Revenue & Taxation- House

That's the income tax cut bill that I sponsored the evening uh discovered an error and oversight in that bill so suburb to there are filed house but one thousand seven will likely hear that tomorrow so without objection we're going to skip down to senate bill one let senator hit you go ahead and present his bills we can get back down to the fun on his in the building senator hickey you are recognized to present sent a cynical one thank you mister chair just second here actually I like to refer this to it as a companion bill to the tax cut bill that the chair was talking about so down in the senate of course is the senate bill on I actually put it at the end of the calendar so we would run the senate the senate version first you know because there is an order that is unless you are wooden payers to take good I would fully expect that you are would want to do this but I will explain it what to see as members is uh from the last fiscal fiscal year we have seven hundred and ten million dollars to a little bit over that left in our surplus and what what we are looking to do is to take those dollars and they right now they're seeing an account that's called general revenue away that reserve a count so they're sitting there we're looking to transfer those to a new restricted reserve account. That where they could be drawn out by alc with two thirds of a boat the reason that we're doing that is as an insurance for the tax cut they were getting myself on the sinity and in quite rightly some of the ones on the house although we're warning uh solve for covery and we excuse me a software in with this economy some of the indicators out there you know kind of point that you know we could possibly get something else like I said down there as financial geeks cannot look at that and worry about that so again this would act as an insurance policy if we were to go into a steep recession or where to have some downturns in the economy so that we could pay for those services what I do want to do is uh say that these dollars are not going to be paid are not going to be paid or are not going to be paying the tax current in the bill that you all are going to see that is going to be paid with revenues that are currently coming in excess revenues that are coming in again this will be a parked in that account or sitting that encounter it is a governor is said we'll also look look for this for future tax codes you know as a hage against those downturns so what they are able to happen and three questions all right thank you senator members or any questions representative ray you recognize thank you mister chairman so hicky how was this fine different from the catastrophic reserve and why why would we create a new phone instead of just putting this money into that will at the difference is and not only the catastrophic reserve phone and then also the general revenue awaitment reserve further we're talking about they require the full legislature to move to move dollars from there and of course that's why we're looking to do this during this special session the reason being is is that if we were to get a downturn. They could be readily available you know for the legislature to move those for their services if they were needed again it would take two thirds volte of alc uh so that we would have to come in the special session and quite frankly spend spend that money to do that we would do that during our regular alcee meeting that makes sense and and how much money is going into the end of this find the exact amount is seven hundred and ten million six hundred and twelve thousand five hundred and eight dollars so it's right it's right at three quarters of knowledge okay I i'm in favor of this it make it make sense to me I guess my the only damn trying to wrap my head around is if the if the price of the of the tax cut the income tax cut is going to be what it's a hundred well it's it's fifty two hundred million well I let's just get it I if you're so kay and I may be missing about all each and it seems like we're put the heart of insured but the tax cuts much more well it's a hundred and sixty two million is what the ongoing tax cut would be whenever you could turn approximately three times off of the personal in three times all for the corporate so that particular part is annually is going to be about a hundred and sixty two million if I remember correct don't hold me I be made listen to a couple of me and what those larger numbers are the top of my head the credit that we were doing is about a hundred and fifty million that is one term so what this would do and this was not intentional in center dismay and I have left about this. Actually if you take the credit and then few or to take like three years of what this tax cut cost it basically is almost the exact same amount of the seven hundred and ten million dollars so it's almost a little one candy that it fell that way but it but it the adalists sold their coincidence okay thank you yes thank you representative representative hockey recognized thank you chairman my question is similar II just have a concern that a lot of our budget is now going to be determined by alc and that is a large amount of money I just don't understand why there is not opportunity for that to come back to the full house and I understand your explanation that a special session. But it would seem about all the constituents of the state would want to have a voice and how that those dollars are being spent in the future and so my question is was their discussion about that you know a large portion of a lot of these federal dollars coming in are only going to alc not the full house and I just have a concern that that seems to be a trend that a smaller group of legislators would be determining a larger