Revenue & Taxation- House

Representative spring or here I give her a point of personal privilege to introduce a believe a group that is here to watch what we do so representative spring or you recognize when you get settled in. Good afternoon and thank you mister chair are ladies and gentlemen this afternoon I have some very special guests to with us I have a doctor robert little and the members from the national science foundation and UA little rock who are visiting with us and there are students from all over the nation so please help me welcome them to our committee meeting this afternoon let's be on our best behavior to thank you. Thank you for that and welcome to revenue and tax at this time i'm going to start with house build one thousand one is a bill i'm running some representative of a vice chair badly actually is going to take over at this point. The. We're giving just a second to get to the end of the table. Slow mister chairman you're recognized to present your bill thank you mister chairman members I have a house bill one thousand and one i'm sure you've all read it it's pretty simple bill pretty similar to what we did last time it's going to reduce the top rate on personal income tax from four point four to three point nine. It'll also take the states top corporate rate from four point eight to four point three uh retroactive to january first twenty twenty four. So you get a lot of questions who is the fact this effects every tax payer in arguments all that makes twenty five thousand dollars or more every one of those folks will get the tax cut the estimated cost is going to be an ongoing about three hundred and twenty two million dollars in general revenue we'll also transfer two hundred ninety million dollars into the tax relief reserve fund so if you remember from last time we did this this is the fund that will help us continue to responsibly phase out our state income tax making us more competitive helpers attract jobs and businesses so this fun is intended to act as a reserve in case there is an economic downturn we're not paying for the tax reduction out of this fun once again i'll get questions on how can organs all continue to make these type of cuts I would say that arguments are can't continue to see seven eight hundred and nine hundred million dollars surpluses and not think that we're not overcollecting from our citizens if you go back from twenty thirteen twenty fifteen when uh the legislature started reducing income tax cuts we've had a surplus every year since that time so I think arguing saw it in a really good position with the taxpayer relief on also with all the reserve a council we have I think we're in a good position to go ahead and further reduce this tax burden on our citizens and with that i'd be happy to take any questions members are there questions from the community representative thank you mister chairman with the transfer the two hundred and ninety million transfer what approximately what will be the new balance in the the I forget the name of the final but the taxpayer relief trust funder you know do you know that one yeah I was going to get almost a billion i'm being told right at a billion dollars okay thank you. Representative thank you mister represent theirs it mentioned from twenty five eighty nine six hundred and three point nine but it's going to be everything open above there too it is or well they're there are two tax tables there's AAA lower table in an upper table so the lower table will be the one your reverencing if you make twenty five thousand up to eighty nine I think it's ninety thousand now you'll get that top rate from those dollars on if you're in the top bracket anything over I think it's five thousand dollars end up you'll pay the top right now so the argument that it's a tax cut for the reach I think kind of falls flat on its phase because the people that are in the top bracket are paying that top rate on more of their income but those that's how the two brackets work thank you sure and thank you michigan. Any further questions from the committee. See none is there anyone in the articles who'd like to speak for against the bill we did have a sign in sheet out we have one person signed up to speak against the bill so there's any other member of the audience that wishes to speak for against the bill if you'll give us certain information but we'll go ahead and start with we have a brantley the exact director for AR advocates for children and families that was to speak against the bill and you may come to the table and introduce yourself and deliver your remarks. Thank you and and thank you for representatives of her like a tactic do today uhm but I also uhm even though representative sets heard these comments I just gave them over on the senate side I do want to thank him for being gracious enough to to speak with us and advance of this and I want to think all of you are who I have spoken to in in preparation for today I know on this particular topic we may not agree but I am very appreciative of those who took the time to give me feedback and particularly those of you are who felt like we were being partisan because that has never my desire the desires to provide you with data about the status of arkansas children and so I hope that we can continue to work together in in the future but as stated my name is kisa smith brian I am the executive director at arkansas have a kids for children and families so each year with the casey foundation our organization releases the kid count that a book which is a fifty state ranking of childhood well being looking at four domains which are education economic well being health family and community and for years which notable it was through various administrations both republican and democratic uhm arkansas has ranked towards the bottom of wellbeing for