Beebe, Legislative leaders agree on tax-cut package

Editor’s note: Roby Brock, with our content partner Talk Business, wrote this report. He can be reached at [email protected]

A deal between the House, Senate and Gov. Mike Beebe administration has been cut to compromise on several tax cut measures and push the state budget process nearer a conclusion.

Sen. Gilbert Baker, R-Conway, and Rep. Kathy Webb, D-Little Rock, the co-chairs of the Joint Budget Committee, say all sides have found common ground on a tax cut deal that will trim about $35 million from state coffers.

"We just got an agreement. The House, Senate and Governor have agreed on a tax cut package for Arkansans," Baker said shortly before lunch after a leadership meeting between the two chambers.

The 6 tax cut measures include:
SB 274 by Sen. Gilbert Baker (R-Conway) would raise the threshold for the application of the used car tax from $2,500 to a modified $4,000.

SB 275 by Sen. Bill Sample (R-Hot Springs) would provide a tax break for manufacturers on the sales tax paid on their utilities. Minor changes to this bill are still expected.

SB 276 by Sen. Larry Teague (D-Nashville) would reduce the grocery tax by an additional half-cent, part of Gov. Mike Beebe’s legislative package. An additional quarter-cent beyond the half-cent is not part of the deal.

HB 1056 by Rep. Uvalde Lindsey (D-Fayetteville) makes technical corrections and provides tax relief for low-income heads of household.

HB 1369 by Rep. Matthew Shepherd (R-El Dorado). The bill would create a sales tax holiday for back-to-school sales.

HB 1421 by House Speaker Robert Moore (D-Arkansas City) to extend and expand geotourism tax incentives in the Delta.

"We’re going to go back and talk to the rest of the leadership in the House and make sure they’re comfortable with it," said Webb.

"Yes, we’ve got to go sell it to our members and make sure our folks are good," Baker added.

Baker and Webb emphasized that the breakthrough is likely to aid a schedule for completing the legislature’s business by the end of the month.

"We’re good and we’re hopeful we’re going to get out on April 1st like we’ve been saying," Webb said.

The money to make up revenue from the tax cuts would likely come from the Governor’s balanced budget that calls for a 1.8% cost of living adjustment (COLA) raise for state employees. Baker and Webb said discussions are underway that would allow for COLA hikes for state workers making $50,000 or less, but not for those making more than that amount.