amount of our budget that really should be on the legislature as a full legislature I know there's a cast to that but that is the cost of doing business for the people that I would represent but not have a voice on lc so it's not just for my constituents but for others that may not have a representative on that committee sure then that's and that's a fair that's a fair question and fair statement used to in this this actually as are as it may sound and I understand we're doing it with these phones it are intent is just to hold there but what we've actually what we've actually done is we've we've we kind of redirected in the last few years how we were dispersing these phones so used to in this is black right now we are what we have done in the last three years is we started setting up these restricted reserve accounts so much like the state crown web or whatever like we've already awarded an allocated those particular dollars and used to we were just kind of go ahead and put them out there and say they're ready to be spared we've decided that you know we need to do some more do diligence as the legislature and as you know alc which is compressively large part of the legislature what we do is we make sure that all the details are in place all the plans and that you know if we need if we need to make those disbursements out in smaller amounts you know as the works being done we can do that so that's been our. The way that we've actually hit it with the way we're doing business quite frankly to be just a little bit more effective and efficient I know what you're saying with this account again. We would fully expect that you know you know what would happen happened to happen is that we would have to get to a point where we needed this at that point which would matter what probably be pretty quick the f and a would have to give I say a full explanation of letter requesting it so they would have to actually request it from us and again but cause of what it is as you all know see most the term takes at fifty percent vote we've had we tried to go ahead and might that a little bit harder with that two thirds vote of the of the entire council. Yes ma'am representative wouldn't thank you mister chairman center of the seven hundred and ten million is this is a hundred and sixty two million within the no sir that's that's totally outside the net paid or income that's coming in now that that is correct this money right here is what's left over out of FY twenty three the june thirtieth air flat twenty three money so any any of these future tax cuts of course are coming out of our as you know mr written out of our per revenues that are are being generated at this point okay then it's if if there's a best okay we've got a catastrophe but on the water one point thirty billion and think it's one point seven one point five one plan about if I remember correctly in the end so with this we're going to have two point six billion roughly in in and revenue my question is have their band are their own going discussings about sending these reserve funds signed to be able to eliminate to stay in contacts at some point is that is that what the is that the bottom line because we're full of sim hundred and ten million yes we're certain aside here that this this this is and and I think the governor's been has said that in the press quite quite frankly i'll just tell you how how this come up you know of course myself I want to do tax cuts always try to do the tax current again i've been a little bit concerned about some inverted yield curve since he made her indicators out there whether or not all that's going to come true there's not one person that knows that but from a conservative standpoint you know when I was whenever we went out to the governor you know the governor actually came up with this adelaide and say well. You know what if we park that what if we park that money in a restricted reserve account so that we could use it as an insurance policy period phrase and I don't remember if insurance policy was her exact word so but an acid wheel so you're you're saying we would park it there and it would specifically be used in a four if we if we were to get into a downturn and she said yes that's why I would want to would want to put it there and she said and that would also help those as we do future tax curts now we possibly could put it this body decided to we could put some more money in there so that eventually you know if we if we're very structured in the way that we reduce these taxes if we were to get some downterms or whatever we can use those to just pay for the state services in the event it was bad for the year to it went down and could could gauge what was happening so you're exactly right although we're doing it for this the purpose he has two is to set up a plan to continue to cut those taxes as long as the economy allows it okay miss chairman courier out and I think we're you're being wise because I don't think we're out of the economic downturn yet I think there's more to come and I think it's going to be it's going to be more drastic if washington don't do something and we may know in the next few days here but none of the question is they say we build three point two billion in this seven hundred and ten million pound. And we understand well we'll do away with the income tax now there's just one year of income and what my concern is and I had the same concern thirty but I have years ago we started talking about doing away with sales tax we've got to we've got to have to replace the three point two billion at some point we can continue to to give tax current like we've been given on we've been blast and I think we're in i'm i'm like you and form them the more the better but i'm worried about trying to understand the side it will