Governor wants to cut corporate taxes, open to prison reform ideas

Gov. Sarah Sanders said she hopes to cut not only personal income taxes by 0.2% in a special session, but corporate income taxes in similar fashion.

In a wide-ranging interview in the governor’s office Thursday (April 9), Sanders offered thoughts on tax cuts, education spending, prison investment, and immigration.

Any size tax cut will depend on the state legislature holding the line on budgeting growth to 3% or less, she said.

“Corporate income taxes [could be] cut 0.2% – that’s part of the conversation with the legislature. We’re still deciding, but the focus is on the personal income [tax],” she said.

“Some of that will hinge on holding the line on additional spending… but I would say there is a general consensus and a level of confidence that we can cut the two-tenths and be in a good position financially as a state,” added Sanders.

The governor said publicly in her State of the State speech Wednesday (April 9) that she will call a special session following the fiscal session, which started this week, to cut personal income taxes another 0.2%. The top personal income tax rate in Arkansas is 3.7%, while the top corporate income tax rate stands at 4.4% today.

Sanders did not include any new funding for a controversial Franklin County prison site in her FY2026-27 budget request. The State Senate blocked an appropriation for $750 million in the regular session, and there was not a major shift in the election cycle that would indicate opposition votes might change.

Last week, House Speaker Rep. Brian Evans, R-Cabot, suggested that aging inmates who have committed serious crimes but pose no physical threat to others or escape might be housed in minimum security settings. That could free up 700 prison beds. Sanders said she’s open to that idea and others.

“I’m certainly open to looking at it as I’ve told every member of the legislature as well as anybody else who has an interest in this. If you have an idea or a solution, I’m all ears. I still firmly believe that we have to expand capacity and I’ve yet to see a better alternative than the Franklin County location. But that doesn’t mean there can’t be other things that we’re doing,” she said.

On education, Sanders defended the rising cost of Education Freedom Accounts (EFAs) – the voucher program for private, parochial and home schooling – that have seen a ballooning price tag for the state. She said education spending for public schools and the EFA program should continue to rise and be a top priority.

“That means more and more families are taking advantage and figuring out how best to educate their kid,” she said. “We spend double the amount on a kid in a public school than we will for an EFA account and we should. We want our public schools to do really well. That why LEARNS also made the single biggest investment in public education in Arkansas history. This is not an either-or.”

“More and more of our kids are doing better. Our scores are going up, our teachers are happier across the board, Arkansas education is doing better now than it was. That’s a good thing. If it’s working, let’s keep investing in it,” added Sanders.

On the topic of immigration, Sanders answered a question about whether the potential Franklin County prison site was the only location once being considered for an ICE detention facility. Sanders said there have been other conversations about locations around the state, but no action was likely to occur in the near future.

“And as of right now, there are no immediate plans to move forward in any location that we have had conversations with the federal side,” she said.