children not meaning that we haven't done things for children that meaning that we haven't invested in areas but meaning that we have been out paste by other states in terms of our investment this year we rank forty five that ranking and the components that lead to us being great that supportedly is why i'm here today asking for you to vote against this tax cut package I know that you care about our children and want them to thrive and while parents are central to that and community organizations either independent or a partnership with the state play an important role this legislative body has a critical responsibility of ensuring that all of our children's will being are covered many of you here today or your colleagues have noted the need to make investments and preschool jobs. Training infrastructure improvement uhm health care particularly as we have the highest percentage of maternal deaths and the third highest number of infant deaths and programs to fight hunger across the state uhm you've known that all of those things being things that we need to prioritize. But what sets. Top states in this uhm report apart from states states ranked lower is how long they've been making investments in childhood programs and how much they invest in the youngest generation each time we cut taxes sometimes those investments are harder to make and on one hand we discuss how much money the state has been on the other hand organizations like mine often hear that there are no are very limited long term funding available for a central programs even though just this package alone including the homestead credit would be four hundred and fifty million so I would like to know I understand the desire to provide tax cuts I definitely understand the desire to put money back in the pockets of individuals that are struggling right now and equally understand that right now arkansas trying to compete with other states that are also trying to reduce their income taxes but uhm since the beginning of twenty twenty three which is the tax cut that i'm referring to uhm there are a number of things that have happened in that time particularly the percentage of children living in households with high housing cost burdens have increased the percentage of teens and not in school in not working has increase the number of children ages three and four not in school either because they do not have access to prequete or they do not have quality precase slots available the percentage of eighth graders not profession a math the amount of babies born with low birthrate and the number of children dying either accidentally or by suicide have all increased. And it is my belief that we can do better before cutting taxes again we asset you please and best improvement programs that help children tried things like expanding access to early chartered education funding programs that will keep more pregnant and imposed part of mom's alive and increased funding for the foster care in the juvenile justice systems are just our few programs the name uh uhm a few programs the name. Now as a time to make bold investments for our concert children and we hope that you will vote i'm against the tax cut package and during the next regular session that we can have a robust conversation about the investments that are needed for our stage children but again we thank you for your time and thank you for considering our comments mispriority will you take questions from the committee yes sir the new members have questions of miss brantley see no question we thank you for your comment today thank you all uhm. Next we'll have mister to speak for the bill if you move come the table in your doctor say often you begin your remarks. Uh yes sir thank you mister chairman my name is in accordance the founder and seal of opportunity arkansas. I recognized oh yes sir with your comma you know I appreciate the the opportunity to to be here and speak today I don't have any plan remarks wasn't really planning on speaking but since I was here and there was time and I have a cap to audience I thought I would speak this little bit a couple things I wanted to know on a high level about where arkansas is at today and until you just a little bit about our organization so we're a nonprofit research organization here in the state of arkansas and our mission is to simplify government in some generational problems and when you look at arkansas today I think most of us would agree government independency and poverty in the state government that takes too much and I think in fact in this case we're talking about takes more than it needs to operate and keep a lights on those are generational problems and so we are supportive of efforts like what you're looking at here today to lower the tax burden on working our candidates I think there's I don't think I know frankly there's a lot of bad information out there about this proposal in the previous tax cuts that happen over the last several years that I know many of you supported this is not as representative we've said this is not a tax cut for the rich the the folks that make twenty four thousand three hundred dollars a year are paying the same tax rate as billionaires and billionaires in the state of work and saw their all going to receive an equal benefit in terms of this year of the tax reduction that they're going to get and in if I could also just address a few things that were were said by the the the previous testifier what we've seen consistently over the last four five years is that as legislature as you all have reduced taxes revenue has continued to go up we have seen that time in time again you all were here less than a year ago. Doing a similar round of tax cuts and here we are again with nearly a billion dollars surplus and I think the lesson is really clear of what we've seen is that when you