House Revenue & Taxation Committee
Video
Transcript
Bills discussed (4)
| Bill | Title | Sponsor | Status |
|---|---|---|---|
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HB1771
· 3 mentions in chapter, transcript
Matched: “HB1771”
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Pre-2017 bill | ||
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SB731
· 3 mentions in chapter, transcript
Matched: “SB731”
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Pre-2017 bill | ||
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SB256
· 2 mentions in transcript, chapter
Matched: “…Committee. Members, without objection, we're going to hear SB 256.”
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Pre-2017 bill | ||
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HB1553
· 1 mention in chapter
Matched: “HB1553”
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Pre-2017 bill |
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Speaker 1
0:00
The tax exemption has a total impact of about $4,000 a year. I appreciate a good vote. Representative Kerr. Do you have any
Speaker 3
0:14
opposition on this? Not that I know of. Do you have
Speaker 4
0:18
any, or do they get excited about it? I'm sure that they're not going to
Speaker 7
0:22
ever be excited about a tax exemption. Here they
Representative Allen Kerr
Unverified
0:25
come. Just to give you the revenue impact. Okay. All right. Revenue impact. All right. Do pass at the appropriate time, Mr. Chairman.
Representative Meeks, you're recognized. Just a quick question. Is this a nonprofit organization? It's
Representative Stephen Meeks
Unverified
0:38
an arm of the Arkansas Community Foundation, so yes, it is. Okay.
Anybody want to speak for the bill, against the bill? Representative Kerr?
motion. Representative Kerr moves do pass. All in favor, say aye. Aye. Any opposed? Motion carries. Thank
you, Chairman. Thank you, Committee. Members, without objection, we're going to hear SB 256.
I'm going to pass the gavel to Mr. Cowling, and I'm going to run down and present the bill. Thank you, members. This is a bill that came out of the code revision. These are corrections that were found that need to be made.
I'll be glad to try to answer any questions. The revisions are more easily appear on your green sheet in front of you. No impact. Do I see any questions
Representative Larry Cowling
Unverified
1:50
of the committee? Representative Kerr. I don't have a question, Mr. Chairman. A motion
Speaker 10
1:55
to do pass at appropriate time. We'd like to hear you
Representative Larry Cowling
Unverified
2:09
on the microphone, Mr. Chairman. Well, I thought I was. Is there
anyone else on the committee like to say anything? Anyone in the audience that is against this bill for the bill. If not, would you like to close for your bill? I'm closed. It's a good vote. What is the motion do pass? Motion do pass. All in favor say aye. Aye. Any opposed? No. Motion passed.
Teague. Members without objection, let's hear SB 731, members of Ingram. I'm seeing no objection. You're recognized. Mr. Chairman,
Representative Keith M. Ingram
Unverified
3:10
committee, I appreciate you hearing this. This is Senate Bill 731. This is Senator Teague's bill.
What this does, it only requires out-of-state sellers to pay the use tax in prepayments the same as we require in-state sellers to do. If you remember, probably 10 or 12 years ago, legislation was passed on sales tax that major retailers prepaid. prepaid. This affects 153 large taxpayers who are out of state. I'll be happy to – well,
let me say I'd like for – if there are any questions, I'll go ahead and invite Mr. Leathers to come up here and be seated next to me. Again, this only affects out-of-state payers. Members, any
questions? Is there anybody from the audience who'd like I'd like to speak for the bill, against the bill. Okay, Representative Ingram, closer to your bill? I'm closed.
What's the pleasure of the committee? I'll make a motion
to pass. Motion is do pass. All in favor say aye. Any opposed? Thank you, committee. I appreciate the good
Speaker 38
4:39
vote. All in favor, carries. Representative Collins, without objection, let's hear HB 1771. Seeing none, you're recognized. We have
Speaker 39
4:49
a handout that Mr. Collins has requested. He's going to speak upon us.
Very well. What time do we have to be out of here? 3.15, but we moved the B
Representative Charlie Collins
Unverified
5:10
Committee to another room. Okay. Thank you very much, Mr. Chairman. I appreciate you recognizing me. What I'd like to do is kind of pick up midstream where we were before. I'd kind of top line House Bill 1771, and you're getting a handout now, and it's a short one.
And I'd just like to turn over the microphone to Misty Newcomb. She'll introduce herself and then walk you through this short handout to give everybody a clear understanding of how this bill can possibly reduce taxes and yet still result in net positive to the government. Mr. You're recognized. MS. Hi. Thank you, Mr. Chair.
