Sen. Jonathan Dismang, R-Beebe, co-chair of the powerful Joint Budget Committee, has some strong opinions on the direction legislators want to prioritize for spending the state’s $6 billion annual budget and how to reform taxes. Dismang was a guest on this week’s Talk Business & Politics.
The former Senate President Pro Tempore said legislators are already prioritizing an expected $240 million budget surplus.
“I think one of the things we focus back on is, right now, we have an inflated economy. There’s cheap money to borrow and there’s also lots of federal money that’s flowing through the state. We feel like at some point the music is going to stop and we’re going to do everything we can to shift funds to the long-term reserve and then also set them aside in what’s called the restricted reserve so that they’re used for really emergency need type situations,” he said.
While Gov. Asa Hutchinson has proposed setting money aside for reserves and using some surplus for tax cuts, Dismang said he’d rather see tax cuts funded from existing revenue streams, not the surplus, which would entail spending cuts from state programs.
“As long as I’ve been here, that’s something that we haven’t done. In fact, when I was a chairman of Revenue & Tax [committee], one of the first questions you ask when someone brings in a tax cut bill is: what are we going to cut in the budget? Because it impacts the balanced budget that’s been proposed so far,” Dismang said. “I believe that $25 million should go into the long-term reserve and we’re going to need to make it up if we’re going to cut those taxes with some cuts inside the current balanced budget proposal.”
Dismang said other surplus priorities include broadband, state police vehicles, and school facilities.
While the surplus is enviable, tax cuts are also on the legislative agenda.
Dismang said a used car tax reduction in some form “definitely has legs,” but he doesn’t see much support for the governor’s proposal to reduce the top income bracket of new state residents for five years to 4.9%.
He does expect a broader tax reform measure to evolve as the session moves forward. Dismang is working on a bill to smooth out the edges of the income tax brackets to avoid sudden sticker shock for residents who transition to different categories. Competing bills for a EITC (Earned Income Tax Credit) versus elimination of the bottom income tax bracket are in the discussion. All three ideas may be blended into a tax reform overhaul.
“I foresee at least on an individual income tax is that there’s going to be a blend. I’m working on a bill to smooth some of the cliffs in our tax brackets right now and simplify our tax code. I’m hoping to be able to pair that with some of the other ideas out there. We need to reform our income tax code, make ourselves more attractive, and that’s the goal. I think at the end of the day, it will be a blending of different ideas on income tax.
You can watch Sen. Dismang’s full interview in the video below.