Two bills that would cut the state’s taxes on income and capital gains advanced through the Arkansas House Revenue and Taxation Committee on Tuesday, the 72nd day of the 2013 legislative session.
Elsewhere Tuesday, the Senate approved bills to expand the state Board of Finance and increase its oversight of the state treasurer’s investments. It also passed legislation requiring paid canvassers collecting signatures for ballot measures to register with the secretary of state’s office and receive training through the state Board of Election Commissioners.
The House sent to the governor a bill that would remove the requirement that the state Department of Higher Education director have relevant experience on a campus of higher education. A bill that would allow the family members of murder victims to attend the killer’s execution failed to clear the chamber.
The House Revenue and Taxation Committee endorsed a bill that would cut the state’s 7 percent income tax rate to 6.875 percent on taxable income of $44,000 and above.
The 7 percent rate currently applies to taxable in-come of $34,000 and up.
House Bill 1585, sponsored by Rep. Charlie Collins, R-Fayetteville, also would expand the existing 6 percent income tax bracket, which applies to taxable income of $20,400 to $33,999 to apply to taxable incomes of $20,400 to $43,999. It would become effective for tax year 2014 and subsequent tax years.
The bill would reduce state general revenue by $28.6 million in fiscal year 2014 and $57.2 million in fiscal 2015, according to the state Department of Financial Administration.
Collins told the House panel that Arkansas workers are operating at a disadvantage because the state’s top rate of 7 percent is higher than rates in the surrounding states.
“Getting ourselves in a more competitive position will help Arkansans get jobs,” he said.
People with taxable income $40,000 to $50,000 would receive the largest reduction in income taxes under the bill and their income taxes would be reduced by about 4 percent, Collins said.
Rich Huddleston, executive director for the Arkansas Advocates for Children and Families, said an Institute on Taxation and Economic Policy analysis found that the top 5 percent of Arkansas taxpayers, who make more than $155,000 a year, would receive about one half the benefits of the tax cuts under the legislation.
The proposed tax cut would be far too small for most small businesses to even hire one worker, Huddleston said.
Afterward, Senate President Pro Tempore Michael Lamoureux, R-Russellville, told reporters that Collins’ bill is “the anchor” of about a $100 million tax cut package being negotiated by legislative leaders, though the details haven’t been finalized.
The House tax committee also endorsed House Bill 1966 by House Speaker Davy Carter, R-Cabot, to cut the state’s capital gains taxes.
The bill creates a 70 percent exemption for any net capital gains relating to the sale of Arkansas property acquired after Dec. 31, 2013.
It also creates an additional exemption for net capital gains on assets acquired before Jan. 1, 2014. Net capital gains up to $5 million would continue to receive the current 30 percent exclusion; gains above $5 million would receive a 70 percent exclusion.
The bill would be effective for tax years starting Jan. 1, 2014.
It would reduce state general revenue by $3.1 million in fiscal 2014, $10 million in fiscal2015, $18.3 million in fiscal 2016 and $27.9 million in fiscal 2017, according to the state finance department.
The capital gains tax-cut bill “looks good on its face, but the fact of the matter is it removes state revenue we need for essential services,” said Brett Kincaid, outreach director for the Arkansas Advocates for Children and Families.
But Carter disagreed, saying, “We have to have job creators in this state and I respectfully submit that passing this [bill] will help advance job creators in Arkansas.”
Democratic Gov. Mike Beebe said the only way that he knows of paying for tax cuts in fiscal 2014 is if the Legislature authorizes the “private option” to extend health insurance coverage to about 250,000 people through a health insurance exchange, with the federal government paying the tab.
“Otherwise, if you do tax cuts without that, you are cutting into a lot of essential services,” he said.
In other action, the House tax committee voted to table House Bill 1240, sponsored by Rep. Fred Love, D-Little Rock, to create a state earned income tax credit that’s equal to 5 percent of the federal earned income tax credit.
Love said his bill would create a state earned-income tax credit for low and moderate-income families and that 26 states already have enacted such a tax credit, including Louisiana and Oklahoma. The tax credit would be granted to 304,000 people, including single mothers and would be a pathway out of poverty, he said.
The bill would reduce state general revenue by $38.8 million in fiscal 2014 and by $40 million in fiscal 2015, according to the state Department of Finance and Administration.
OVERSIGHT OF STATE TREASURY
The Senate voted 35-0 to approve a bill that would expand the state Board of Finance, increase its oversight of the state treasurer’s investments and require the board to appoint the chief investment officer in the state treasurer’s office based on nominations from the state treasurer. Sen. Jason Rapert, R-Bigelow, said his bill would ensure transparency and accountability with the treasurer’s investments and Gov. Mike Beebe and state Treasurer Martha Shoffner support it.