Speaker 48
5:43
Thank you, Committee, for having me here today. If you would look at your handout, it was originally a PowerPoint. If you will take that first sheet and move it to the third sheet, I think it would be
little bit more easily understood if you take the the sheet that says sources of state funding and and move that to the third sheet what I want to do I want to just walk through three points in the bill that this bill address that talks about and the first I want to just discuss school funding how schools in the state are are are funded right now and I want to talk about how students how we how we fund our students and then that should set us up to explain how this would result in a net gain for the state but also provide some options for
kids that are currently in that are most vulnerable to to being a part of a failing school so our inside of a failing school so these are the the per pupil allotments that the state mandates through through the state law that we give to public schools to fund the education in the state of Arkansas every child is every school is given six thousand twenty three dollars per pupil from the state foundation funding and then additional forty one dollars
thirty three cents is given to to fund the professional development then there are three major categorical funds also through the state the state foundation funding and those are called NSLA English language learner funds and special education I think the English language learner and the special Education funds are self-explanatory, how you would be eligible for that. The NSLA eligibility is determined on the basis of whether you are free or reduced lunch eligible. So that's our basic measure of poverty in Arkansas.
It's a tiered categorical fund that's distributed on a per-pupil basis. Depending on the concentration of poverty in your district, that amount per free and reduced lunch child varies. So if you have over 90% of your students FRL eligible, then you would get, for each of those students, $1,488. If you have 70% to 89% of your students FRL eligible, each of those students would have $992.
And if you have less than 70% free and reduced lunch eligible, then for each of those particular students, you would get $496 additional dollars. So that is a very quick summary of basically how we fund our schools. Now, the sources of revenue, there's three primary sources. The uniform rate of taxation, the first 25 mils of local taxation, all goes to what we call the foundation funding.
It's basically a pot where everybody's money comes. That's a simple way of putting it. then they redistribute that out to the different districts. Now, that money alone is not enough to meet that $6,023 as well as those other earmarked fundings. So they also get the state contributes from just the general revenue bucket. One point in 2009-2010 school year, $1.7 billion, according to the annual statistical report, is also given.
Also, there's federal funding. there's you know schools have grants things like that the federal funding and those grants are not important for this bill they're not they're not part of those are minority funders they're not affected by this and they they don't contribute to this so this bill would enable students to would they able donors to receive a tax credit to provide money to nonprofit scholarship
funding organizations at a maximum amount of three thousand seven hundred fifty dollars per student those and it's only for for low-income students those students could take that money and use it at a private school our low-income students are disproportionately located in in schools that that are failing by school improvement measures in the state so that is why we we looked at this as an option for those kids they currently don't have options and and this bill would provide those kids with an option but it does so in a way that is fiscally
efficient because if you will look at that fiscal summary statement typical spending on students who meet the eligibility requirement would range from six thousand five hundred sixty dollars if you include all those those state funds that I talked about to seven thousand five hundred fifty two dollars so the tax credit for these kids is three thousand seven hundred fifty dollars so when those kids come out of the school district they are no longer those those funds are no longer coming out of the the state pot and instead a
donor a corporation or an individual is providing is sending money and and they're receiving a scholarship through a nonprofit scholarship funding organization so the difference using the most conservative number on there would be three thousand eight hundred two dollars actually twenty eight hundred and two dollars oh I'm sorry okay then that the last page shows the process by how that this would work so in this bill is is a is basically replicated from a
similar bill in Florida that's been very successful also there's a bill in in there's a program in Arizona so the best way to do this is to the donors make contributions to a I've used the acronym SEO a scholarship granting organization parents choose a school the SGO can would be responsible for confirming the eligibility of the student and in the school the private school has to meet some qualifications those qualifications would be they would have to participate
in standardized testing they would have to just so that we can kind of track how these kids are doing academically so participate in standardized testing comply with all the state laws concerning private private schools as well as they would they would also have to conduct an audit annually so the SGO just confirms that the private school is doing all those things they make a monthly payment to the school to cover the child's tuition and then the SGO SGO submits quarterly reports to the DFA and an annual form to the donor.
Representative Link, you're recognized for a question. Thank you, Mr. Chair. Are there existing SGOs in
Speaker 48
12:34
Arkansas? There are not, because there's not an existing tax credit program. In all the other states that have implemented this program, this is the – well, I shouldn't say all – in the states that have effectively implemented this program, they have set up an SGO. You apply to become one. You have to be a 501 to become an SGO, and they would apply through the DFA if this were
Representative Kelley Linck
Unverified
12:56
approved. And I read that 90 percent of the money goes to scholarships?