point do we reach enough that we say okay we're going to do away with the income tax well II don't think it's it my personal opinion which is me by myself and you all know that he twenty are the same with one vote down here my personal opinion is is that that this is what this is about this is a structured this is this is a structure that we're going to try to set up so that we can consistently cut those taxes as we see at what point one time we are see how much our additional surpluses have been over the last year or two uh and it's some point and in the heart one thing you said I want to make sure this is this seven hundred and ten million let's just take the income tax without the credit in it to draw about to hear whenever we cut one tenth off of the personal income tax that's about fifty million parties so in other words that's going to be about a hundred and fifty million dollars don't hold me to the exact name but i'm close the the corporate that we're doing whenever we cut a tenth of that is somewhere around I always say twelve me and I read something and we might be a little bit more thirteen fourteen fifteen me but it. I used twelve million on that particular one so so so those those that were doing right there each tieth is sixty two million dollars solve the bill that you all that that you're about to see would be the sixty two me and basically terms times the three so you know it's not quite this whole seven hundred and didn't ten million dollars so I want to make sure that we were clear right there and again we're not using this revenue we're using the current one coming in this is just going to sit in this account in the event that those revenues did not come in if everything just with south this body could get to it now say this body this body would give alc you know the way to get to it mr app appreciate the questions I would have got some of the f AL is line whenever aren't giving just a minute here guys we have a little bit of an issue taker of synergy i'll get you out here probably quicker than I thought that the house failed to suspend the rules yesterday for the special session so we cannot take action on senate bill wine today so what I want to do is hold off on the questions we're going to have representative jean come down right now and present the identical house bill which is one thousand four without objection and if you want to stay down there with representative jean and answer questions together you can if you want him to take over at this point since their identical bills are in that's entirely up to you but rather than keeping you down here and and i'm not taking action on that bill I want to go ahead and get this other one I go on sure I appreciate the opportunity to however to explain this and get out what we've already got so that really worked right in members those of you that are in the queue it's the same bill that representative jeans going to be be presenting in our bell you senator hick is going to stick around and both of those gentlemen uh will be able to take your questions at that time so while you're right then was center bill one again can't take action on it at this time it was in advertisingly put on our calendar on our agenda so I apologize for that. And with that objection we're going to hear house build one thousand four it's the identical bill to senate bill one is a companion bill on the house side so representative jean you're recognized that take over at this point and we do have several people in the queue here for questions thank you mister chairman members of the committee of I don't have a lot to add to what soon for hickey days but when the rs questions and you have the opportunity to look up these numbers to let you know what we're couldn't taxes in in the twenty four year it's going to be behalf a year so you go back and tear you people on the we had their bill a seventy five million dollars for fiscal twenty four seventeen point two million dollars for the corporate and a hundred and fifty six million dollars for the one time tax credit which totals looked about two hundred and forty eight million dollars is what will be cutting taxes and twenty twenty four now at one time all the tax credit the second year which would be fifty or twenty twenty five it's a hundred fifty million to senator hickey all the individual and thirty four and a half million on the corporate so there'd be a hundred and eighty four point five million dollars on the tax customer twenty twenty five in the tax curt the projected text could produce fna for twenty twenty four is four hundred and twenty three million dollars surplus so that more than covers the two hundred and forty eight million dollars of tax cuts that we're going to have and that's that's where we're going to pay it is that that the surplus of uh twenty twenty four but in will have it is free will have two reserve accounts want to be the category for reserve and this would have named the arkansas reserve account and told him those two total whole will have in reserve if this bill pays. Is two billion two hundred and forty million two hundred and twenty eight excuse me two billion two hundred forty million two hundred twenty eight thousand five hundred twenty eight dollars that'll be our total reserve that he takes the legislature or ALC or joint budget to touch on a two third vote that I speak their right all right and i'll take any questions thank you for that one bill house cleaning their four groups signed up to speak against house bill one thousand one as I mentioned earlier we're skipping that bill so I don't want you to sit there thank you we're going to run it we will not be running house but one thousand one you're welcome to stay just want to let you know that all right next on the uh q is representative brown