Tax relief measures, Game & Fish Commission budget advance in special session

Arkansas lawmakers on Monday (June 17) advanced an appropriation bill for the Game & Fish Commission (G&FC) and complimentary tax cut bills to reduce the top personal and corporate income tax rates.

Gov. Sarah Sanders called a special session of the 94th Arkansas General Assembly for purposes of reducing taxes and passing the G&FC appropriation measure.

Senators on the Revenue and Tax Committee advanced SB1 and SB3. SB1, led by Sen. Jonathan Dismang, R-Beebe, would reduce the top personal income tax rate from 4.4% to 3.9% and the top corporate tax rate from 4.8% to 4.3%.

The financial impact of the tax cuts are $256.1 million annually for the personal income tax reduction and $66.2 million annually for the corporate tax reduction.

SB1 also moves $290 million of the state’s $708.1 million estimated budget surplus to the Arkansas Reserve Fund Set-Aside fund. The bill has an emergency clause that will cause it to go into effect when it becomes law.

The measure has 28 Senate sponsors, all Republican. No Democratic senators are sponsors of the bill and Sen. Bryan King, R-Green Forest, is not a sponsor.

SB3, by Sen. Steve Crowell, R-Magnolia, raises the homestead tax credit by $75 per year to $500. It also requires the chief fiscal officer of the state to report annually on the balance of the Property Tax Relief Trust Fund and whether it could sustain additional increases to the homestead property tax credit.

There are 32 Senators on the bill as sponsors including six Democrats.

House members also passed House versions of the same Senate bills. HB1001 by Rep. Les Eaves, R-Searcy, is the companion bill to SB1. HB 1002 is the companion bill to SB3. They both cleared the House Revenue and Tax committee.

While the tax cuts have broad legislative appeal and support from many trade groups and business interests, one organization opposed to the tax cuts is Arkansas Advocates for Children and Families (AACF).

AACF contends the tax cuts will cost the state roughly $450 million annually and will substantially benefit out of state corporate interests and upper income Arkansans. A report released from the group said:

• 42% of the corporate tax cut will go to corporations in the top 1% by corporate income;
• Nearly 95% of the corporate tax cut will flow out of the state of Arkansas, benefiting corporations registered elsewhere;
• 74% of the personal income tax cut will go to households in the top 20% by income; and
• 45% of the personal income tax cut will go to the top 5% of households, or those making more than $236,400 annually.

In the Joint Budget Committee, legislators approved SB2, by Sen. Dismang. It sets forth the appropriation for the Arkansas Game & Fish Commission. Lawmakers failed to agree on the budget bill in its recent fiscal session over disagreements for the executive director’s salary.

SB2 sets a $170,437 cap on the executive director’s salary.

“The director’s salary would be capped at $170,000,” said Dismang. “That’s the equivalent to what the lowest paid secretary is in the state, so we feel like that’s the number we can tie back to.”

Each chamber of the Arkansas General Assembly is expected to take up the committee-approved bills on their respective floors on Tuesday. Lawmakers will then reconvene in their committees and aim to pass the companion bills on opposite sides of the state capitol.