Speaker 48
13:02
Yes. 90 percent of the money, well, the SGO cannot take more than 9.5 percent of donations given to them for administrative costs. We want the money to go to the kids. And then some of those funds, and I believe that number is 90 percent, 90 percent of those Those funds will go to tuition, but we also allow 10 percent of the funds to be used for books, uniforms, or other fees that the private school may have.
Representative Kelley Linck
Unverified
13:27
Okay. And who audits the SGOs? The
Speaker 48
13:29
SGO has to submit an audit to the DFA annually. They audit themselves? No. The CPA in the bill, it actually states a CPA has to do that. Okay. Thank you,
Speaker 63
13:44
Mr. Chair. Representative McCowling, you recognize for question. Thank you. What's your name and what do you do?
Speaker 48
13:51
My name is Misty Newcomb. I am here as a citizen. I also work as the Director of Outreach for the Department of Education Reform.
And I have worked as a director of a nonprofit that researched meeting the educational needs of academic –
Speaker 64
14:05
of children in poverty, specifically. And my question, you mentioned private schools,
Representative Larry Cowling
Unverified
14:10
and that's just a while ago. Did you
say this just was covered private schools or something? Yes. MS. Well, I kind
Speaker 48
14:18
of – I jumped right in. Charlie gave the intro the other day, and I sort of jumped down to the nuts and bolts of it. I apologize for that. This program enables donors and corporations or individuals to get a tax credit when they
donate money for low-income kids to have a scholarship to attend private school. MR. Thank you. Representative Westerman, you
Representative Bruce Westerman
Unverified
14:47
recognize? Thank you, Mr. Chairman. Representative Collins and Ms. Newcomb, I commend you for a very ingenious idea, and I just want to make sure I've got this straight. If
somebody wants to make a benevolent donation to send an impoverished kid to a private school,
then they get a tax credit of $3,750 per student. The state saves the difference between the foundation funding amount and that amount, So the child gets a private school education, the donor gets rewarded for his benevolence, and the child gets a private school education. So it seems like a win-win-win situation to me. And would you agree with that? Touchdown.
I certainly would. Representative Meeks, you recognize. Thank you. Just so I understand, the SGOs, those are private organizations and not government-run entities? no
Speaker 48
15:43
they they were the the eligibility requirement for that is that they be a 501 c3 okay mr. chairman have
a motion of proper time represent Viviano you recognize you just got it anybody in the audience want to speak for the
bill anybody in the audience want to speak against the bill mr. leathers you know I
finally figured out you know I've been thinking this is inappropriate but I'm going to say it anyway. I mean, you're always faced with this difficult challenge speaking against all these bills. So I finally kind of put a – I got an analogy. You're like the Washington Generals. You remember the Washington Generals that would always plague the Harlem Globetrotters and, you know, they would – you had to give
it to – that's – that's it. So – but anyway, you're recognized. Sometimes with a
Speaker 75
16:37
clowning around up here, I think it is the Harlem Globetrotters. But
Chair
Unverified
16:41
That's another story. I want to make sure everyone understands that there is a significant revenue impact of about $28 million growing to $52 million over four or five years. And what you're talking about here is education policy. You know, you're not really talking about taxes. You're just taking money from one place in the budget and shifting it somewhere else to pay for private schools is what you're doing, and you're doing
it, and I'm quoting Mr. Collins, I don't want to be accused of playing classes, but he said it's a credit for rich people, but it is a dollar-per-dollar credit. So what you're saying is you just keep your tax money, wink-wink, and we'll say now it's going to go for private schools. It's a dollar-per-dollar credit. So why wouldn't they give? And all it's doing is shifting money from one place in the budget which goes to fund public schools to fund private schools.
If you want to do that, you do it in the budget process as a matter of policy considering the entire budget and considering school funding and how you want to do that and supervise the program so that you know that they'll accept disabled children and all of that that goes along with it, all the consideration that needs to be done, but it's not appropriate to do it as a tax credit in this forum. It should take place where you're talking about that entire issue.
Representative Love, you had a question, if it's for Mr. Leathers or Mr. Collins, who do
Speaker 78
18:21
you recognize? Thank you, Mr. Chairman. Mr. Leathers, as the formula is stated,
Representative Fredrick J. Love
Unverified
18:26
education gets funded off the top or first, correct? Education gets funded before everything
Chair
Unverified
18:34
else. They're protected because of the court, so we're going to make sure that they get their money off
Representative Fredrick J. Love
Unverified
18:40
the top. Okay. So if we enact this legislation, for instance, it's not basically taking it out of education.
