State lawmakers are to get details on Gov. Asa Hutchinson’s proposed fiscal 2016 budget Tuesday, and a House committee is to consider Hutchinson’s proposed $100 million income tax cut Thursday, during the third week of work for the 90th Arkansas General Assembly.
Senate President Pro Tempore Jonathan Dismang, R-Searcy, said he hopes to get the Senate’s approval this week on legislation to create a legislative task force to study overhauling the state’s Medicaid program and to look at alternatives to the state’s private-option program. He also hopes the Senate will reauthorize funding for the private option this week.
“I think it is going to be a busy week,” said House Republican leader Ken Bragg of Sheridan. “Hopefully, we’ll have some resolution to these issues.”
Officials in the state Department of Finance and Administration are to share Hutchinson’s draft budget with the Legislature’s Joint Budget Committee, said Hutchinson spokesman J.R. Davis.
Hutchinson has said his budget will provide increased public school funding to meet educational adequacy recommendations. He also promised not to cut funding for higher education.
His budget proposal will include the income tax cut, which would be paid for through growth in state tax collections, modest cuts in the budgets of some state agencies, changes to capital gains tax rates and the use of one-time surplus funds.
The proposed income tax rate cuts and the repeal of capital gains tax cuts — passed in 2013 — would reduce state general revenue by $12 million in fiscal 2016 and by $102.8 million in fiscal 2017, according to the Department of Finance and Administration.
The income tax rate cuts bill, Senate Bill 6 by Dismang, sailed through the Senate on Thursday with only three dissenting votes from Little Rock Democrats, who said they wanted to see Hutchinson’s proposed budget for fiscal 2016 before voting on the cuts.
If that tax bill becomes law, the rate for Arkansans with taxable incomes of between $21,000 and $75,000 would drop from 6 percent to 5 percent on their incomes between $21,000 and $35,099, starting next year. The rate on incomes between $35,100 and $75,000 would fall from 7 percent to 6 percent.
SB6 repeals Act 1488 of 2013, which increased the capital gains exclusion from the state income tax from 30 percent to 50 percent, starting this tax year. Act 1488 also provided an income-tax exemption for that part of capital gains received by a taxpayer in excess of $10 million starting last tax year. The law would be repealed retroactive to Jan. 1 of this year.
The House Revenue and Taxation Committee will wait until Thursday to consider SB6, said committee chairman Joe Jett, D-Success.
“There are some folks [in the House] that have heartburn about getting rid of the capital gains tax cuts,” Jett said.
Bragg said some House Republicans are worried that repealing the capital gains tax cuts “constitutes a tax increase,” though “it’s just a piece” of SB6 that would result in a net reduction in state taxes.
“I’m not sure how the votes will turn out,” in the House where a three-fourths vote is required to approve SB6, Bragg said.
On Thursday, at the University of Arkansas for Medical Sciences in Little Rock, Hutchinson called for reauthorizing funding for the private-option Medicaid program through Dec. 31, 2016. He also advocated forming a legislative task force to recommend by year’s end changes in the state’s entire Medicaid program and another way to provide health insurance for private-option participants.
Hutchinson’s speech led several Republican lawmakers, who had previously voted against the private-option funding, to say they will vote to fund the program through 2016, because of that end date. Others say they need more time to consider Hutchinson’s proposal.
The private option divided Republicans in the 2013 and 2014 legislative sessions and was a hot topic last year on the campaign trail.
The program extends insurance coverage to adults who have incomes of up to 138 percent of the poverty level — $16,105 for an individual, for instance, or $32,913 for a family of four. More than 180,000 Arkansans have enrolled in private health insurance through the private-option program, according to the state Department of Human Services.
Federal Medicaid funds pay for 100 percent of the program until fiscal 2017, when the state will pick up 5 percent of the cost. The state’s cost will gradually increase to 10 percent — topping $200 million — by fiscal 2020, according to Hutchinson.
The Legislature barely achieved the three-fourths vote threshold in the House and Senate to authorize funding for the private option in 2013 and 2014.
“On the Senate end, we would like to move forward,” said Dismang. “Our goal would be to move both of those [bills] through our chamber early [this week],” he said, referring to the task force and private option funding.
Senate Republican leader Jim Hendren, R-Sulphur Springs, said he’ll probably ask the Senate Public Health, Welfare and Labor Committee on Wednesday to approve his Senate Bill 96, which would create the task force. If approved, the task force would consist of 16 lawmakers and state Surgeon General Greg Bledsoe.
Dismang said Friday that he believes there are enough votes in the Senate to pass the private-option funding this week.
“The governor set the tone for the discussion and did a good job of allowing both sides to have input, and I think this task force will be very diverse when we establish the membership of it. I think that gives folks on both sides some assurances that they are going to get their case heard,” Dismang said.
State Sen. Bryan King, R-Green Forest, said he won’t vote to fund the private option in fiscal 2016, and he declined to speculate about the odds of the measure clearing the Senate.
“With a new governor, there’s extra leeway he’s going to get,” he said. “I hope they don’t vote for it.”
Bragg said he’s “pretty confident” that funding for the private option will be reauthorized in the House.
“I think [some opponents of the program] are willing to go ahead and forgo an immediate action to end the program for something more long-term,” he said, referring to changes in the state’s entire Medicaid program.
But Rep. Laurie Rushing, R-Hot Springs, who campaigned last year against the private option, said she’s not sure she’ll vote to reauthorize its funding.
“I need to visit with some legislators to see what their thoughts are,” said Rushing, who is chairman of the House freshmen caucus.
In other action, House Public Health, Welfare and Labor Committee Chairman Kelley Linck, R-Flippin, said the committee will consider a bill Tuesday that would require a physician to be in the room during a chemical abortion.
Rep. Julie Mayberry, R-Hensley, is the sponsor of House Bill 1076 that would ban the use of telemedicine during abortion procedures, sometimes referred to as webcam abortions. She has said the practice is not currently used by the handful of abortion providers in Arkansas and that the aim is to prevent such abortions from occurring in the state in the future.
Also, Sen. Jimmy Hickey, R-Texarkana, said he would ask the Senate State Agencies and Governmental Affairs Committee as early as Thursday to approve his SB7 to abolish the Arkansas Lottery Commission and require the governor to appoint the lottery director. The commission includes three appointees apiece by the governor, House speaker and Senate president pro tempore.