A state Senate committee on Tuesday will consider the bill that contains Gov. Asa Hutchinson's plan to reorganize state government.
The bill is one of several major topics on tap for a shortened week in the regular legislative session.
Sen. Jim Hendren, R-Sulphur Springs, said he hopes to ask the Senate tax committee this week to support his legislation to provide about $100 million a year in income-tax cuts for moderate- and low-income people. The cuts would be paid for by taxes on cigarettes and e-cigarettes.
Another discussion is expected in the House and Senate State Agencies and Governmental Affairs committees, which will continue trying to decide on the last two of the three proposed constitutional amendments that they want the House and Senate to refer to voters.
"I hope next week that we'll have answers for that," the Senate committee chairman, Sen. Ron Caldwell, R-Wynne, said last week.
Proposed amendments that would revise term limits and change the ballot initiative process "have been real popular discussions," he said.
Earlier this month, the House and Senate voted to refer to voters in the 2020 general election a proposed amendment that would permanently extend the half-percent sales tax for highways. The tax originally was approved by voters in 2012 for a 10-year period. The proposal is House Joint Resolution 1018 by Rep. Jeff Wardlaw, R-Hermitage. State officials project that if enacted, it would raise about $205 million a year for the state Department of Transportation and $44 million a year each for cities and counties.
Speaking of money, Hutchinson said Thursday that he and legislative leaders will begin negotiating the general revenue budget. In November, Hutchinson proposed a general revenue budget for fiscal 2020 that would total $5.75 billion -- a $125 million increase over the current fiscal year.
MANY BILLS TO GO
Today is the 64th day of the 92nd General Assembly's regular session. Legislative leaders hope to wind down the session in the first or second week of April, with official adjournment in May.
Lawmakers typically meet for four days each week. This week is shortened because many school districts are on spring break. The plan is to recess at the close of business Wednesday and resume work next Monday.
The House and Senate may recess April 12 -- if not earlier -- and reconvene before noon May 6 to take fix bills or consider overriding vetoes. The session would then adjourn.
April 12 would be the 89th day. Of the four previous regular sessions, the longest was 101 days in 2013. (Fiscal sessions, in even-numbered years, are shorter.)
So far this session, representatives have filed 851 bills and senators have filed 582 bills, according to the General Assembly's website as of late Friday afternoon.
By the end of the 2017 regular session, representatives filed 1,280 bills and senators filed 789 bills, for a total of 2,069, according to Bureau of Legislative Research records. That session had a nonappropriation bill filing deadline on the 55th day.
But this year, the deadline was scrapped, making comparisons to previous regular sessions difficult. The most bills filed in the last four regular sessions was 2,492 in 2013.
Some lawmakers said eliminating the deadline would reduce the number of "shell" bills, which lack details and are amended later.
Asked whether the bureau has requests for several hundred bills to be drafted, bureau Director Marty Garrity replied by email, "I can't speak to that."
The governor's reorganization plan -- contained in a 2,049-page bill -- zipped through the House State Agencies and Governmental Affairs Committee and the full House of Representatives last week.
House Bill 1763 by Rep. Andy Davis, R-Little Rock, would reduce the number of state agencies reporting to the governor from 42 to 15. Many small agencies would be placed under one of 15 Cabinet-level agencies headed by secretaries, effective July 1 of this year.
The bill would create the following Cabinet-level departments: agriculture; commerce; corrections; education; energy and environment; finance and administration; health; human services; inspector general; labor and licensing; military; parks, heritage and tourism; public safety; transformation and shared services; and veterans affairs.
Hutchinson, a Republican, has projected savings of about $15 million a year from the plan starting in fiscal 2021, which starts July 1, 2020.
The legislation is now before the eight-member Senate State Agencies and Governmental Affairs Committee.
The committee has been widely viewed in legislative circles as the most significant hurdle for the bill since early December, when Republican Sens. Jimmy Hickey of Texarkana, Bill Sample of Hot Springs and Ron Caldwell of Wynne surprised some of their colleagues by deciding to serve on the committee. Sen. Will Bond of Little Rock is the lone Democrat on the committee, which also includes Republican Sens. Bob Ballinger of Hindsville, Breanne Davis of Russellville, Trent Garner of El Dorado and Bart Hester of Cave Springs.
The committee will consider the bill from 7:30 to 10 a.m. Tuesday, said Caldwell, the chairman.
"We are going to listen to what the members have to say. We are not taking testimony. This is a discussion among the committee members on, 'Will this work? Will that work?'" he said. "We will review it and come up with any recommendations that the committee may have."
Caldwell also said: "I still have not had anyone ever say that they are going to vote against the bill.
"I think we will have some amendments to put on it. Some are just changing a few words there and a few words there," he said.
