Committee Stalls On Income Tax Cut For Retired Veterans

Janelle Lilley with our content partner, KATV Ch. 7 News, reports:

For retired veterans, Arkansas is anything but paradise…fiscally speaking. Arkansas is the only state to tax veterans benefits in the region. Retired Air Force Colonel Steve Eggensperger is a lifelong Arkansan and says he’s not surprised that there’s been a decline in veterans retiring here.

“It kind of makes me feel like the state in general doesn’t value military service as much as the surrounding states,” said Eggensperger.

A bill which would gradually eliminate the income tax on retired veterans met hesitation Wednesday in a Senate committee with budget concerns putting the brakes on a vote.

The state is on its way to a $90 million surplus this year, but the veterans income tax cut wasn’t built into the budget. Another tax reduction not factored into the budget reduces the tax on capital gains. The two have a similar fiscal impact but while capital gains passed the House and is expected to clear the Senate without trouble, the veterans income tax bill is stuck in committee.

“I realize there’s competing priorities. There’s 250,000 veterans in Arkansas. At some point, I think those veterans need to rise to the top of the priority list,” said Eggensperger.

“I think the difference between the capital gains and {the veteran’s income tax bill} is you’re putting back in place a tax cut that was already in existence with the capital gains. So, I kind of understand that argument to some degree, but again, it is priorities for the membership and that was addressed today too,” said Senate President Jonathan Dismang, R-Searcy.

Lt. Governor Tim Griffin, R-Arkansas, said he believes the state can do both and plans to put his money where his mouth is.

“I’m willing to take a chunk out of my budget in the lieutenant governor’s office and give it back to the treasury to help pay for this,” said Griffin who pledged $250,000 of his $500,000 budget to the cause.

That won’t cover the cost of the bill, but Griffin says he’ll scour the budget for the rest of the money.

“I think ultimately this pays for itself with the additional entrepreneurship and revenue that we get from it. In the short term, I think we can find the money somewhere. I’m an optimist, and I’m not giving up on this bill,” said Griffin.

When asked about the possibility of finding the money in General Improvement Funds (GIF), Griffin responded, “If we’re going to have GIF money, let’s use it for these veterans tax cuts.”

Dismang said GIF money isn’t a viable option despite the fact that the state has $180 million in accumulated surplus over the last two years.

“You can’t base a tax cut on one-time money,” said Dismang.

The committee plans to hear the bill again later this week.

“Where we’re at in the session, I do agree that we should reinstate what was originally provided for with the capital gains tax cut, and if we’ve got room in the budget and someone can show me where that’s going to be, then we’ll be willing to make some additional cuts, and that would be one of the first ones on the table,” said Dismang.

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