LITTLE ROCK — House Speaker Davy Carter on Tuesday asked the House Revenue and Taxation Committee to start work on tax cuts totaling $150 million, but Gov. Mike Beebe wants to see how his proposed budget would be sliced to finance these tax cuts.
Also Tuesday, Carter said the Legislature has hired two consultants to review a proposed steel mill project for which Beebe wants the Legislature to authorize a $125 million bond issue.
Legislation outlawing harmful new synthetic drugs and a bill allowing motorists to show their proof of insurance on their cell phones also advanced in the Legislature.
TAX CUTS
Carter, a Republican from Cabot, told the House tax committee on the 44th day of this year’s session that “we are at halftime of this session, and the third quarter starts today.
“You all have a great responsibility to make sure that we pass reasonable tax measures out of this committee,” he told its members - 15 Republican legislators, including himself, and five Democrats.
In the 2011 session, the Legislature enacted several tax cuts. State officials estimated that the changes would reduce revenue by $34.5 million in fiscal 2012, and $44.7 million in fiscal 2013.
Carter said there have been tax-cut bills introduced that would collectively reduce state revenue by more than $2 billion, and all these bills can’t be sent to the House.
“I am asking that the committee begin deliberations on your tax-cut package in the total amount of $150 million,” Carter said in a two-minute speech.
He asked the committee to prioritize tax cuts by putting together their most essential tax cuts totaling $50 million, and then packaging together four tax cuts totaling $25 million each based on its priorities.
Afterward, Carter said he came up with the $150 million figure for a total tax-cut package “with a lot of hard work.”
He said he wants to change the state’s income-tax brackets to reduce taxes.
But Beebe told reporters that, “We cannot even afford my No. 1 tax cut right now immediately, which is the groceries tax cut, and still meet these obligations.
“So if they are going to cut any more taxes, they have an obligation to say who they are taking it from,” he said. “You can’t just do this in a vacuum. They cannot in good conscience and with any responsibility talk about tax cuts without showing what cuts in the budget will ensue from those tax cuts.”
The state’s general-revenue budget is $4.727 billion in fiscal 2013, which ends June 30, and Beebe has proposed a budget of $4.947 billion in fiscal 2014, including $10 million in rainy-day funds.
If the Legislature follows the governor’s existing recommendation to bolster the Medicaid program by $90 million in general revenue and $70 million in surplus funds in fiscal 2014, state officials project a $61 million Medicaid shortfall that could be fixed without cutting services, said Beebe spokesman Matt DeCample.
Beebe’s proposal to further cut the state’s 1.5 percent sales tax on groceries is dependent on bond obligations that won’t end for years or the resolution of a decadesold lawsuit that requires the state to pay millions for desegregation efforts. The sales tax on groceries has been cut from 6 percent under Beebe’sleadership since 2007.
Senate President Pro Tempore Michael Lamoureux, R-Russellville, said Carter’s aim for a $150 million tax-cut package is probably a good starting point for the debateon how much the Legislature should cut taxes.
“I don’t know that I agree with any figure at this point,” he said. “But I agree we need to set a figure and I wouldn’t say that’s out of line.”
Carter told the House tax committee that he’s also asking it to consider a capitalgains tax cut “in the context of the healthcare debate that is ongoing regarding Medicaid.
“At the end of the day, the folks that are going tobe paying for this are the job creators of this state and this country, and we are going to at least give that that due consideration,” he told reporters.
Beebe said he and Carter are looking at “some options on some capital gains treatment designed to keep the big job creators from leaving the state, but it is way preliminary right now.”
He said he considers the discussions about Medicaid and cutting capital gains taxes to be “totally separate.”
“They don’t have anything to do with each other,” Beebe said. “One is not a quid pro quo.” BIG RIVER STEEL
Carter announced that the Legislature has selected two consulting firms to complete a review of a $1.1 billion steel mill project in northeast Arkansas. State officials, including the governor, want lawmakers to authorize $125million in bonds. Otherwise, the plant will likely go elsewhere.
Amendment 82, passed by voters in 2004, allows the Legislature to authorize general-obligation bonds to finance infrastructure or other needs to attract large economic-development projects. Lawmakers must complete a study or review of the proposed project before they approve the bonds. This is the first time Amendment 82 has been used.
Regional Economic Models Inc., based in Amherst, Mass., will be paid $29,000to complete a cost-benefit analysis of the project as well as looking at the economic, fiscal and demographic effects of employment, taxes and revenue, gross domestic product, population, wages, income and the bond issues.
The report will be due by March 11.
Global Insight Inc, based in Englewood, Colo., will be paid $48,750 to complete those same analyses as well as analyzing other aspects of the project including the capital costs, financing, economic incentives being offered, and whether the market can bear another steel mill.
The Global report will be due by March 12.
“We don’t want to get it wrong, and I’d rather have two and say we overkilled it than have one and have you asking me next year why we only had one,” Carter said. “I don’t want any Monday-morning quarterbacking, so we’re going to try to get as much information as we can.”STATE FLAG DESIGNER
The House of Representatives passed House Resolution 1014, proposed by Rep.James Word, D-Pine Bluff, to honor Willie Kavanaugh Hocker, the creator of the Arkansas state flag.
Word presented the resolution onthe flag’s 100th anniversary.
Hocker was born on July 21, 1862, in Madison County, Ky., and moved to Arkansas in 1870.
In 1913, a legislative committee led by Secretary of State Earl W. Hodges selected Hocker’s flag design from among 65 entries and adopted it as the official state flag.
Hocker died at home in Wabbaseka on Feb. 6, 1944.
ELECTRONIC INSURANCE
In other business, the House approved 91-0 Senate Bill 243, proposed by Sen. Larry Teague, D-Nashville, which would allow motorists to show proof of insurance in either paper form or electronic form.
Rep. Andrea Lea, R-Russellville, who presented the bill to the House, said most people already have their cell phones on them and it would be convenient to simply present an app.
CONTROLLED SUBSTANCES
The House Judiciary Committee passed House Bill 1415, proposed by Rep. John Vines, which would add a variety of “synthetic substances, derivatives, or their isomers” to the list of Schedule VI controlled substances.
Vines told the committee that the bill was aimed at addressing new drugs that have been sold at convenience stores and other businesses since the Legislature banned K2, Spice and other synthetic marijuana brands.
Possession of a Schedule VI substance ranges from a Class A misdemeanor to a Class A felony depending on the amount of drugs and the number of previous convictions.
Front Section, Pages 4 on 02/27/2013