let our cansons hard working our kansas keep more of their money they're going to invest it back into the economy back in the arkansas small businesses and they're going to spend it in in main street arkansas and you're going to see a lot of that money continued to come back into the state we all agree you know a lot of the programs that were mentioned previously are important but all of those programs are being fully funded we're spending record amounts on medicaid we're spending recruit amounts on education we're spending record amounts on core functions of government in in in many cases as we should be but none of those programs are going to be put at risk by by this proposal so II think it's a great step in I appreciate the chance to be here today thank you miss horton were you entertaining questions from committing absolutely any questions from committee members see now and we appreciate your test money today thank you is there anyone else in the audience that we should speak for against the beal see none mister chairman you are allowed to close for your bill band close from a bill and i'd like to make a motion to pass members we have a motion do pay us on the bill all those in favor si early opposed thank you mister chairman your bills passed. And we will get him just a second to get back up here. Even dim the lights to level. Representative short fuel come to the table you have recognizers are introduced yourself you recognize here should be all thank you mister chairman representative bart shield district twenty eight. Good afternoon colleagues I bring before you today house bill one thousand and two. The intent of this bill is to increase the homestead tax credit from its current amount of four hundred and twenty five dollars to five hundred dollars per qualified household it will also require the report we generated on the balance of the relief fund honor before january thirtieth of each year just to give a little history. In the general election of two thousand hark and so of voters approved amendment seventy nine to create the homestead credit in response to that the legislature at the time enacted I have sent sales tax revenue from that is credited uh to the property tax relief fund the original homestate tax credit at that time was three hundred dollars in two thousand seven the founded grown to the point where the legislature could safely increase that amount to three hundred and fifty dollars they increase to the increased it again in two thousand nineteen to three hundred and seventy five dollars. And you all remember. Uh we increased it in our last general section to the current number of four hundred and twenty five dollars. The physical impact build on this thanks to the flourishing arkansas economy the balance of the property tax relief fine is raised a point where we can responsibly increase this. Number two five hundred dollars and continue to put money back in the hands of the heart working men and women of arkansas as intended when the voters approved amendment seventy nine twenty four years ago. At this time I would attempt to answer any questions are they questioned for members of the committee representative ray thank you mister chairman representative of schulz's maybe a question for you may be a question for definitely. Uhm i'm curious what what does the quote is the current balance of the property tax relief trust find and how does that balance compare to what it was I guess last year when we when we made the decision to raise it from three seventy five to four twenty five. Mister chair could I have someone from the end the fna come down to that depends on who it is but yes. I'm going to get its paul. Yeah. All you. Volunteer to come to the temporary somebody making you come to the table as i'm happy hold gearing DF happy to volunteer for mine for dfa and I appreciate all of the expertise of the individuals that are able to assist to give me the information to bring to you so you can answer the representative raise questions repeating of ray so the uhm year and balance for calendar year twenty three was two hundred and fifty five point six million. And I would you have a hand out that we'd be happy to share with the members of the committee that to show the fine balance that went back to calendar year twenty sixteen. Do you ever available for staff that can the capacity of have you got a copy here staff simple to make a copy they could distribute to the members of the committee sure i'd be fine that answer question well yeah i've got a couple more than two year the reason I the reason I asked their questions because we weren't. You know this was in originally enacted in two thousand as representative schulz was explaining and we were quite a while from two thousand until twenty nineteen when it was I guess when it was increased again and so that sort of makes me wonder whether we should have been gradually increasing it during those years and if we could sustain a higher amount can could someone please speak to how we arrived at the five hundred dollars number for the for changing their credit. Yeah. Uh but certainly those were negotiations that took place between members of the general assembly and and the governor staff so there's also a provision within the bill that provides for an annual report that dfa will be providing to the general assembly and other constitutional officers to state uhm the balance of the fine and the amount that the constant credit can be increased so in that that report will be do on june thirtieth of every year to give the general assembly um a report that will show what possibly increases to the homestead credit uh would could be available for the general assembly in the in a regular session. Okay thank you for that III think this is a much needed bill and I think one of the one of the things I