Job creation and tax reform were two of the biggest issues before us this week as we inch closer to adjourning for the session.
We began week 11 by passing the Arkansas New Markets Job Act. This bill would create Community Development Entities (CDE). The CDE’s would be allowed to sell insurance premium tax credits to insurance companies and then use that funding to invest in businesses in low income areas. The businesses would have to agree to create or retain jobs paying 115% of the average wage in Arkansas. This bill passed with unanimous support in the House. It is intended to create good jobs in economically depressed areas of the state.
And that’s exactly what many are hoping a proposed steel mill will do in Mississippi County. That is why we spent a great deal of time this week going over reports of the advantages and disadvantages of supporting Big River Steel.
The Legislature hired two firms to conduct independent studies of the risks associated with supporting the project with bonds backed by general revenue. The two firms were IHS Global and Regional Econometric Modeling Inc. We have posted those reports on our website.
The bottom line from a five-hour hearing was this-there is no guarantee it will be a net positive. Our state is one of over 20 states across the country to offer a recycling tax credit. That means we pay 30% of the costs for equipment used to reduce or reuse solid waste. Since Big River Steel intends to use scrap metal they would qualify for over $200 million worth of credit. We must weigh that against potential increases in state revenue from more jobs. We have some tough decisions ahead.
The bill drafted to enable the funding for the project was amended this week. The amendment spells out stipulations such as the mill must invest half a billion dollars in the property and construction cost, it must employee 300 people pay wages no less than $70,000 per employee. This bill will start in the Senate as soon as next week.
We should add both reports indicate more jobs will be created by simply having the mill in operation. Estimates are it will create over 3,000 jobs during construction and around 1,300 in subsequent years.
Meanwhile, we are also hard at work at providing tax relief to all Arkansans. While not all members agree on how to best accomplish this, there seems to be a growing consensus that our budget can afford a reduction.
The income tax reform measure now heading to the House floor is HB 1585. This bill would cut the state’s 7% tax to 6.875% on income of $44,000 and up. Those making between $20,400 and $43,999 would be taxed at 6%.
There is another reform measure filed which would eliminate income taxes for single individuals making $12,800 or below and lower tax rates for individuals making up to $121,600. HB 1926 would also increase standard deductions.
A tax measure to lower the capital gains tax is expected to be presented on the House floor next week.
550 bills have been enacted so far.
The coming weeks will be the busiest yet as we will continue to work on the job creation bills, tax reform, and Medicaid.