Some committee members have questioned whether the Public Service Commission should be part of the proposed Department of Energy and Environment, and whether the Bank, Insurance and Securities departments should be part of the proposed Department of Commerce. They also asked whether the Cabinet-level secretaries would be granted too much control of cash-fund agencies.
Under HB1763, the Office of Personnel Management, as directed by the governor, would be required to establish and submit the maximum salary for each Cabinet-level secretary to a panel of lawmakers before July 1.
Asked why he isn't including the pay ranges for each secretary as part of HB1763, Hutchinson said Friday in a written statement, "I have consistently stated that the discussion on transformation should be focused on the policy and not who will ultimately be selected for these positions or the salary allocated to each position.
"I do not expect all salaries to be the same considering the cabinet level departments will range in both size and scope. I have also stated that some of the Secretaries will have dual roles for a period of time, but we will not have all of that information, including their current salaries, until I name those individuals to those positions. There are legislative guidelines already set for executive branch salaries," the governor said.
MORE TAX CUTS
Hendren said he may ask the Senate Revenue and Taxation Committee to advance his Senate Bill 571 today.
The bill would:
• Create a state refundable earned income tax credit equal to at least 5 percent of the federal earned income tax credit and save low-income families about $40 million a year. The credit could be adjusted depending on the economy's effect on revenue.
• Increase the standard deduction from $2,000 to $3,300 to save taxpayers about $41.3 million.
• Eliminate the 2 percent rate bracket in the tax table for people with incomes up to $22,200 a year. The rate is now applied to incomes from $4,500 to $8,900 a year. This cut would save those taxpayers about $16.8 million a year.
• Levy a 20 percent special excise tax at the retail level on cigarettes, which he said equates to about 80 cents a pack. The state's current tobacco tax is $1.15 per cigarette pack.
• Make e-cigarettes and vaping products subject to the same taxes as traditional tobacco products, which would equate to about a 67 percent tax on vaping products.
The bill has 16 co-sponsors in the 35-member Senate. Rep. Lee Johnson, R-Greenwood, is the House sponsor of the bill, which has 39 co-sponsors in the 100-member House of Representatives.
If the bill clears the Senate, it could be assigned to the 15-member House Rules Committee or the 20-member House Revenue and Taxation Committee.
It's almost always a bigger challenge to get a bill through a committee "on the other side than in your home court," Hendren acknowledged Friday.
Rep. Lane Jean, R-Magnolia, a member of both House committees, said Friday, "I'm not for it."
He noted that creating an earned income tax credit was not part of the recommendations of the Tax Reform and Relief Legislative Task Force that Jean and Hendren co-chaired.
"We did the governor's tax cut, and we still have to do the Internet sales tax," Jean said.
House Revenue and Taxation Committee Chairman Joe Jett, R-Success, said he opposes Hendren's legislation as well.
"You get to the point of where enough's enough," he said, referring to this year's fuel and fee increases for highways.
The Legislature also approved a tax cut, proposed by Hutchinson, that will reduce the state's top individual income-tax rate from 6.9 percent to 5.9 percent over a two-year period. State officials project that the cut will reduce revenue by $97 million a year.
The Internet sales-tax bill, filed Friday, is Senate Bill 576, by Hester. It would allow the state to begin requiring sellers without a physical presence in the state to collect and remit sales taxes on Internet sales. It's estimated to raise $20 million a year. The bill also includes business income-tax changes.
SB576 also would exempt certain services and products related to carwashes from sales and use taxes but would levy a fee.
Zips Car Wash ran an advertisement March 10 in the Arkansas Democrat-Gazette that warned that Hester "is considering creating a new statewide tax on water use for some local businesses" and urged people to call lawmakers about it.
Hester said he disputes the ad's characterization of the bill. He said state officials projected these carwash provisions would reduce revenue by $800,000 to $1.2 million a year. He said he's only aware of one carwash owner who contends the provisions will represent a tax increase on him.
He said he plans to ask the Senate tax committee to advance the bill after this week because he wants the business community to assess its effect.
Meanwhile, Hendren said he believes he is getting closer to having the votes in the 20-member House Revenue and Taxation Committee for his Senate Bill 447, which would increase the homestead property tax credit by $25, to $375 per parcel. It also would divert $8.2 million from the property tax relief trust fund to the county voting system grant fund and move some money from the trust fund to general revenue. The trust fund is financed with a half-percent sales tax; the revenue is used to reimburse counties for the credits.
But Jett said members "are at loggerheads" over SB447 because many representatives don't want to divert money from the trust fund to general revenue.
The Senate tax committee has twice declined to recommend approval of a competing bill, House Bill 1321 by Rep. Lanny Fite, R-Benton, that would raise the credit to $375 but also authorize a study of the trust fund.
A Section on 03/18/2019
Print Headline: Arkansas Senate panels poised to look at agency changes, tax cuts