like about the bill said it includes that provision that you just reference the annual reporting requirement because I think this is a topic that. It gets discussed a lot but we don't always receive a lot of information about the balance of the trust find and what what level of credit the trust fine could sustain one my last question is I know at least at one point in twenty nineteen there was money taken out of the property tax relief trust find for non property tax relief purposes I think it was blow about eight million dollars for new election machines that that's correct or there's no are there other instances when the property tax relief trust fine has been dipped into for non property tax relief purposes I would have to verify and check with our staff members on possibly mister breck might be able to assist with the question. Thank you rather break with the face there was actually a fifty million dollars which was taken out of that fund proximity two years ago two and a half years ago for an economic development project what what year was there I believe there would have been in two thousand twenty was I think is around the end of the calendar year. And you said it was fifty million for an economic development problem that's crew okay thank you. Thank you represent fortnight you're recognized thank you mister chairman has there ever been any thought or consideration to lowering the sales tax rate if we keep having more than an abundant fund. As far as we know that it's set in the amendment the rate so we would have to go where I can change the amendment to my understanding I think that might be worth considering uh because in government if there is a balance a big surplus it's just a terrible temptation. To draw it out for some if it's there we're going to spend it yes but if we don't need that was it two point two percent did I understand correctly that what the taxes have said if the half cent is a needed in a quarter percent what will do why don't we consider that representing the foreign and we have found that that is in the law so there is something we could potentially change I think it's worth considering thank you thank you representative representative will you recognize thank you mister chairman the impact is poorly six million for tornadoes but in border seven million for tornadoes how much does it sell text produce each year. Represent what we'll get that number for you. Yeah. He's getting it the net tax collections for calendar twenty four hours three hundred and eighty point one million. For what you're that would be for calendar year twenty four the reproduced yeah the reimbursement to the countings was two hundred and seventy six million. The. So we collected over a hundred million more than we need that's correct and I think that's what's uh get this conversation happening now to raise that on stead exemption the way the law provides well have you ever calculated a half a quarter of san has represented it for the house I think we'd have to go back and look at that if if that's the direction you want to go if you want to lower that rate instead of providing additional you know relief from homestate tax uh I assume that could be done. It just seems a lot. Collecting far more than what to tax were either increased credit or reduce. Do it not that you're probably looked at this other than just current increasing it. As far as I know the affairs aren't had any conversations about asking that the tax we reduced I think is that balance has grown because cell such a revenues in general have gone up there has been efforts to increase armstead exemption. Well. For them is to have discussed with the governor's office the fact that it's collecting for more than his needed to find it part of hundred million level representative and we've i've certainly had several commercial set several conversations with the over the years with the the governor's office on providing the property tax relief to through the home increasing the homestead credit uh haven't been in any the recent conversations as to this particular bill but i'm sure that other members of dfa likely have been involved those conversations with representative for no I think this you know in needs to be looked at because even with the evening of the five hundred dollars we still collect and more than. Then we need it in order to be able to give it back to we came over. All right least balances out that mischairman i'm all for male to the entire committee. Is a former director of the value through the sales reduction situation in the foreign careful I don't care what you see in the economy today but you lead to situation and israel you let the situation in ukraine go self and more of europe gets involved in that and we get deeper environment I don't know what the account is ill I don't think anyone can tell you for sure what's the future holes for the economic development one of the state to the nation so for given more money back to the citizens and the property tax or through income tax but better be careful. Well I don't know that we we have a billion in the foremost two two billion representative in our. Care of the strategy for this of the should happen but just give you one example last week one company to worried there projected income and the market feel fun of a hundred forwards for one company if we get a little bit with china over to her wine no one can no one can tell you what it's going to do to the economic well being of the united states. So this was really aware of the each movie we're all attacks and we're talking about trying to do away with the income tax to get the position that took what's the salestore when I was directly affected we can do that but we can be increased texas. So we need to make sure that sure what we're doing and there's a great great deal of difference