LITTLE ROCK — A bill to grant a Fort Smith group a sales- and use-tax exemption stalled Thursday after legislators questioned whether it would open the door to more such proposals.
House Bill 1137 by Rep. Tracy Pennartz, D-Fort Smith, would have granted an exemption to the nonprofit Arkansas-Oklahoma Regional Education and Promotion Association Inc. She said the bill would reduce state revenue by $10,000 a year.
Pennartz told the House Revenue and Taxation Committee that the group educates people about agriculture, runs a rodeo and fair, and gives out about $30,000 in scholarships each year.
The group’s chairman, Pam Carter, said the rodeo boosts tourism dollars for the state and the Fort Smith area by attracting people who stay in hotels and dine in restaurants.
Pennartz said the Legislature’s decision denying judges and other elected officials a cost-of-living adjustment infiscal 2012 means the state has money to cover such a tax break. The Legislature’s decision on raises saved the state about $475,000 in fiscal 2012.
Rep. Fred Love, D-Little Rock, asked if the group is trying to get the same exemption from Oklahoma.
Carter said the group isn’t eligible for Oklahoma tax breaks.
Rep. Bruce Westerman, RHot Springs, asked if HB1137 would open the door to other nonprofit groups seeking exemptions.
Pennartz said no because legislators and the Department of Finance and Administration would make sure that didn’t happen.
Rep. Stephen Meeks, RGreenbrier, wanted to know whether a tax exemption would be abused by members of the group who are buying personal items.
Carter assured him that wouldn’t happen because the members are quality individuals.
State Revenue Commissioner Tim Leathers told the committee that passage of HB1137 would “open up awhole new door” for “hundreds or even thousands” of nonprofit groups across the state. He said there are likely nonprofit groups in each legislator’s district that could make similar arguments for a tax break.
The committee took no action on the bill.
Committee Chairman Rep. Davy Carter, R-Cabot, said the bill would be considered later.
Rep. John Burris, R-Harrison, said the committee needs time to consider how each tax-cut bill could fit into the state budget. He said the committee is treating other tax-cut bills the same way. Those include:
House Bill 1002 by Rep. Ed Garner, R-Maumelle, to cut the capital-gains tax.
House Bill 1025 by Rep. Denny Altes, R-Fort Smith, for an income-tax credit for stay-at-home moms.
House Bill 1030 by Altes for a tax credit for school expenses.
House Bill 1052 by Rep. Lane Jean, R-Magnolia, to cut the sales tax on energy used in the manufacturing process.
Front Section, Pages 8 on 02/04/2011