Gov. Asa Hutchinson on Friday (Dec. 3) called a special session for Arkansas legislators to consider a major tax cut bill, and he has added seven other bills to the call. The session will begin at 10 a.m. on Tuesday, Dec. 7.
“The key reason for the session is the tax-reduction bill,” Hutchinson said. “I spoke with both the Speaker of the House Matthew Shepard and Senate Pro Tem Jimmy Hickey, and they confirm that we have more than a majority vote on the tax bills to have that passed. They feel confident with the support for that.”
The primary tax cut bill would lower the top tax rate for Arkansans from 5.9% to 4.9% over the next four years. The individual income tax rate will drop from 5.9% to 5.5% in tax year 2022 and down to 5.3% in tax year 2023.
There are trigger mechanisms based on certain revenue projections to take the rate down to 5.1% in tax year 2024 and to 4.9% in tax year 2025.
The bill will also combine the low- and middle-income tax tables, and provide for a $60 non-refundable tax credit from those individuals with an income of less than $24,700.
“This bill puts us in a competitive position with other states,” Hutchinson said. “I’ve pushed to try to get down to 5%, and it looks like we’re going to be able to get down to 4.9%.”
Lawmakers have accumulated a roughly $1.2 billion budget surplus and will be using funds from the surplus to lower rates.
The other seven bills on the call include:
- Fund Transfers – State funds in various accounts throughout state government need to be transferred to Restricted Reserve Funds, the General Allotment Reserve Account, and the Quick Action Closing Fund.
- Appropriation Bill – This bill allows for more federal money from the American Rescue Plan to flow into Arkansas where it is needed.
- Insulin Bill – Act 1104 which passed during the regular session changed laws related to insulin rebates. Since passage, it was determined to have unintended consequences. The goal is to repeal this bill.
- LLC Bill – Act 1041, concerning LLC laws, was passed during the regular session. It has now been determined that there was a drafting issue, and this amendment will rectify the issue.
- Tax Appeals Commission – Act 586 of 2021 created the Independent Tax Appeals Commission. This bill aims to correct some language in the original act.
- Tax Incentive Amendment – This bill amends income tax credit for waste reduction, reuse, or recycling equipment to allow for use of these credits by a qualified growth project.
- General Assembly Security Personnel – This bill allows both chambers to hire and employ security personnel.
Several lawmakers have promised to bring up additional measures not on the special session call, such as restricting abortion rights and curtailing Critical Race Theory instruction. A two-thirds vote of membership in both chambers is required to go beyond the items called by the governor for a special session.
Sen. Jonathan Dismang, R-Beebe, was a guest on this Sunday’s edition of Talk Business & Politics. Dismang is co-chair of the Joint Budget Committee, vice-chair of the Senate Revenue and Tax committee, and is one of the primary authors of the tax reform bill. You can watch his full interview in the video below.