Joint Budget Chair containing spending growth, hopes to slice top tax rate to 4.5 percent

by Talk Business & Politics staff ([email protected]) 2,283 views 

Sen. Jonathan Dismang, R-Beebe, co-chairman of the Joint Budget Committee still hopes the regular session will adjourn by April 7 with a successful funding of schools, prisons and another income tax cut.

Dismang, who appeared on this week’s edition of Capitol View, said the next two years are somewhat predictable for planning government expenses, but three years and out will be a budgetary challenge due to new programs from Gov. Sarah Sanders and the GOP-dominant legislature that will kick in at a higher spending level.

Sanders’ LEARNS education plan calls for $150 million in new spending in year one, $250 million in year two, and looks to grow much larger when her voucher plan, known as education freedom accounts, becomes universal in year three and beyond. New spending for sentencing reform is expected to take three years or more to cycle up as it will take time to build new prison beds and for convictions of violent criminals with longer sentences to move through the pipeline. Dismang said consensus is forming around 3,000 new prison beds at a cost of roughly $300 million.

Dismang has a draft of a balanced budget that calls for about $6.2 billion in state spending, up from close to $6 billion last year. The new spending would go for the governor’s LEARNS plan, prison and sentencing reforms, and smaller amounts for the state police and military department. The document is not final and will receive more input from legislators and the executive branch in the coming days.

“That’s why it’s so critical that we maintain as little growth as we can in this current RSA [Revenue Stabilization Act], because we know that there are some big ticket items outside of sentencing reform that we’re going to see and there’s the education freedom accounts. Those won’t truly hit our budget until year three, so there’s multiple things we need to be planning for, that we’ve set in motion or will be setting in motion this session,” Dismang said.

Despite that long-term view and the possibility of a looming recession, Dismang still believes the state can afford a tax cut of two-tenths of a percent this year and next. This would drop the state’s top tax rate from 4.9% to 4.5%. The ballpark estimate for an overall four-tenths of a percent tax cut is $200 million over the biennium.

“I personally think that we should look at doing one [tax cut] retroactively to the first of this year with another pickup at the beginning of next year,” he said. “Two-tenths for both of those time periods is what I would be looking at, which will get us to 4.5%. But again, I’m not sure that that’s something that will have to be agreed to amongst everyone else and we’re not there yet, but that’s the direction that I’m headed in right now.”

Dismang thinks it is too late in the session to address state employee compensation and classification, which was originally budgeted for $80 million in new funding over the next two years. State lawmakers are aiming to improve the environment for state agencies to attract necessary workers with pay, benefits and potential growth opportunities. Gov. Sanders scuttled the $80 million executive branch plan two weeks ago.

“I think we’ve just waited a little too long to have those more in-depth discussions. What I think we’ve got to be careful with is the state is no different than the rest of us that are employers in the state. It is hard to keep high-quality employees because there’s a lot of opportunity with a very tight job market, and so we’ll see what they need to do to be able to make that right, as we get in the next session,” he said.

You can catch Sen. Dismang’s full interview in the video below.