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Governor has eye on Dec. 6 session start

He’s waiting for legislators to back draft of tax-cut plan by Michael R. Wickline | November 26, 2021 at 12:00 a.m.
Gov. Asa Hutchinson talks about the daily COVID-19 numbers during his weekly briefing on Tuesday, Nov. 23, at the state Capitol in Little Rock. (Arkansas Democrat-Gazette/Thomas Metthe)

Gov. Asa Hutchinson said Tuesday that he's looking at calling the Arkansas General Assembly into a special session starting Dec. 6 to consider income tax cuts.

The Republican governor said he would formally call the special session after a majority of the House of Representatives and state Senate sign up to support the draft income tax plan that is being circulated among them.

"I want to make sure we have the support for the main purpose of the special session, which will be the tax-cut session," Hutchinson said at his weekly news conference in the governor's conference room.

The draft bill would cut the state's top individual and corporate income tax rates and consolidate low- and middle-income tax tables.

The proposal also would create a nonrefundable low-income tax credit; make adjustments to smooth the tax cliff between tax tables; index the standard deduction to the consumer price index; create triggers for some individual and corporate income tax rate cuts; and rename the state's long-term reserve fund as the catastrophic reserve fund.

The proposal would reduce the top individual income tax rate from 5.9% to 4.9% and the top corporate income tax rate from 5.9% to 5.3%, if the tax-cut triggers are met. Under a 2019 state law, the top corporate income tax rate will drop from 6.2% to 5.9% on Jan. 1, 2022.

The state Department of Finance and Administration has projected that the proposal would reduce state general revenue by $135.25 million in fiscal 2022, which started July 1. The reduction in general revenue is projected to increase each year in fiscal years 2023-25, up to potentially $497.9 million in fiscal 2026.

Rep. Joe Jett, R-Success, said Tuesday that he has rounded up signatures from about 65 Republicans in the House to co-sponsor the draft bill and he expects to have about 70 co-sponsors when he files the bill. The House has 78 Republicans and 22 Democrats.

Sen. Jonathan Dismang, R-Searcy, said Tuesday that he has rounded up 25 Senate Republicans and Sen. Jim Hendren, an independent from Sulphur Springs, as co-sponsors of the bill. Hendren later confirmed he had signed on.

Besides Hendren, the Senate has 26 Republicans and seven Democrats. One seat is vacant because Sen. Lance Eads, R-Springdale, resigned.

VACCINE MANDATE

Senate Democratic leader Keith Ingram of West Memphis on Tuesday contrasted the proposed state income tax cuts with the potential loss of federal funding at the University of Arkansas for Medical Sciences if lawmakers continue down the path of confronting the federal government over its COVID-19 vaccination rule.

UAMS stands to lose $600 million in federal Medicare and Medicaid funding if its employees are not vaccinated or receive medical or religious exemptions by Jan. 4, in accordance with federal Centers for Medicare and Medicaid Services regulations, UAMS Chancellor Cam Patterson told the Legislative Council last Friday.

Patterson said fewer than 2,000 of UAMS' nearly 12,000 employees are unvaccinated.

The council on Friday postponed a vote on UAMS' request to mandate COVID-19 vaccinations for its employees until after a ruling in a legal challenge to the federal mandate. The Biden administration mandate conflicts with a state law that prohibits vaccination dictates without approval from the Legislative Council.

At his news conference, Hutchinson said he hopes to be able to release early next week "a number of items that are sometimes technical fixes or just needed items that have come up" that also will be on the call for the special session.

"But let me make it clear the focus of this session is one principal point and that is to lower the state income tax rate in Arkansas, and everything else is just supplementary to that," the governor said.

To consider bills not on the governor's call for a special session, two-thirds of both the 100-member House and the Senate must vote to allow those bills to be introduced.

OFFICERS' TAX CREDIT

Sen. Jason Rapert, R-Conway said he and Rep. Keith Slape, R-Compton, plan to pursue legislation to grant full-time law enforcement officers a $3,000 income tax credit in the special session.

The state Department of Finance and Administration estimates that a proposal that would grant that $3,000 refundable income tax credit to full-time law enforcement officers, effective for tax years starting Jan. 1, 2022, would reduce general revenue by $25.2 million in fiscal 2023, which starts July 1, 2022.

Rapert said there is no reason why the state of Arkansas can't afford granting $25 million a year in income tax credits to help full-time law enforcement officers, whose compensation lags their peers in other states.

But Jett, chairman of the House Revenue and Taxation Committee, said that if the Legislature enacts this $3,000 income tax credit, lawmakers will attempt to introduce two or three other income tax credit or tax-cut bills, and "that's not what this special session is about."

Sen. Bill Sample, R-Hot Springs, who chairs the Senate Revenue and Taxation Committee, said he can't justify giving $3,000 income tax credits to full-time law enforcement officers and not giving similar income tax credits to firefighters, emergency medical technicians, etc.

"I would love to, but it's a slippery slope and I don't think we can afford it now." Afterward, Hutchinson said consideration of Rapert's abortion and income tax credit bills "should wait until next year or the next regular session."

"It is not a matter of being for or against the bills as much as the issues are not yet ripe for consideration," the governor said in a written statement. "If a consensus develops and there are no other legal or constitutional concerns, then they could be considered in a future session."

The Legislature will meet in a fiscal session starting Feb. 14.

Dismang, who is a co-chairman of the Joint Budget Committee, said he hopes for a three-day special session.

"I don't know what others have planned, but that's my plan," he said.

Print Headline: Governor has eye on Dec. 6 session start

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