It's just taking it out of some other place in general revenue, correct? It's going
Chair
Unverified
18:51
to take it out of the entire budget. Where you plan to put it, you know, you could decide that you don't want to support public schools anymore and to fire the court order and do that. The reason they're protected is because the legislators decided some years ago that they wanted to comply with the court rule and keep us out of court and provide that equal and adequate education.
So you could certainly decide not to do that. You could decide to say we're going to send half of our school budget to pay for scholarships
Representative Fredrick J. Love
Unverified
19:26
to private schools for poor kids if you wanted to do that. But what I'm saying necessarily is that this tax credit money would not necessarily be taken out of education, would it? Since education is funded first, this money can realistically be taken out of anywhere
Speaker 81
19:44
in the budget besides education, correct? Well, what's left generally is
Chair
Unverified
19:49
prisons and the DHS nursing home programs and those sorts of things.
So, yeah, you might shut those down or do something like that. But the point I'm making is you're decreasing revenues and you need to make the decisions affecting education, shifting money from one place in the budget to another based on the people that know about the programs and education and how to do that, because I certainly don't. I don't know all about how the funding operates. I don't know about the requirements of all of that lawsuit and what we have to do and what we have to do to protect handicapped children and everything that goes along with
that. It's just the wrong forum to be shifting multiple millions of dollars in the budget from one place to another to pay for scholarships, and that's what you're doing. The only real winner that comes out here is the person that gets the dollar-per-dollar credit on their taxes as they get the big savings they give a dollar and they get don't have to pay the taxes representative Bell you
recognize for question mr. leathers as I
Representative Nate Bell
Unverified
21:00
understand it constitutionally our state's obligated to provide a public education for children is that correct they are if that's the case if I'm obligated to spend the six thousand five hundred and sixty dollars every year to provide a child with an education, and you had the opportunity to give me $3,750
and in return not have to spend that $6,500, wouldn't that be a good deal? I'm telling you
Chair
Unverified
21:25
right here that I'm not qualified to tell you that we ought to take money out of the budget and
spend it on any kind of scholarships for private schools without having a full consideration by the people that know about education or the experts of that in funding, which I'm not.
Representative Nate Bell
Unverified
21:41
Well, let me restate the question. Let's assume that your monthly car payment is $6,560 and you drive a really nice ride. And I came along and I said, Mr. Leathers, if you'll help me out with $3,750, I'll take care of that car payment. You know what I'd probably say?
Chair
Unverified
22:02
I'd probably say there ain't no such thing as a free lunch and I might be getting a bad car is what I would say. That's what I would think. And that's what you might be getting here. And you shouldn't be making it in Revenue and Tax Committee. It should be made by the folks,
Speaker 85
22:20
the education experts present, ready to testify, not on the basis of a tax credit, but
Representative Nate Bell
Unverified
22:26
on the basis of a good education policy. So your assertion is that when the state can save money in the net, that that's not
Chair
Unverified
22:32
a good idea? No, I didn't say that. I said the state should not, in the guise of a tax credit, think they're doing something, that they're going to get something on the cheap that
Speaker 85
22:46
might not comply with the law and might not know what they're getting without all the experts at
I just wanted to make sure I heard you correctly.
Representative Homer Lenderman
Unverified
22:59
Thank you. Representative Linderman, you're recognized. Thank you, Mr. Chair. Mr. Leathers, I've heard people make analogies and things,
and I sure did, and some of them I didn't like. This one, when I was sitting here a while ago listen to this there was a one that came to my mind and that was voodoo economics because I didn't understand and I don't
understand this you're not referring to the Washington general analogy are you because I thought
Representative Homer Lenderman
Unverified
23:24
that was a good mr. chair but but thank you for bringing a little levity to our meeting I think we need to lighten up a little bit but the revenue impact from 28 million to 52
$2 million is extremely significant to me. Do you
know who did that revenue impact and how they arrived at that figure? Our
Speaker 81
23:46
staff did that based on Florida's experience and how it grew in the population in doing
Representative Homer Lenderman
Unverified
23:56
believe this will be a net loss in state revenue of this amount based on the
Chair
Unverified
24:02
figures? We will lose this revenue. Now, if there is any savings or could be any savings in the schools, I don't know.
