As he launches his re-election bid, Gov. Hutchinson hopes task force can ‘accelerate’ broad tax reform

On his cell phone in the Miami International Airport, Gov. Asa Hutchinson was coming home to Arkansas with tax reform and a children’s cause on his mind just one day after officially announcing his re-election bid.

Hutchinson was returning from a panel discussion at the Republican Governors’ Association where he shared a dais with the governors of two states that Arkansas competes against for business.

“I was on a panel talking about tax reform,” Hutchinson tells Talk Business & Politics while waiting to board a flight back to the Natural State. “It was interesting that North Dakota, Missouri, and Arkansas — all three have tax commissions or task forces looking at tax reform. So we’re not acting in isolation in Arkansas. Other states are looking at the same issue because if you’re a conservative Republican governor, you’re looking at competitiveness and fairness, and trying to stimulate the private sector of the economy.”

A low unemployment state like Arkansas, North Dakota has seen a boon in the last decade in the energy sector, with natural gas mining and wind energy manufacturing leading the charge. Arkansas experienced a similar revolution in the boom years of the Fayetteville Shale Play and with success recruiting wind turbine manufacturers to the state. Missouri, which shares the northern border with Arkansas is a major regional competitor for economic development projects.

In formally announcing his re-election campaign for 2018 on Tuesday, Hutchinson touted that he’s kept promises to reduce taxes, create jobs, push a computer coding initiative, and reform state government.

During his first three years in office, he’s cut tax rates for low-income and middle-income Arkansans – roughly $150 million in income tax reductions for a large swath of workers making less than $75,000. Hutchinson has said in state and national interviews that he hopes to cut Arkansas’ top income tax rate from 6.9% to 5%.

Hutchinson knows that the incremental approach he’s taken in his first term will make that goal a long-term one. He’s hoping that the newly created Arkansas Tax Reform and Relief Legislative Task Force can quicken the pace.

“If you try to lower the income tax rate based upon normal economic growth, it takes a long time. It’ll take some time to do that. You just have to take a gradual approach to it. You have to be very careful that you don’t cut taxes too far. That jeopardizes the state budget,” he cautions. “However, there’s broader reform that you can accomplish and accelerate the lowering of the income tax rate, but those are politically difficult challenges, and that’s why I’m very anxious to see what kind of recommendations they come out with.”

The legislative task force will meet over the next year to make recommendations to alter the state’s individual and corporate income tax code as well as examine all exemptions currently on the books. Those exemptions include agricultural, motor fuel, food, equipment, manufacturing, nonprofit, charitable and religious tax reductions or eliminations.

“The long-term goal is to continue to flatten our income tax rate structure in Arkansas. But it is important that we do it in that context of comprehensive reform,” Hutchinson said. “It’s possible, but as you can see from the challenge we had in just closing off a few exemptions for the military retiree tax cut, it’s not as easy as it is to debate it theoretically.”

The 2014 governor’s race was an expensive one. In the general election, Hutchinson raised and spent nearly $4.5 million, while his Democratic opponent former Congressman Mike Ross spent more than $6.4 million. That doesn’t include any outside group spending, which added several million dollars more to the overall totals.

In the 2018 cycle, Hutchinson may not need as much or be able to raise as much campaign cash although he hopes to at least match his 2014 haul. For starters, there are new restrictions banning corporate contributions.

“It’s a change, a different environment today because we cannot accept any corporate contributions. And so, that puts a greater reliance upon individual contributions and that could affect the total amount raised by the candidates,” he said.

Hutchinson also said it depends on the circumstances and the candidates that may challenge him. He could get a token opponent in the GOP primary as he did in 2014. Democrats will have to field a general election candidate to oppose the governor in order to secure a minimum of 3% at the ballot box to maintain their party status.

In the days when Republicans were as sparse as Democrats are today, the Arkansas GOP chairman used to serve as the lamb to the slaughter at the ballot box. Dale Bumpers, David Pryor and Bill Clinton would generally thrash their Republican unknowns with the exception of Frank White’s historic upset in November 1979.

Hutchinson enters the 2018 field with many more positives than negatives. State budget projections have stumbled as of late, leading to an estimated $70 million shortfall in the current fiscal year. The governor says reducing the forecast will impact Category B funding, which includes some areas of education, human services, corrections and a merit adjustment fund, although he cautions that no disruption in existing state services should be affected.

However, Gov. Hutchinson also enjoys steady popularity. He’s consistently polled above 50% and his negatives hover around 30%. In an April Talk Business & Politics-Hendrix College survey, Hutchinson had a 56-32% job approval rating. He performed well with Republican and independent voters, but more impressively, he was rated highly by Democratic voters (38%) and African-American voters (43%) – a key Democratic constituency.

He’s had two successful regular sessions passing many of his agenda items and, at times, has been a voice of moderation and compromise on several contentious issues, such as a religious freedom measure, transgender bathroom bill, and guns on college campuses.

Expect to see Asa Hutchinson take nothing for granted in his re-election campaign. He’ll be active attending local fish frys and small town festivals, and surely, a good coon supper next January. You’ll see his face on TV and you’ll hear his voice on your local country music station. You’re likely to receive some direct mail or see targeted web ads as you surf the Internet.

But for now, he’s got a plane to catch. Before he raises more money for his campaign, he’s raising money and awareness for neurofibromatosis (NF), which causes tumors to grow on nerves throughout the body. The community group that invited him is having an awareness night for the Children’s Tumor Foundation at an Arkansas Travelers baseball game at Dickey-Stephens field and his Miami-to-Little Rock plane is starting to fill with passengers.

He cuts short his final answer — a riff on workforce development — when he gets a signal.

“I need to go. They’re telling me I’ve got to board.”