Few things conjure up a drive for new government spending as much as a vibrant economy.
When economic conditions are strong, as they are these days, government leaders know the time to ask voters for money is ripe.
Even Republicans, who became dominant in Arkansas with talk of smaller, more efficient government and lower taxes, are demonstrating they'll jump at a chance to create new or expanded taxes. Gov. Asa Hutchinson and his legislative supporters have cut income taxes, but they also have imposed $95 million a year in new fuel and other taxes to fund highways. And they're going to ask voters next year to make a temporary sales tax permanent so highways can get another infusion of more than $200 million a year.
Hutchinson also tapped a new form of taxation, one that might be called voluntary. Most people know it as casino gambling. Hutchinson's plan will take $35 million a year from casino taxes and shift that new-found money into highways and roads, too.
It turns out Driving Arkansas Forward, the organization that pressed for the casino measure last year, was right even if they were premature. The group caught criticism (including from me) for their assertion that approving the casino gambling would pay for better state highways. The amendment to the state Constitution to legalize casinos said nothing of the sort, so their promotion of that notion was just speculation. They dropped those claims from their campaign. Hutchinson and the General Assembly, however, have made the group look like soothsayers.
Late last week, Sen Jim Hendren of Sulphur Springs joined a bipartisan group of lawmakers to propose new taxation on electronic cigarettes. The new tax is ostensibly made more attractive by the group's proposal to also reduce taxes on lower- to middle-income residents through a state refundable earned income tax credit; an increased standard deduction on income taxes from $2,000 to $3,300. The plan would also eliminate the 2 percent rate bracket in the tax table for people with incomes up to $22,200 a year. The rate is now applied to incomes from $4,500 to $8,900 a year.
Closer to home, robust economic times have inspired cities and counties to go for it when it comes to tax-supported projects.
Last August, Rogers asked its residents to extend a 1 percent sales tax to pay for about $240 million in new projects. Voters approved all the requested projects.
In February, Springdale voters agreed to extend a 1 percent sales tax and allow the city to issue $225 million in new bonds that will ultimately fund about $180 million in new projects.
It seemed for a while that voters were in a giving mood, ready to fund new facilities and projects. Then last week happened. Voters in Benton and Sebastian counties demonstrated there's no such thing as a sure bet. Voters in those two counties soundly defeated temporary tax increases to fund a new Benton Count courts building and to shore up the U.S. Marshals Museum with an infusion of taxpayer dollars. It was a solid beat-down by voters.
But wait, there's more.
Fayetteville is ready to take a turn with its voters in a special election April 9 seeking approval to extend a 1 percent sales tax in support of 10 project categories -- from drainage to a lofty "civic space" and arts corridor downtown -- that total $226 million.
And Washington County officials have talked of a jail expansion, which would have to include a request for new temporary taxation to build it and long-term taxation to provide operational support for the jail. Early last week, a committee of the Quorum Court decide to delay further consideration of the funding and expansion until May.
That was before the defeats in Benton and Sebastian County, but those outcomes made Washington County's decision look wise.
Last year and so far in 2019 have proven to be taxing times, quite literally.
Commentary on 03/17/2019
Print Headline: NW Arkansas in the midst of taxing times