you recognized thank you mister chair representative of jane or senator haki when I look at this bail it it's I get it says they're either ALC or the general assembly would be able to release this money correct joint budget are they of general assembly not not the tourist is either won't be joint budget if we're in session or a lc when we're out of station and then. From what uhm what average in what i'm hearing this seems like a prudent approach to getting to a place where we might pass simply be able to some day eliminate the income tax but instead of just doing it like fifty two pick up and see what happens we we are we've got a fund here in case there's a downturn in the market or two cushion things as we are cutting in case there is a downturn in the market in the end that is that the the theory behind I would agree with that statement thank you thank you represent the brown representative ray you're next you're good okay ribbon warn you recognized alright reps in a mac linden you're recognized thank you mister chair thank you thank you for being here so I have a couple quick questions one is this a fan that you think that we will continue to add to every year is that the goal of having this fund do you will actually speak to what is going to look like next uh july one but in if if we've got excess money that we're not using I think the prudent thing to do is is to continue to build on our reserve cause we never know what will happen in how we'll need this money down the road and that's that much border he can speak to that yeah and our most most definitely agree with what uh uh representative jeans said with that of course it's all the verse it's always man teaching especially with us doing the ongoing tax cuts I think this is going to be our most prudent approach I think that that's what the governor has come up with two or our discussions actually i've been very proud with that fiscal part the way that all of this is coming together on cutting this text but also. Trying to structure a way to accommodate for this possible research or other things it could happen so that we could make it through that and then continue on our continue on our goal that was to happen just one thing that this body also needs to remember with our catastrophic reserve account you know the catastrophic reserve account we we always keep a certain amount is at five percent is we keep what we've had done a few years ago is we we had structured that so that whatever our budget is we try to maintain five percent in that catastrophic reserve phone and if there's any surplus then that comes out of the surplus first so in other words there would be some dollars that would flow to the catastrophic reserve phone I believe and it may have been represented and then it does just come to me and some this is just I guess it's good good information what everybody who needs to remember to that's different with the catastrophic reserve phone we maintain it for what it's called but there's also another benefit and that benefit is that if we maintain a certain amount of money we're able to get the best bond writings that we that we do i'm not going to tell you that it's that it's how much is in there I can't remember because it's something like five or seven years of trailing revenues so it's kind of a changing thing but we have to maintain a very very large balance within that and that particular account is structured the way that it needs so that we do get those better band rates you can't just have it in certain type phones it has to be structured a certain way and that one wrapped there is a has it does allow for that okay and just a quick follow up thank you so I know that other than it has to be at two thirds of alc are two thirds of joint budget to approve the spending are there any restrictions on how this money can be spent have to be within appropriation can not go over the rsa. Which which and and also the chief financial ultra has to verify this before the general assembly. Presenting how much interesting thank you earn on the seven hundred mean that we're storing away more at the bank or answer there will our new treasure missed water which i'm a big fan of uh totally the other day he better at least be getting the treasury rates out there and you know I think I think currently a uh uh I think currently somewhere around a nanny day tragedy is you know somewhere around for that point four percent or something like that so you can multiple year portal five for terms that number and get there thank you representative right you recognize. Thank you mister chairman okay line this morning is in a holding fine it's going to be like something very very security now right well we keep touch it unless i'll go a lct budget okay with the chief financial officers uh do delegates on it it takes two thousand two third vote two thousand okay the manage this line anything other than less you're saying two years we ran into a problem and we were trying to give text goods but we may not be able to do at that point could this money be used to help us with our budget I would help over budget I thought you will go with it with this help find the tax cut I would not go there but II just adjust ahead of you but you're right it could help us on our budget okay thanks sir our members any other questions of these two fine gentlemen at representative lynch you're recognized. So that the in game and cutting taxes is to actually increase date revenues by tracking investment industry and that sort of thing in our budget projections were there any consideration for growth in that I was that we we just keep it flat well DF and they always has a projection in in like I just told you on twenty twenty four they're projecting a four hundred and twenty three million dollars surplus