Gov. Asa Hutchinson on Thursday signed into law legislation his office described as “the second-largest tax cut in state history and to provide $50 million for a school safety grant program.”
Hutchinson signed into law two four-pronged tax cut bills. He said the tax cut will provide $400 million in income tax relief.
The governor said the state’s top individual tax rate has been cut from 7% in 2015 to 4.9% during his tenure as governor.
Watch video from the signing here.
11:46 a.m.: Arkansas lawmakers pass tax cut package, adjourn session
The Arkansas House and Senate on Thursday sent the governor identical tax cut bills that would accelerate the implementation of the cut in the state’s top individual income tax rate from 5.5% to 4.9%, retroactive to Jan. 1, 2022, before they voted to adjourn the special session.
The measures also would accelerate the implementation of the reduction in the state’s top corporate income tax rate from 5.9% to 5.3%, effective Jan. 1, 2023, grant a temporary, nonrefundable income tax credit of $150 for individual taxpayers with net income up to $87,000 and of $300 for married taxpayers filing jointly with net income up to $174,000, and enable the state to adopt a federal depreciation schedule for businesses.
The House voted 79-14 to approve Senate Bill 1 by Sen. Jonathan Dismang, sending it to Gov. Asa Hutchinson.
The Senate voted 27-5 to send the Republican governor House Bill 1002 by Rep. Joe Jett, R-Success, which is identical to SB1.
The House and Senate’s approval of the identical tax cut measures came on the third day of a special session called by Hutchinson to consider the four-pronged tax cut package agreed upon by the Republican governor and Republican legislative leaders and to provide $50 million in surplus funds to a reserve fund for a school safety grant program that hasn’t been developed yet.
The House on Thursday voted 94-0 to send to the governor Senate Bill 2 by Sen. Missy Irvin, R-Mountain View, to transfer $50 million in surplus funds to a restricted reserve fund for the school safety program.
The Senate voted 24-8 to adjourn the special session and the House voted 61-33 to adjourn before Democrats could make motions to seek a two-thirds vote of the Senate and House to extend the special session to consider other matters such as teacher pay raises.
Hutchinson will hold a news conference at the state Capitol Thursday afternoon with state lawmakers to sign legislation into law "regarding the second-largest tax cut in state history and to provide $50 million for a school safety grant program," his office said this morning.
Hutchinson declined to put teacher raises on the call for the special session, citing the lack of support in the Republican-dominated Legislature for considering teacher pay raises in the special session, after he floated proposals to boost teacher salaries in the special session.
Republican legislative leaders said they want lawmakers to consider increasing teacher pay during the 2023 regular session, starting Jan. 9, after the House and Senate education committees complete their biennial educational adequacy review this fall.
House Bill 1002 and Senate Bill 1 are projected to reduce state general revenue by $500.1 million in fiscal 2023 that started July 1, $166.6 million more in fiscal 2024, $69.5 million more in fiscal 2025, $18.4 million more in fiscal 2026 and $8.4 million more in fiscal 2027, according to the state Department of Finance and Administration.
The state Department of Finance and Administration projected a general revenue surplus of $914 million in fiscal 2023.
The enactment of HB1002 would leave the state with a projected general revenue surplus of about $400 million in fiscal 2023, Jett told the House Revenue and Taxation Committee on Tuesday. The state’s general revenue budget is $6.02 billion in fiscal 2023.
The state’s general revenue surplus totaled $1.628 billion in fiscal 2022 that ended June 30. The state’s general revenue budget totaled $5.84 billion in fiscal 2022.