between the income tax. And there's properly to be in the fact that we're not always going to have the surpluses that we've got so uh to be careful and what we do thank you representative wouldn't by chairman you're recorded just want to stay on the record then appreciate the comments from committee members and and point of of looking both at the the tax and what we collect on the sales tax side but I want to get back on task of what this bill actually does in what will be bodian is this is going to return about forty six million dollars to arkansas property owners in an increase credit and so I think that's something that we can be proud of we can look at these numbers each year and see what that find holds and then make a decision as a legislative body on what we would like to do as far as an increase in the credit or reduction attack so I think those are featured discussions that we can have and be engaged in but today the focus is to return forty six million dollars to arkansas tax payers so thank you thank you vice chairman representative rate you're reckon thank you mister chairman I have a couple more questions just after seeing the hand out paul um one is the balance a year and what happens to that balance is it is is it being an interest bearing a cow what tell me what is it just sitting there. Earning nothing would what happens with that balance at you around. It is only interest that treasury would be investing in those funds and is the interest go back into the account I know that I know of our believe this interest would probably go into the main with with the rest of the the interest that that's collected okay by my next question is there's a there's a line here that says last and then it says other um i'm assuming the calendar year nineteen eight point two million is the money that was transferred out for election equipment that our reference and then i'm assuming that fifty million and calendar year twenty twenty one was the economic development project you referenced paul her robert. Uhm can either either of you shared lied on the twenty five million in calendar year twenty twenty or the hundred and fifty million calendar year twenty twenty two number i'm told the hundred and fifty million and calendar twenty two one and of the catastrophe reserve on there was at a time when they were trying to get that catastrophe for reserve fund up to the twenty percent was the goal of the rsa that hundred and fifty one there. And what about the twenty five million. And in calendar year twenty twenty same thing that was that also went to the catastrophe okay that's my those are my questions thank you I think some of the things that you see coming out of their but i'm not mistaken were in representative of schools can probably confirm that where the reasons they wanted to put the reporting in there so that leadership and in the constitutional offers can see what's in that fund before it gets rated I think would be how I would phrase the representative you recognize thank you thank you mister that two hundred and seventy six million that's there is that for implementation in it like a private for this credit and if it is actually we're producing three hundred and eighty four show our way production and hundred million more than watching to pay for the twenty five I mean that the favorite credit rights so we we reimburse the counties um monthly for the the credits that they have uhm provided to the individuals that are claiming the homestead credit and then it of course at the end of the calendar year year there's AAA trueing up as well to make sure that the counties are reimbursed and then there's also the uhm we have also the as you see in the hand out uhm there are transfers to the cities and counties as well so but of course the the fund is there to uh reimburse the counties the credit that the remaining amounts the remaining amounts that are of the constitute the balance that find in the general assembly can make determinations in future sessions if they want to adjust the amount of the credit to match the man of the collections of the sales tax. Follow up get into your work we're in a safe zone though at this point by a hundred million dollars in the death that's correct in in the the revenue impact was in the first year or anticipating there be forty six million in additional credits that would be authorized for a homeowners in arkansas claiming the homestead credit uhm provide this would provide additional tax relief to those individuals that claim the credit thank you thank you mister chairman. Yeah. A more question than we'll get on to force and against representative you recognize thank you mister chairman market perfectly clear i'm not speaking against the proposed bill that was asking questions relative to the income versus of the outcome and we got the answer to their in the paper tomorrow that was pretty against it because i'm not mister baby thank you. Seeing any other questions for for these folks at the end of the table I had seen that thank you for coming down no one signed up to speak for against the bill with anyone the audience like this before the bill or against the bill seeing and represent that would you like to close free bill yes sir first I want to say thank you to everyone for your questions in comments and to the chairman's point that all of these comments and observations you you all have made or exactly while we put the reporting thing in this bill at this time i'm close from my bill and i'd appreciate a good vote thank you for that you've heard of the description of the european very motion equate do pass representative raise a motion to pass all those in favor of sign if I was saying I post that as have it congratulations you pass your bill. Anything else that seem for the business thank you for your participation where our