Revenue concerns likely first issue for Arkansas Blue Ribbon tax panel

The newly authorized Blue Ribbon tax panel will immediately face the issue of state revenue potentially coming in below forecast.

After Wednesday’s (March 29) session-ending budget meeting, Senate President Pro Tempore Jonathan Dismang, R-Searcy, said there were some anxieties among lawmakers about the state’s revenue picture. The Senate leader said he plans to speak with the governor in the coming days to discuss possible scenarios if the state falls short at the end of fiscal 2017.

The Joint Budget Committee, made up of House and Senate members, approved a $5.49 billion biennial budget. Lawmakers are expected to wind down the 91st General Assembly by Monday. The session convened on Jan. 9.

“I think there are some concerns the way revenue has been fluctuating over the last few months,” Dismang said, adding that lawmakers plan to go home on Monday. “That is the last day …, I assume not to close out on April 1.”

Dismang also said he and other legislators have held “broad-based” discussions on the possible makeup of the Arkansas Tax Reform and Relief Legislation Task Force, the Blue Ribbon panel created under the emergency clause of Gov. Asa Hutchinson’s $50.5 million tax cut to reform Arkansas’ tax code. By law, the task force must hold its first meeting within 30 days after the session ends.

As Senate president, Dismang will get to appoint 5 senators to the 16-member task force. The legislative work group must file a preliminary report with the governor, House Speaker and President Pro Tempore on the task force’s activities, findings and recommendations by the end of 2017. A final draft of the task force recommendations must be completed by Sept. 1, 2018.

Some suggestions have already emerged. For example, Sens. Jake Files, R-Fort Smith, and Jim Hendren, R-Gravette, have said the Blue Ribbon panel should put a 5-year sunset provision on all tax exemptions. According to a 2012 Department of Finance and Administration analysis, tax exemptions amount to hundreds of millions of dollars or more than $1 billion, depending on interpretations.

Also, Dismang said the task force would likely take a look at how the state would allocate additional sales tax revenue from online retailers. On Tuesday, a bill to force remote online retailers to collect and remit sales and use taxes from Arkansas taxpayers failed for the third time in a House committee.

“I have not named or had any discussion with any member or promised any member to be one of five members on the committee,” he said. “But broadly, this session we’ve had discussions about funding (priorities), tax increases and our overall look at long-term income taxes and how that should work with potential additional sales tax revenues that the House failed yesterday.”

Amazon.com announced March 1 it would begin collecting state sales and use taxes from online retailers that do business in Arkansas. City and county sales taxes will not be collected and remitted by Amazon. The state tax revenues, estimated at between $30 million and $130 million, will show up in the state’s books in the April revenue report. No other remote online sellers besides Amazon have announced publicly a decision to collect and remit online sales taxes to the state of Arkansas.