Shoffner and her chief investment officer, Autumn Sanson, have disagreed with each other in testimony before lawmakers about what Shoffner advised her to do regarding bond transactions.
REGISTERED CANVASSERS
In a 29-1 vote, the Senate approved a bill that would require canvassers gathering signatures to qualify a proposed initiated act or constitutional amendment for the ballot to first register with the secretary of state’s office.
Senate Bill 821 by Sen. Keith Ingram, D-West Memphis, also would require paid canvassers to complete a training program established by the state Board of Election Commissioners.
Ingram said the bill is aimed at fixing the problem with paid canvassers coming from out of state into Arkansas and not knowing the state’s laws.
BACKGROUND CHECKS FOR CANDIDATES
In a 34-0 vote, the Senate approved a bill requiring background checks for candidates seeking elected office.
Senate Bill 1029, sponsored by Ingram, would require candidates to undergo a criminal background check when they file to run for office. Thecandidate would pay a fee for the Arkansas State Police to perform the check.
LIMITING GUNS
The Senate sent to the governor a bill that would remove the governor’s ability to suspend or limit the sale, dispensing or transportation of firearms during a disaster emergency. The provision has been on the books since 1973. Rep. Charlotte Douglas, R-Alma, has said the National Rifle Association asked her to sponsor House Bill 1819.
The bill does not address the governor’s other disaster emergency powers, including suspending or limiting the sale of alcohol and explosives. HIGHER EDUCATION DIRECTOR
In a 58-19 vote, the House sent the governor a bill that would remove the requirement for the director of the state Department of Higher Education to “have relevant experience on a campus of higher education” and be “an experienced educator in the field of higher education.”
Senate Bill 812, sponsored by Sen. Jeremy Hutchinson, R-Little Rock, would instead require the director to “exhibit advanced coordination and communication skills” and show “competence in the field of institutional management or agency management, institutional finance, financial aid, or institutional research.”
Rep. Les “Skip” Carnine, R-Rogers, said the bill would allow the state to look at “competencies rather than academic degrees” when selecting a director.
DEATH PENALTY WITNESS
The House failed to pass a bill that would allow the family members of murder victims to attend the killer’s execution with a vote of 48-13. Fifty one votes are required for approval in the House.
Senate Bill 52, sponsored by Sen. Bart Hester, R-Cave Springs, would allow aspouse, any parent or stepparent, any adult sibling or step-sibling and any adult child or stepchild who is related to the victim to attend the execution.
Rep. Jim Dotson, R-Bentonville, said only two other states - Oklahoma and Texas - allow the family of victims to witness executions.
Under the current law, family members of the victim are allowed to watch the execution over closed-circuit television.
BODY ART
The House approved two bills that would regulate the body art and modification industry.
Members voted 66-8 in favor of Senate Bill 388, sponsored by Sen. Missy Irvin, R-Mountain View, which would require minors to obtain parental approval before getting a tattoo, piercing, branding or other type of body art. The bill would ban body art on a person who is inebriated and on children under 16 years of age, regardless of whether they received parental consent.
The House voted 62-11 to approve Irvin’s Senate Bill 387, which bans body modification artists licensed by the Department of Health from inserting subdermal implants.
Rep. Deborah Ferguson, D-West Memphis, said dermal implants were deemed OK, but the subdermal implants were considered plastic surgery. She said the bill would not ban scarification - the intentional injury of the skin to produce a scar - but the health department would regulate the practice.
TIM TEBOW LAW
A bid to codify regulations governing the participation of home-school students in extracurricular activities at public schools failed to clear the House Education Committee.
House Bill 1789 by state Rep. Mark Lowery, R-Maumelle, is modeled after the regulations drawn up by the Arkansas Activities Association, but critics said amendments to the original bill left the bar too low for participation in extracurricular activities for home-school students compared with public-school students.
Often called the “Tim Tebow Law,” named after the home-schooled former star quarterback at the University of Florida, the bill also would apply to home-school students who want to participate in public school bands, choirs and other nonathletic activities, which the AAA also governs.
SOCIAL MEDIA
The House Public Health, Welfare and Labor Committee approved a bill that would prohibit employers from asking for access to the personal social media accounts of an employee or potential employee.
House Bill 1901 by Rep. Nate Steel, D-Nashville, would also prohibit employers from requiring individuals to add them as a contact on a social media site or change their privacy levels so information can be publicly viewed.
Some companies are asking for access so they can check up on employees, Steel told the committee.
The bill does not include accounts set up by the employer or on the employers behalf. Noel Oman of the Arkansas Democrat-Gazette contributed information to this article.
Front Section, Pages 1 on 03/27/2013