Lt. Gov. Tim Griffin on Wednesday stumped for legislation phasing out state income taxes levied on military retirement benefits. He told the Arkansas Senate Revenue and Taxation Committee that the state can afford to pay for the tax cut in the fiscal year starting July 1.
A few senators challenged the Republican to find the money to finance the tax cut in Republican Gov. Asa Hutchinson's proposed $5.2 billion general revenue budget for fiscal 2016.
Senate Bill 782 by Sen. Missy Irvin, R-Mountain View, would increase the current $6,000 income-tax exemption for military service retirement and survivor benefits to $12,000 for this tax year, to $20,000 for the 2016 tax year, $28,000 for the 2017 tax year, and exempt all military retirement and survivor benefits starting in tax year 2018.
The bill would reduce state general revenue by $4.8 million in fiscal 2016, $10.2 million in fiscal 2017, $11.5 million in fiscal 2018, and $13 million a year in fiscal 2018 and thereafter, according to the state Department of Finance and Administration.
Griffin testified that "I think we absolutely can afford it," noting the state Department of Human Services paid more than $4 million to a contractor for services for which it failed to perform.
Sen. Jimmy Hickey, R-Texarkana, said that "from a political standpoint I believe that everybody wants to do that."
"If you can find the money, I'll stay another week if that's what it takes if you want get with the governor and look at the Revenue Stabilization [Act that would distribute state general revenue to agencies and programs] that we come up with and actually going in and make that cut that would offset that expense, I'm all for it," Hickey said.
Griffin said he's confident there's enough money in the state's proposed general revenue budget in fiscal 2016 to pay for the tax cut.
"I am saying if there is a will there is a way," he said. "And I have volunteered my energy and my tiny staff, which I have cut" from four to two.
Senate President Pro Tempore Jonathan Dismang, R-Searcy, said, "[I] really hate when I get a text from a veteran saying that if we don't support this we don't support them."
He said Sen. Jane English, R-North Little Rock, has championed this bill in the past and he's always supported it.
"I don't know how many hours that I have spent going through [the proposed Revenue Stabilization Act] making cuts to make room for the taxes we have already cut," Dismang said.
Act 22, enacted earlier this year, reduces income tax rates for Arkansans with taxable incomes between $21,000 and $75,000 a year and repealed certain capital-gains tax cuts enacted in 2013. It is projected to reduce state general revenue by $22.9 million in fiscal 2016 and $90.3 million in fiscal 2017, according to the state Department of Finance and Administration
HB1402 by Rep. Matthew Shepherd, R-El Dorado, would restore the capital-gains tax cuts repealed earlier this year. It is projected to reduce state general revenue by $6 million in fiscal 2016 and $11.8 million in fiscal 2017, the finance department said.
Dismang said Hutchinson "has proposed a budget [and] we have to and will cut that budget in order to make room for the restoration of the capital-gains tax."
The income tax rate cuts enacted by the Arkansas Legislature "were a tremendous cut and I don't think that should be taken lightly and it impacted the veterans, too," Dismang said.
"There is a hope and a goal that we can get to the point that we can find some additional places to cut, but it's not this session," he said.
Griffin, who served as Arkansas' 2nd District congressman from 2011 until this year, said "God created the world in seven days.
"You got, what, five days or seven [days left]. I'm going to do a lot of praying," he said.
Committee Chairman Sen. Jake Files, R-Fort Smith, said that approval of SB782 "is not as easy as you think it is.
"It is a priority for us. It is a priority for our governor," Files said. "As I spoke to him [Wednesday morning], he didn't see the money there now."
Files said that the tax committee will leave SB782 on its agenda to allow Griffin to work with the Senate and House to try find the money needed to fund it.
Metro on 03/26/2015