The
legislative session is nearing the halfway point and 932 bills and joint
resolutions have been filed so far. While that sounds like a lot of legislation
this is a significantly slower pace than in the previous session and assuming
it continues the 89th General Assembly will wind up filing nearly 20% fewer
bills this time.
There
have been 143 of the 932 bills enacted into law so far. Eighty-nine are Joint
Budget Committee bills and represent the 2013-2015 budgets for state agencies
and departments. None of the remaining 54 bills represent major
business-related legislation and only a few of the Acts have received much in
the way of press coverage. By far, the leading headline-grabber was the bill
that allowed concealed handguns to be carried inside churches, which is now Act
67.
All the signs are there that the session will
begin to consider some of the major business issues of the session soon. The
Arkansas Economic Development Commission delivered the official report
requesting legislative approval of the $125 million in state support for the
Big River Steel project last week. This starts the twenty-day clock for either
approval or denial of state support for the $1 billion superproject.
begin to consider some of the major business issues of the session soon. The
Arkansas Economic Development Commission delivered the official report
requesting legislative approval of the $125 million in state support for the
Big River Steel project last week. This starts the twenty-day clock for either
approval or denial of state support for the $1 billion superproject.
The
most anticipated pre-session issue – Medicaid expansion – has seen some
movement this week as well. Governor Beebe met with federal officials to
discuss a partial expansion of the Medicaid program in Arkansas and Republicans
announced the hiring of a consultant to provide information on cost and
benefits of expansion.
most anticipated pre-session issue – Medicaid expansion – has seen some
movement this week as well. Governor Beebe met with federal officials to
discuss a partial expansion of the Medicaid program in Arkansas and Republicans
announced the hiring of a consultant to provide information on cost and
benefits of expansion.
Finally,
the past week saw the final anticipated piece of tax reform legislation filed
when Representative Charlie Collins submitted a bill, currently without any
details, that will likely propose a reduction in the state’s income tax rates.
This bill filing might signal a willingness of the General Assembly to begin
considering which tax cuts might be feasible and, if so, how much the state can
afford to cut.
the past week saw the final anticipated piece of tax reform legislation filed
when Representative Charlie Collins submitted a bill, currently without any
details, that will likely propose a reduction in the state’s income tax rates.
This bill filing might signal a willingness of the General Assembly to begin
considering which tax cuts might be feasible and, if so, how much the state can
afford to cut.
There are four main tax
cut types that seem realistic options for consideration.
cut types that seem realistic options for consideration.
Grocery Tax – one of Governor Beebe’s goals is to
eliminate the state tax on groceries. Since 2006, the state’s grocery tax has
been reduced from 6% to 1.5%. SB135
would elminate the remaining 1.5% if certain revenue conditions are met and
when select state spending on bond payments and other extraordinary items are
phased out.
eliminate the state tax on groceries. Since 2006, the state’s grocery tax has
been reduced from 6% to 1.5%. SB135
would elminate the remaining 1.5% if certain revenue conditions are met and
when select state spending on bond payments and other extraordinary items are
phased out.
Income Tax – Representative Charlie Collins (R,
Washington County) has long advocated for reducing the state’s income tax,
which kicks in the highest bracket at just $33,200 in income. While the bill, HB1442,
is only in shell form at this time, in the past Collins has recommended that
the income tax reductions be phased-in based on revenue increases to reduce the
impact to the state’s current budget. This would require the state to maintain
the flat budgets until the entire reduction is enacted, which might be several
years depending upon revenue growth.
Washington County) has long advocated for reducing the state’s income tax,
which kicks in the highest bracket at just $33,200 in income. While the bill, HB1442,
is only in shell form at this time, in the past Collins has recommended that
the income tax reductions be phased-in based on revenue increases to reduce the
impact to the state’s current budget. This would require the state to maintain
the flat budgets until the entire reduction is enacted, which might be several
years depending upon revenue growth.
Agriculture
& Manufacturing Taxes – There are nearly ten separate bills seeking to
exempt equipment, supplies or utilities from state sales tax. These items range
from utilities used in agricultural structures like chicken houses, baling wrap
for cotton and timber equipment to utilities and replacement parts for
manufacturers. The Chamber endorses eliminating the sales tax on utilities and
repair/replacement parts and equipment for manufacturers. More on that below.
