LITTLE ROCK — The Arkansas House of Representatives on Friday passed Gov. Mike Beebe's grocery tax cut, the largest single tax reduction in state history and a centerpiece of the governor's campaign last year.
Lawmakers said they expect the bill to arrive on Beebe's desk for his signature early next week. First it returns to the Senate for approval of an amendment that added the names of additional sponsors. The Senate had approved it 35-0 the first time the bill was offered in the chamber late last month.
If enacted, the tax cut would mean anyone spending about $160 a week on groceries would pay about $250 less in taxes over a year.
The bill arrived on the House floor three days after Beebe and the House leadership hammered out a compromise in which House leaders agreed to back Beebe's grocery tax-cut bill in return for legislation exempting poor Arkansans from paying state income tax and a reduction in the tax manufacturers pay on energypurchases.
"I can't help but be pleased," said Rep. David Evans, D-Searcy, Senate Bill 185's lead House sponsor. "To have 100 sponsors on a bill, I think that says a lot about the work of the governor and the work of the speaker of the House. That cooperation is what brought this to pass."
The bill passed with a 99-0 vote in the 100-member House. Rep. Jim Medley, R-Fort Smith, was absent from the Friday morning session for personal reasons.
The bill would halve the state's 6 percent sales tax on groceries starting July 1. At $122 million the first year of the biennium and $131 million the second, it dwarfs the previous largest tax cut in the state, a $90 million income tax reduction passed in 1997.
"This is a great day for Arkansas," said Sen. Bobby Glover, DCarlisle, the bill's Senate sponsor. "We've made history."
Despite the bill's effect on state coffers, it garnered no debate in committee Thursday or on the House floor Friday. In the chamber, Evans introduced the bill with a standard request "for a good vote." No members questioned him on the bill or spoke against it.
Lawmakers said the bill sailed through because the governor and House leadership had already completed the hard political work. Once the two sides struck an agreement, House members rushed to add their names to the list of sponsors on the grocery tax cut bill.
All the elements of the tax-cut package combined would result in a revenue reduction of $157 million the first year and $178 million the second, according to figures from the Department of Finance and Administration and legislators.
Before reaching the agreement, House leaders expressed reluctance to move any tax-cut legislation through to the governor ahead of a report by the Supreme Court masters detailing their view of the state's school-funding obligations. Lawmakers said they feared that they might be stripping too much from the state treasury only to have the Supreme Court direct them to invest millions more in education. None of that caution was evident Friday, and lawmakers said if the high court ultimately requires large new appropriations for public schools they will find money elsewhere in the governor's proposed state budget.
"The governor has convinced everyone that his budget allows for whatever we have to do," said House Speaker Benny Petrus, DStuttgart.
Glover said the Legislature had "gone the extra nine yards in financing public education" and shouldn't wait for the Supreme Court's nod to pass a tax cut.
"We need to do our business the way we think it should be done," Glover said.
The two other components of the tax compromise are expected to move steadily through the Legislature next week.
House Bill 1443 would exempt Arkansans earning below the federal poverty level income from paying state income tax. It would cover single filers whose annual gross income is less than $10,200; married couples filing jointly with fewer than two dependents whose gross income is less than $17,200; married couples with two or more dependents earning less than $20,700; and heads-of-household filers whose gross income is less than $13,700 a year. The Department of Finance and Administration estimates that 62,000 people would be taken off the tax rollsunder the bill.
Arkansans earning more than the federal poverty level but less than 33 percent above it would receive tax credits intended to soften the burden for lower-income taxpayers under the bill. The finance department estimates 89,000 taxpayers would be eligible for those credits.
The bill would take effect for the current tax year and would adjust both the tax credit levels and the poverty threshold for future inflation. The tax cut would total between $14 million and $14.5 million in the fiscal year beginning July 1, 2007 and an estimated $16 million the following year, said sponsor Rep. Keven Anderson, R-Rogers.
Two competing bills, one in the House and one in the Senate, would reduce the tax manufacturers pay on energy purchases. The bills would cut the 6 percent tax charged to manufacturers for their natural gas and electricity use to 4.5 percent on July 1, 2007, and to 4 percent on July 1, 2008. This would reduce state tax revenue by $20.2 million next fiscal year and $30.5 million in the following fiscal year, the finance department said.
The bills are Senate Bill 119, by Sen. Barbara Horn, D-Foreman, which was approved by the Senate Thursday, and House Bill 1420 by Rep. Allen Maxwell, DMonticello, which was introduced Wednesday and will be heard in the House tax committee Tuesday. House leaders say they prefer the House version, because they negotiated the compromise with the governor and think the resulting legislation should originate in their chamber.
OTHER ACTION
Also Thursday, the House sent to the Senate:
HB1068 by Rep. Roy Ragland, R-Marshall, which would strengthen the penalties for trespassing on archaeological sites and stealing artifacts.
HB1333 by Rep. David Johnson, D-Little Rock, which would make it a crime to interfere with a person's attempt to summon emergency assistance. Johnson said the measure would be most helpful in domestic-violence cases, in which offenders often forcibly prevent victims from calling police.
HB1401 by Rep. Sid Rosenbaum, R-Little Rock, which would enhance the penalty for transporting minors to engage in prostitution or sexually explicit conduct.
Front Section, Pages 1, 10 on 02/10/2007