Legislative panels advance tax-cut bills

Railroad tracks, jobs for ex-inmates, steel producer among issues addressed

FILE — The state Capitol is shown in this undated file photo.
FILE — The state Capitol is shown in this undated file photo.

The Arkansas House of Representatives and Senate on Monday each approved a few tax credit measures, after the Senate Revenue and Taxation Committee advanced a handful of tax cut bills:

• The House voted 94-0 for a bill that would create an income tax credit for a railroad for track maintenance and modernization. The bill now goes to the Senate.

The credit would be equal to 50% of track maintenance expenditures under House Bill 1456 by Rep. Jeff Wardlaw, R-Hermitage, according to the state Department of Finance and Administration.

The maximum amount of the credit is $5,000 per mile of track owned or leased by the railroad.

The bill would be effective for tax years starting on or after Jan. 1, 2021. The finance department projects it would reduce general revenue by up to $4.9 million in fiscal 2022.

• In a 91-1 vote, the House sent the Senate a bill that would create the Reboot Pilot Program.

House Bill 1719 by Rep. Robin Lundstrum, R-Elm Springs, would provide refundable income tax credits for employers who hire former felony offenders who were incarcerated and released from a first term for an offense within 12 months of hiring, according to the finance department.

The former offender must be employed at least 40 hours per week at pay at or above the state's minimum wage under the bill. The income tax credit would be $3,000 upon completion of a year of employment, $2,000 upon completion of two years' employment and $1,000 upon completion of 3 years' employment, according to the finance department.

Lundstrum told the House tax committee last week that the pilot program would be limited to 1,000 former offenders.

The bill would become effective starting in tax year 2022 and cost the state roughly $3 million in general revenue, starting in fiscal 2023, said Paul Gehring, an assistant revenue commissioner for the finance department.

• The Senate on Monday voted 33-0 for Senate Bill 566 by Sen. David Wallace, R-Leachville, which would extend a sales and use tax credit to assist Nucor Steel Arkansas.

Wallace said Nucor Steel Arkansas delayed projects because of the covid-19 pandemic and kept its employees on the payroll rather than laying them off.

Under the bill, a company that qualified for a retention tax credit through the InvestArk program by an application approved by the Arkansas Economic Development Commission between June 22-28, 2017, may incur eligible project costs within six years, rather than four years, of the incentive agreement between the company and commission, the finance department said.

The InvestArk sales and use tax credits may be claimed after July 1, 2023; are contingent on a positive economic analysis by the AEDC director; and may be claimed up to $750,000 for each qualifying project in any fiscal year under the bill, the department said. The department projects the bill would reduce state general revenue by up to $3.4 million a year in fiscal years 2024-28.

• The Senate on Monday voted 33-0 for House Bill 1457 by Rep. Les Eaves, R-Searcy, which would create an income tax credit for a stillborn child and create Paisley's Law. The bill goes to the governor.

The bill would provide the income tax credit against a taxpayer's liability in the amount of $500 for a stillborn child for whom a certificate of birth resulting in stillbirth has been issued under state law and who would have been a dependent of the taxpayer during the taxable year, the finance department said.

The bill would become effective for tax years starting on or after Jan. 1, 2021. The bill is projected by the finance department to reduce state general revenue by $139,500 in fiscal 2022.

Measures approved by the Senate Revenue and Taxation Committee included:

• HB1555 by Rep. Joe Jett, R-Success, which would allow the state Division of Heritage to issue up to $8 million in historic rehabilitation income tax credits each fiscal year, up from the current limit of $4 million, starting in fiscal 2022. The bill also would extend the sunset of the historic rehabilitation income tax credit from Dec. 31, 2027, to Dec. 31, 2037.

The bill is projected by the finance department to reduce state general revenue by $1 million in fiscal 2022, $2 million in fiscal 2023 and $3 million in fiscal year 2024 and after.

• HB1596 by Jett that would allow a specialty or job printing business that produced a printed item for a customer or an item to be placed on the market for a retail sale to be considered a "manufacturer" for the manufacturing machinery and equipment sales tax exemption. The finance department projected the bill will reduce state sales tax revenue by $2.6 million in fiscal 2022 and $4 million in fiscal 2023.

• HB1314 by Rep. David Hillman, R-Almyra, which would increase certain maximum credits allowed under the Water Resource Conservation and Development Incentive Act for tax years starting on or after Jan. 1, 2021.

The finance department projects the bill would reduce state tax revenue by $301,886 in fiscal 2022, $603,732 in fiscal 2023 and $905,597 in fiscal 2024 and thereafter.

• Senate Bill 336 by Sen. Mark Johnson, R-Ferndale, which would exempt the sales of coins, currency and coins from sales and use tax, effective Oct. 1.

The bill is projected by the finance department to reduce state sales and use taxes by $766,667 in fiscal 2022 and $1.15 million in fiscal 2023.

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