so DF and a does most of our projections. Oh so this this theory of the velocity of money you know if I can get you to change hands on many twice and tax at twist I get twice as much money as I would if you just change hand on so so when this project here you're not you're not doing anything that fiddling stuff are you okay good thanks no fiddling their favorite members any other questions of either reps of jeanne or senator hickey our acting nine you can stay there people want to we do have rose in a woman would like to get the fna to come answer a few questions. He would disintroduce yourself for the record and in representative of women you're recognized to ask your question when he gets recognized robert breck with partner and finance administration jim mets and secretary DF and a great to have representative europe thank you chairman my pleasure to welcome the new secretary of finance and achieve physical office before the study say redo hot from one department director to another former understanding i'm probably for you every day your calling is now there are used to work close in the car if we're going if we're going to look at all the if we're if we're all looking at the totality of doing away with the income tax structure is we currently know it I think we need to do you do you have mister brag do you have and you might not happen do you can you tell me the exact quality of state government and arkansas today i'm including and then included in that i'm including fun balances within all agencies i'm including all those moneys that are invested in the state treasury just exactly one is our look quite because if we start talking about doing away with income tax they will only either have to start come out we're we're going to replace it three point two billion or what are you going to cooked. And so I think we even know it may be for five years I don't know how long I think we need to be looking at just how how look with our way and while it cares money do we have out there that we might can call on even though we've got to cancel strawberry fund and the reserve does that make sense it does the governor asked me a similar question and I gave her an answer and I did I don't know the exact number but it exceeds five billion dollars for how much five billion five billion then we have access to this that there is either catastrophic rainy day money our money that's not restricted is we we've got money in set asides we've got money in the catastrophic we've got the seven hundred and ten million they were disaster we've got the educational adequacy phone it is around six hundred million we've got money at medicaid if you take all of those in the balances of the central services you take all those together probably exceeds five billion dollars do you have could you give us a very simple report work of fun balances for the fifteen major agencies but they're fine balance in what their annual expenditures are we likely can but you have to keep in mind that not all of that would be funded through the rsa a lot of the fun balances or special revenues we may have access to some point in well though they would be cash balances it could be restricted to the specific reasons why those taxes were revenues were collected so not all of those would be available should we have a downturn and we need those to bolster the rsa what what I meant to. Then are those funds that would be available in the event that we decided to do away with the study then contacts our we got in a band and were needed money I realize that occasion burned in an agency sign to a specific appropriation that's not money that we could call upon because it's committed and i'm told about them and committed uncommitted I can tell you I can get fairly close eh we've got about one point five billion in the restrictive reserve set of sides currently you put about one point eight billion in that find at the end of the year and it's a the balances are about one point five billion we've got one point five three billion I believe in the catastrophe reserve fund that's can only be touched in certain circumstances we've got the seven hundred and ten million that you're discussing now and then we've got medicaid balances and education balances that they could use should there be a downturn to pay for medicaid expenses for instance or educational expenses so those those concern dollars are available if you were in the session now the the idea with the seven hundred and ten is that you would not have to be in session and it would only be the bolster the rsa should the downturn be severe enough that secretary hudson and the government would decide to ask for any any revenues out of the seven hundred and ten most of the moneys aren't available unless you wanted to go into session and try to collect those funds in redistribute them but we would we could have access that would be one course of action if it would be yes okay thank you mister chairman that's that's all I had thank you members any other questions for any of these two fine general. Are it seen and thank you for coming down there anyone in the audience that would like to speak for or against house bill one thousand four by representative gene. Not seeing on representative jeans you like to close for your bill yes our word mischairman i'd like to close and have emotion do pay us our members we have a motion by reps in the gene that do pass all those in favor seeing if i'll be saying I opposed all right the eyes have it house bill one thousand four has passed in the right you thank you for presenting that bill will get their own tomorrow share thank you I mean it's no other further business we will likely have a meeting tomorrow don't know at the time but just stay tuned and and will be in touch with that we are journed.