Brenda Blagg: Cuts top governor's list

New year presents Hutchinson opportunity for change

Before we blink, the Jan. 9 start of the 2017 legislative session will be upon us, promising all manner of conflict and presumably a lot of cooperation, too.

Gov. Asa Hutchinson expects to be on the receiving end of the latter and recently laid out an agenda he will push with the Republican-controlled House of Representatives and Senate.

The Republican governor, who is in the middle of his first term, comes into this next regular session with slightly greater majorities in each of the chamber. He, of course, brings a bit more understanding of his own job than he could have as a brand new governor two years ago

Republicans came out of the general election with 75 of the 100 House seats and 26 of the 35 Senate seats, then picked up more as a few of the men who were as elected as Democrats switched their party allegiance.

Theoretically, the numbers should make for a successful session for Hutchinson, whose agenda includes some significant tax cuts and government reorganization, which ought to be popular with lawmakers.

The tax cuts he's proposing are offered as economic development programs, reducing state income taxes with the goal of attracting people to jobs here and boosting consumer spending.

Hutchinson is proposing to exempt all retirement income of retired military service members, expecting more retired service members to move to Arkansas to start their second careers.

It's the same reasoning he's offered for an income tax cut aimed largely at lower-income Arkansans (those earning less than $21,000 a year).

Details offered by the governor's office explain that the goal is to have a state income tax rate below the regional average and therefore attractive to new talent. The side benefit is Arkansans spending less on taxes will put that money toward consumer goods, arguably increasing sales tax income.

The bulk of the $50 million tax cut plan will benefit the 44 percent of Arkansas taxpayers who earn below $21,000 a year.

Roughly 46 percent of the state's taxpayers, ones who earn more, got relief from a 2015 tax cut.

If lawmakers accept these new cuts, Hutchinson argues the state will have provided income tax relief to 90 percent of individual income taxpayers.

While not all of the resulting budget cuts will be made up, Hutchinson expects the Legislature to undo some other tax breaks to hold the budget impact of the overall package to roughly $50 million this year.

Not taxing military retirement income, for example, will cost about $13 million, but that sum, according to the governor, must be offset with repeal of other tax exemptions.

He's suggested taking away the exemptions for unemployment compensation, fully taxing the cost of manufactured housing and levying the full sales tax on candy and soft drinks, among other shifts.

Mind you, all those existing exemptions have their own backers, who will resist the governor's plan.

But the money must come from somewhere if his overall budget plan, including the income tax cuts, is to survive.

The government reorganization Hutchinson proposes is also multi-faceted. It, too, affects the overall budget planning.

Budget building is like assembling some great puzzle, trimming some pieces to make others fit. And, when it comes to state government, there is always someone to argue against changing his or her particular piece of the puzzle.

Hutchinson's legislative agenda includes elimination of some state boards and commissions and reassignment of some responsibilities.

One proposal that will get a lot of attention would move supervision of Little Rock's War Memorial Stadium to the state Department of Parks and Tourism, for example.

Hutchinson has already proposed cutting state funding to War Memorial in half, beginning in mid-2017 when the new fiscal year starts. So how might the management shift impact the state's existing parks and tourism programs?

Someone will be asking such questions as they pick apart details of the governor's agenda.

The governor also plans to get into the big middle of higher education funding, backing a funding shift to reward institutions for the numbers of students who complete work toward a certificate or degree rather than for the numbers of students enrolled.

The proposal will be met with opposition from some quarters, but the governor is tying a proposed $10 million funding hike to passage of the new formula. The policy and funding are all wrapped up together.

And, of course, all of these nuts and bolts of governing will be considered in an emotionally charged session that will also see a lot of social issues debated anew or rehashed.

Expect the governor himself to be drawn into those debates, too.

"I ran for governor as a jobs governor," Hutchinson said in a pre-Christmas press conference. "That doesn't mean I'm less pro-life, that I'm less concerned with other issues."

His focus, Hutchinson emphasized, will be economic development, education and government efficiency. But he'll consider those other issues as they come.

Commentary on 12/28/2016

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