& Manufacturing Taxes – There are nearly ten separate bills seeking to
exempt equipment, supplies or utilities from state sales tax. These items range
from utilities used in agricultural structures like chicken houses, baling wrap
for cotton and timber equipment to utilities and replacement parts for
manufacturers. The Chamber endorses eliminating the sales tax on utilities and
repair/replacement parts and equipment for manufacturers. More on that below.
Business
Taxes – There are two major business tax cuts to be considered this session.
The first is a reduction in the capital gains tax assessed on the sale of
Arkansas investments and property. A similar bill passed the House in 2011, but
did not pass in the Senate. The bill has been refiled and will likely be
discussed in detail, although it doesn’t have the champion in the current
legislature that it has had in the past. The other major business tax cut would
double to ten years how long businesses can carryforward prior year losses to
offset current profits. Many states have even longer carry-forward policies so
Arkansas’ current five-year restriction is much too short.
Taxes – There are two major business tax cuts to be considered this session.
The first is a reduction in the capital gains tax assessed on the sale of
Arkansas investments and property. A similar bill passed the House in 2011, but
did not pass in the Senate. The bill has been refiled and will likely be
discussed in detail, although it doesn’t have the champion in the current
legislature that it has had in the past. The other major business tax cut would
double to ten years how long businesses can carryforward prior year losses to
offset current profits. Many states have even longer carry-forward policies so
Arkansas’ current five-year restriction is much too short.
As
mentioned above, the Chamber strongly supports two of the tax reductions under
consideration and we encourage you to join us in advocating for their passage
in the coming weeks.
HB1218
– Eliminates the state sales tax on utilities used by manufacturers. Only one
of our surrounding states tax manufacturer’s utilities, which places Arkansas
at a competitive disadvantage in both recruitment and retention of
manufacturers. In order to have a diverse economy, Northwest Arkansas must
continue to support and protect its manufacturers by creating an operating
environment that allows them to be the most competitive in the world. This bill
continues a steady reduction in this tax and improves our ability to recruit
and retain jobs.
– Eliminates the state sales tax on utilities used by manufacturers. Only one
of our surrounding states tax manufacturer’s utilities, which places Arkansas
at a competitive disadvantage in both recruitment and retention of
manufacturers. In order to have a diverse economy, Northwest Arkansas must
continue to support and protect its manufacturers by creating an operating
environment that allows them to be the most competitive in the world. This bill
continues a steady reduction in this tax and improves our ability to recruit
and retain jobs.
SB334
– Eliminates the sales tax on parts used to repair or replace equipment used by
manufacturers. This reduction is important to retain industry in Northwest Arkansas
since many of our local manufacturers not only have competitors from around the
world, they also have other facilities in the United States When a company is
looking to expand production or make their facilities more efficient we want
them to choose their Northwest Arkansas location to improve and expand instead
of moving production to somewhere less costly. Reducing the sales tax on repair
and replacement parts and equipment gives the state an advantage that might
save hundreds if not thousands of existing jobs.
– Eliminates the sales tax on parts used to repair or replace equipment used by
manufacturers. This reduction is important to retain industry in Northwest Arkansas
since many of our local manufacturers not only have competitors from around the
world, they also have other facilities in the United States When a company is
looking to expand production or make their facilities more efficient we want
them to choose their Northwest Arkansas location to improve and expand instead
of moving production to somewhere less costly. Reducing the sales tax on repair
and replacement parts and equipment gives the state an advantage that might
save hundreds if not thousands of existing jobs.
If you
want more information on how HB1218 or SB334 might benefit your business please
contact Michael@RogersLowell.com. Also, we need your assistance to make sure legislators
understand the potential benefits of these bills. Please reply to this email if
your business would be positively impacted by a reduction in the tax on
utilities and repair/replacement parts.
want more information on how HB1218 or SB334 might benefit your business please
contact Michael@RogersLowell.com. Also, we need your assistance to make sure legislators
understand the potential benefits of these bills. Please reply to this email if
your business would be positively impacted by a reduction in the tax on
utilities and repair/replacement parts.