.
SB298 by Sen. Jonathan Dismang, R-Searcy, was approved 82-0. It would create a sales-tax exemption for energy used for on-farm and commercial grain drying and storage, effective July 1, 2014.
HB1399 by Rep. Joe Farrer, R-Austin, was approved 90-0. It would make volunteer firefighters eligible for an income-tax deduction of up to $1,000 a year for the cost of firefighting equipment, effective Jan. 1, 2014.
SB11 by Sen. Gary Stubblefield, R-Branch, passed 87-0. It would create a sales0tax exemption for sales of baling twine, net wrap, silage wrap and similar products that are used for baling, packaging, tying, wrapping or sealing animal-feed products.
SB853 by Teague was approved 86-1. It would create a sales-tax exemption for the sale of “a dental device” made for a specific patient, to or by a dentist, orthodontist, oral surgeon, maxillofacial surgeon or endodontist. This includes a dental implant, orthodontic appliance, retainer, crown, bridge or denture.
The House also voted 91-0 to approve SB135 by Sen. Jason Rapert, R-Bigelow, that would eventually lower the 1.5 percent grocery tax to 0.125 percent.
The tax cut is contingent on the state paying off bond obligations that won’t end for years or resolving a decades-old lawsuit that requires the state to pay millions for desegregation efforts. If, in combination or separately, the bond and desegregation costs drop by at least $35 million over a six-month period, the tax cut would kick in.
It would reduce state tax revenue by $70 million during its first year, according to the finance department.
TAX INCREASE
While they spent more time cutting taxes, The House also voted 75-10 to approve one tax increase.
SB5, sponsored by Sample, would raise the Forest Fire Protection Tax to 20 cents per acre from 15 cents per acre.
Rep. Jeff Wardlaw, D-Hermitage, said the bill addresses a “safety issue” in the state caused by fires. He said the increase in revenue would allow the Forestry Commission to purchase much-needed equipment. State Forester Joe Fox has said the bill would raise about $700,000, enough to purchase three new bulldozers.
Rep. Ken Bragg, R-Sheridan, said the tax increase will save people money because it will enable the state to put out forest fires before they cause property damage. CONSTITUTIONAL AMENDMENTS
The House gave f inal approval to two proposed constitutional amendments - an ethics-overhaul measure and a measure that adds restrictions to the initiative and referendum petition process.
Senate Joint Resolution 16, sponsored by Sample, would deny groups a 30-day extension to collect more signatures if too many of their signatures were deemed invalid. It passed 65-17.
Rep. John Vines, D-Hot Springs, said the signature-gathering process for petitions had become a “free-for-all” and that the proposed amendment would be a beneficial change.
But Rep. Bob Ballinger, R-Hindsville, said the measure would be an unnecessary restriction that would keep people from being able to “touch government.” Ballinger said the Legislature had already approved a bill, SB821, to address problems in the signature-gathering process by putting restrictions on paid canvassers.
The grass-roots groups that are some of the most common users of the petition process seem to have been caught unaware by SJR16 and are scrambling to defeat it.
HJR1009, sponsored by Rep. Warwick Sabin, D-Little Rock, passed 76-3 without debate. The proposed constitutional amendment wouldestablish a number of ethics rule changes and adjust term limits for lawmakers to serve a total of 16 years in either chamber.
The proposed amendment would prohibit direct political contributions from corporations and unions and delay lawmakers’ ability to become lobbyists for two years; there’s currently a one-year ban. It also creates an independent citizens commission that would set salaries for lawmakers and other elected officials.
ELECTION COMMISSIONERS
The House narrowly approved 53-16 a bill that would terminate the six currently appointed members of the Board of Election Commissioners and expand the board from seven to nine members.
Under SB721, also sponsored by Sen. Bryan King, R-Green Forest, the chairmen of the state Democratic and Republican parties would each appoint two members to the board, including a county election commissioner and a county clerk. The lieutenant governor, governor and both chamber leaders would appoint one member apiece.
The secretary of state would remain on the board.
JUDGES’ PAY
After twice rejecting the measure Thursday, the House voted 81-5 in favor of a bill Friday that would provide a 2 percent cost-of-living increase for the salaries of judges and prosecutors in the state, their first since fiscal 2010.
Rep. Duncan Baird, R-Lowell, said SB365 would provide the same increase to those positions that was appropriated to all other state employees, except for constitutional officers and members of the General Assembly.
Northwest Arkansas, Pages 11 on 04/20/2013