The Arkansas House on Tuesday voted down millions of dollars in state appropriations to "send a message" to the Senate and Gov. Asa Hutchinson that increasing the used-car sales tax exemption is a priority for the 100-member body.
More than 30 House Republicans joined together to block the passage of nine budget bills that need 75 votes to pass.
No members stated on the House floor why the appropriations bills, which usually pass with minimal dissent, were being voted down, but in interviews Tuesday afternoon, several representatives said it was to signal to senators that House Bill 1342 by Rep. John Payton, R-Wilburn, was a House priority.
The bill, which passed the House last week 84-1, would increase the sales-tax exemption on used-car purchases from vehicles bought for less than $4,000 to vehicles bought for less than $7,500.
HB1342 was assigned March 20 to the Senate Revenue and Taxation Committee. It is still on the committee's agenda.
The bill now has 93 sponsors in the 100-member House and 11 sponsors in the 35-member Senate.
"It was a message that [HB1342] got overwhelming support from us," Payton said in an interview. "Sending the governor and the Senate a message that it's a priority issue. It was just a show of support; it wasn't a mean-spirited thing against those appropriation bills."
The legislative posturing came a day after the Republican governor expressed reluctance about Payton's proposal. The tax cut would reduce state revenue by about $12.6 million annually and city and county revenue by about $700,000 a year, according to the state Department of Finance and Administration.
The proposal would recoup some revenue by nixing a current sales tax exemption for new trailers purchased for less than $4,000, extending the benefit only to used trailers.
Hutchinson, speaking to reporters on Monday, acknowledged that the bill would provide relief to "hardworking" Arkansans buying used cars, but he also noted the significant revenue hit.
"I have a difficult time with it when we don't have that covered in our budget," Hutchinson said. "We've already done significant tax relief in this session, and there's a number of other bills that are still pending out there. At some point we've got to say, 'We've got to balance this budget.' That's my job, and that's what we'll be working on these next couple of weeks."
The ongoing regular legislative session, which began Jan. 14, is projected to recess by mid-April.
Payton said state revenue growth would offset the cost of the tax exemption, pointing to annual revenue growth of more than $100 million over the better half of the last decade in the Natural State.
Payton added that there was no plan to hold up the appropriations into the future. The state agency spending authority bills that were voted down Tuesday included the Department of Human Services, the Department of Education, the Parole Board, the Department of Agriculture and the Arkansas Economic Development Commission.Gallery: Arkansas General Assembly Day 72
"We're not looking for gridlock at all, believe me," Payton said.
Several House members were worried that the Senate may decline to consider Payton's legislation. House Republican Leader Marcus Richmond, R-Harvey, said there were rumors that the bill was "dead on arrival" in the Senate.
"This was to send a little signal down there to say, 'Be sure you take it up,'" Richmond said. "We at least want it to get a fair shake."
The bill is pending before the Senate Revenue and Taxation Committee, and Sen. Jonathan Dismang, R-Searcy, who chairs that committee, said it plans to hear the bill and take a vote on it. Dismang said he hasn't signaled that Payton's bill won't clear the Senate committee.
"If someone wanted to more effectively send a signal, they should probably just pick up the phone and make a phone call," Dismang said. He added that Payton wasn't in the room when the committee tried to meet Monday but couldn't because it lacked a quorum.
Richmond said Payton's proposal would have a more difficult time passing the Senate due to its members' concerns about the bill's impact on the state budget. He suggested that Payton be ready with an amendment to spread the increased exemption out over time or decrease it slightly.
Payton said he was open to delaying the implementation until July 2020 to allow for more time to incorporate the revenue reduction into the state budget. In the current bill, the new exemption would take effect later this year.
"I introduced this bill on Jan. 31," Payton said. "I was negotiable in the beginning, but I don't feel the liberty to change the exemption amount with all the supporters who have come on board."
Information for this article was contributed by Michael R. Wickline of the Arkansas Democrat-Gazette.
A Section on 03/27/2019
Print Headline: Used-car bill leads to Arkansas House standoff