Budget chair says guardrails in place for accelerated tax cuts
State Sen. Jonathan Dismang, R-Beebe, says he’s comfortable accelerating tax cuts the governor wants to speed up with a $1.6 billion surplus on hand and money in a state rainy day fund, but he’s hesitant to commit to new expenses, including teacher salaries, until more data is collected.
Appearing on this week’s edition of Talk Business & Politics, Dismang said he also wants constituents to be reminded there have been other tax cuts for low- and middle-income Arkansans that have already taken place.
“We’re accelerating. We’ve already put, in fact, as far as January 1st, 2022, a low-income tax cut and a middle-income tax cut. When we combined the [tax] tables, those totaled roughly, if I remember correctly, about $150 million alone for all those individuals that were making less than $84,000 a year,” he said.
Gov. Asa Hutchinson has called an Aug. 8 special session to consider an accelerated schedule for previous planned tax cuts to bring the state’s top rate down from 5.5% to 4.9%. Dismang says that and other cuts – including a corporate tax reduction, adopting a federal depreciation trigger for equipment purchases, and tax relief on the first $10,000 earned by any citizen – can occur now with the burgeoning budget surplus.
“We currently have over a billion dollars in our rainy day fund. There’s $1.6 billion essentially that’s going to be a new surplus amount. We can set a significant portion of that aside to ensure that if we do have a reversal and the collections start drying up, that we’ve got the ability to fund state government at the level it needs to be funded. So I feel like we’ve got the proper backstop to be able to take advantage of the environment we’re in right now, as far as revenues,” Dismang said.
TEACHER PAY, ABORTION RULES
Gov. Hutchinson says legislative consensus does not exist for teacher pay increases in the special session. Arkansas teachers currently have a minimum salary level of roughly $36,000. Surrounding states have higher salaries and nationally there is a teacher workforce shortage.
Dismang said there have been teacher pay increases in Arkansas and improvements to benefits packages. He said the legislature is currently in the midst of an adequacy study that helps lawmakers determine recommendations for school-related expenses. He wants that process to finish, which won’t happen before the special session.
“Right now, we’re in the middle of what’s called the adequacy study. It’s a legislative body, both the House and the Senate are looking at that, and one of the things they’ll take into account is what we need to do for teachers. Just like we’ve done in the past, we’ll follow the procedures before, and that’s something that we’ll take up when we get into the regular session.
“Really, it was nothing against teachers, per se, it was against not wanting to increase expenditures in this special session. Members were comfortable with looking at decreasing revenues, but again, not increasing ongoing expenses. And then also there’s a lot of unknown for that on how it would impact the school district. We didn’t want to put mandates on the school districts that they weren’t able to live up to as far as being able to continue that increased pay for teachers,” Dismang said.
Hutchinson has also said he’s considering potential abortion-related items on the special session call in the wake of the Supreme Court’s decision to overturn Roe v. Wade. Dismang said those items are likely to be budget-related, not policy-related. He thinks policy should wait until the regular session in January 2023.
“There’s been some discussion about matching the credit for adoption with that on the federal level. I think that’s part of what the governor is talking about, again, but I haven’t had the conversation directly with him. And then also the pregnancy crisis centers,” Dismang said.
“I don’t think that [abortion exemptions] will be debated now, but I think it should be debated in the future. You know, as long as I’ve been here, I felt as though there needed to be an exception for rape and incest, and I know that we did pass a bill that does not have that in it, but I do think it’s something that we should consider, but I don’t think it’s something we should do during this special session,” he added.
You can watch Sen. Dismang’s full interview below.