Gov. Sanders: Tax cuts, tax credits, and FOIA changes on tap for Special Session

Arkansas Gov. Sarah Sanders on Friday (Sept. 8) called for a Special Session to begin Monday in which tax cuts, a tax credit to an estimated 1 million Arkansans, and changes to the state’s Freedom of Information Act (FOIA) will be considered by legislators.

The governor said the goal is to lower the individual income tax rate and the corporate tax rate to 4.4% and 4.8%, respectively. The top income tax rate is now 4.7%, and the top corporate rate is now 5.1%. She said with Texas on one side and Tennessee on the other having no income tax, it’s “harder for Arkansas to compete.”

Sen. Jonathan Dismang, R-Beebe, said during the Friday morning press conference the income tax cut would reduce revenue by $150 million, and the corporate tax cut would reduce revenue by around $35 million.

Part of the tax change would include a tax credit of $150 to an estimated 1 million lower-income Arkansans, or $300 for a qualifying couple. The credit will have an estimated one-time cost of $105 million, according to Dismang.

Another element of the tax package, Gov. Sanders said, is to create a $750 million Arkansas Reserve Fund to be used in the process of phasing out the state’s income tax.

Arkansas ended the previous fiscal year (August 2022-June 2023) with a $1.161 billion tax revenue surplus driven in large part by a more than 8% growth in sales tax collections. Total tax revenue in the fiscal year (August 2022-August 2023) was $8.85 billion, up 0.9% compared with the previous fiscal year and 1.7% more than the budget forecast.

The fiscal year surplus of $1.161 billion was the third consecutive year of a surplus of near or more than $1 billion. Total tax revenue in fiscal year 2022 (August 2022) was $8.773 billion, up 8% – or $651.2 million – and the budget surplus was $1.628 billion. The surplus in the fiscal year that ended June 2021 was $945.7 million.

In the first two months of the new fiscal year, the state’s surplus – net available revenue above forecast – was $33.2 million, according to the Arkansas Department of Finance and Administration (DFA).

Sanders also said during the press conference she plans to end COVID-19 vaccine mandates for state employees and to require the Arkansas Department of Health to provide literature about the dangers of vaccines.

FOIA ACTION
The controversial part of Sanders’ Special Session call is to change the state’s FOIA. Sanders alleged in the press conference that the law is being “weaponized” to “slow down our bold conservative agenda,” and to place her family’s safety in jeopardy. She also said the existing law could be used to obtain sensitive government documents.

“Right now, a Chinese-owned company operating in Arkansas could use their employees to FOIA for internal government documents,” Sanders said.

The proposed bill, sponsored by Rep. David Ray, R-Maumelle, would significantly limit the information available about the deliberations of officials at state agencies, recommendations about policy, and other governance matters. The proposed law also would effectively make it more difficult for an attorney or individual winning a claim for a FOIA violation to recover attorney fees and other reasonable expenses. The draft legislation also has a “retroactivity clause” that would qualify new exemptions to FOIA for requests dating back to Jan. 1, 2022.

The proposed bill would also exempt from FOIA any records about “planning or provision of security services provided to the Governor, the Lieutenant Governor, the Attorney General, the Secretary of State, the Auditor of State, the Treasurer of State, the Commissioner of State Lands, members of the General Assembly, Justices of the Supreme Court, or Judges of the Court of Appeals.”

Sanders pushed back against claims the proposed bill would “gut” the state’s FOIA, saying the changes mirror federal document access laws. She said the proposed changes would make government more efficient while preserving transparency.

Fort Smith attorney and noted FOIA advocate Joey McCutchen told Talk Business & Politics the proposed bill, if approved, will change Arkansas’ FOIA from one of the best in the nation to one of the weakest.

“The federal deliberative process exemption being pushed by Gov. Sanders and some Republican legislators in this special session shields from public scrutiny letters, memorandum, recommendations and other documents that elected officials use in the course of reaching a decision. Some have called it the ‘most abused exemption’ in the federal government and others call the federal exemption the ‘withhold it because you want to exemption.’ Is this what Arkansans deserve?” McCutchen noted in a statement. “If this exemption becomes law, Arkansans will overnight go from the strongest open records law in the country to the weakest. This bill is not Government of the people, by the people, and for the people. … Legislators will have to decide if they represent the people or the Government.”

Editor’s note: An earlier version of this story did not include a quote from Sanders that offered additional clarity on her position about sensitivity of government document requests. The updated version includes Sanders’ quote.