Arkansas tax cut bills won’t require supermajorities

Gov. Mike Beebe may want to bone up on his penmanship or at least work on his chest-pumping.

The flurry of tax cut proposals that have been pre-filed registers at 18 — one-third of all the bills submitted for pre-session consideration, according to this report filed by Talk Business, a content partner with The City Wire.

The bills are predominantly championed by Republicans, who control the House Revenue and Tax committee and have equal numbers on the Senate panel. Conservative Democrat Sen. Jerry Taylor could easily be a swing vote on the Senate Revenue and Tax committee, which will be chaired by Sen. Larry Teague, a Nashville Democrat up for re-election in 2012.

Combined with their new super-minorities in the House (44) and Senate (15), it won’t take many Democratic converts if GOP lawmakers can keep their rank-and-file in order.

Those dynamics could lead to some interesting showdowns between the executive and legislative branches, even raising the possibility that Beebe could be exercising his veto prerogative — or the threat of one — if things get out of hand.

ACTION CENTER
Sen. Gilbert Baker, a Conway Republican who will co-chair the crucial Joint Budget Committee, believes the action will be in the Senate Revenue and Tax Committee.

"I think they [tax cut bills] are all going to come out of the House and rest in the Senate Revenue and Tax Committee until the last two weeks," Baker said in a recent interview. "I’m just telling you straight up, that’s my opinion."

The final weeks of a legislative session are when lawmakers put the final piece of the state’s balanced budget — the Revenue Stabilization Act — into place.

"When it gets into the session and you’re dealing with Revenue Stabilization and these tax cuts, they’ll go hand in hand," says Baker, who knows he’ll play a critical role in brokering any deal.

Gov. Beebe avoids any references to using his veto pen in the next session in an email response to several questions posed by Talk Business. He repeated his position that any reduction in revenue must be accompanied by equivalent budget cuts.

"We owe it to the people to be truthful and specific about what services will be impacted or eliminated," said Beebe. “Those who propose to reduce general revenue bear some responsibility for making those tough decisions and answering to their constituents who will be affected by the reductions in state services.”

That’s a position echoed by Joint Budget Co-Chair Rep. Kathy Webb, a Little Rock Democrat. She says tax-cutting members will have to spell out how they’ll cut money to their local nursing homes or senior centers.

"Members will have to do some real negotiating and discussing. People will come to the realization that you can’t cut anything without actually effecting people in their districts who receive services that they can’t do without," Webb said.

But Baker isn’t fully bought into that position.

"I don’t believe that everybody that proposes a tax cut is absolutely responsible to find where that revenue is. Now, we as a legislature have that responsibility, and I as budget chair will have a great deal of that responsibility," said Baker. "I think the Governor has responsibility as [chief] executive to work through the appropriations of revenue that is passed in the legislature. So I probably disagree with the Governor a little bit on that."

VETO POWER
Arkansas law has varying thresholds on the number of votes needed to raise taxes. It is why the heavily-relied upon sales tax, which only requires a simple 50%-plus-one majority, has been the go-to tax increase for decades. Other taxes, such as the income tax or severance tax, require supermajorities of 75% to be raised.

However, lowering taxes is a different matter. Arkansas laws requiring supermajority votes only apply to increases, not decreases. Simple majorities are all it takes to lower state taxes.

A capital gains tax cut, a used car tax phase-out, or a personal or corporate income tax reduction would only require 51 House members for passage and 18 Senators.

That would force Beebe, who has said the additional half-cent grocery tax cut is the only affordable tax reduction, to use his veto power if the bills reach his desk.

And guess what: only simple majorities are needed to override a gubernatorial veto, according to Article 6 of the state constitution. In essence, if the votes are there to pass a tax cut bill, then the votes are there to override a veto.

While Beebe did not directly address his veto option in his responses to this article, Baker and Webb said that a Governor’s veto — despite the low threshold — is a powerful weapon in the executive branch arsenal.

"We’re very careful with overrides, even under Republican Gov. Huckabee or Democratic Gov. Beebe. I think there’s a healthy respect for the executive," Baker said.