And there's nobody that studied this and is here to give you the entire evidence that you would need or an education committee would need to decide
Representative Homer Lenderman
Unverified
24:21
that. Okay. I guess my next question is for
Representative Collins. We're kind of hopefully down here in the last few days or whatever, and I think this is, As Representative Westerman said, I think it's very intriguing to look at this. I don't know that we're ready and prepared to do that. Would this be something that you would think might should go to an interim study to look
Representative Charlie Collins
Unverified
24:46
at and really be studied? I think I remember you getting a question like that in one of our ag meetings recently. And like you, I'd like to see this
bill pass. Thank you. Thank you. Representative Bibiano. Thank you,
Mr. Chairman. If you send your child to a private school and you own property, do you pay property
Chair
Unverified
25:14
tax generally? Mr. Leder. Well, if you own property, you pay property regardless of whether you have children or
how many children you have. And generally that property tax goes to school funding, is that correct? Public school funding. It does. Good. So if they're going to private school, they're not utilizing that funding,
Chair
Unverified
25:32
correct, even though they're paying that tax? that doesn't have kids in school, whether they're private school or not, obviously they're not
Speaker 81
25:39
utilizing in the sense their kids aren't there, but they're benefiting from the whole community getting
an education. MR. Would you consider a private school that employs maybe hundreds of employees an economic
impact to a community that creates jobs? MR. I
Chair
Unverified
25:55
haven't studied that. I wouldn't think a private school would be any more of an economic impact than a public school. MR. Okay. Thank you. Representative Burris,
you're recognized. MR. Thank you, Mr. Chairman. All
Representative John Burris
Unverified
26:09
right, Mr. Leathers. After all that defending of DF&A at the last meeting, I'm going to get my street cred back here.
MR. All right. MR. I just want to be clear. I mean, I appreciate your concern on where it was assigned, but I do believe that's something
something you have to take up with Tim Massanelli, not us. I agree that it's certainly educational components to this, but the bill was assigned to the Revenue Tax Committee. I think Representative Collins has worked very hard with people on input regarding the educational components of the bill, so I just wanted to make that clear. Moving forward, though, and I just want a very simple explanation. I know there's a lot of other factors, but I kind of just want to boil it down to this, is that in order for an impact to be realized to the state revenue of thirty three thousand seven hundred fifty dollars the state would
have to not spend over six thousand dollars in funding to school
districts for the child that would otherwise be in the public school as opposed to the private school is that correct you know in order to get in order to cost three thousand seven fifty would that we would have to not spend I'm not sure that it equals out like that I'm not sure that the
Speaker 81
27:11
costs would spread out you know if you have less students I'm not sure this cost doesn't spread that's why you need the education the foundation formula the per student funding is I understand that's
Chair
Unverified
27:22
the way it is now but I'm telling you if you had a significant shift out
of there you may have fixed costs that continue so it may not be that same amount I don't I don't know well either do I know that the same education that they would receive in the private schools as constructed here but they be the same or that's that same credit but
Representative John Burris
Unverified
27:41
but I guess my point is we don't fund based on various fixed costs per district things like that we fund per student. But it's based on
Speaker 106
27:49
actual cost. There's a matrix that includes all of
Representative John Burris
Unverified
27:51
those costs. I guess my point is there's an average daily membership for school districts and we fund on a per
pupil formula that right now is $6,100 I'm not sure exactly what it is but it's a fixed And so we fund on a per pupil based formula and if that pupil is not in school then we do not fund in order for so in order for a pupil to be in a school where this tax credit was realized we would not fund at that $6,000 level. I mean that's correct I know it is, but – and I guess that's my point. I realize there's a much broader discussion going on, but I just want to make sure that the very – the basis of the bill is being portrayed accurately,
and that's that in order to cost $3,750, we would have to not spend $6,000. And the only
Chair
Unverified
28:36
to look at if there is a major shift, then does that make the cost necessarily go down, or do you just spread some of those costs against fewer students? And I don't know the answer to that, but I suspect part
Representative John Burris
Unverified
28:48
of that is true. I agree, but whether we're talking about it, and this will be my last point, Mr. Chairman, because I know we're in time, but whether it's revenue and tax issues, educational issues, I'm not comfortable making decisions that affect children in our state
based on whether or not a district has a fixed cost and we're just spreading it around. The question is, does it give children an opportunity to get a better education, and does it save the state money and do it in an efficient way? And I think this bill does. So I guess if the district has fixed costs, that will be – I guess my point – I understand your point. I just don't think it's the issue on this bill, and I think it should be very last on the – or maybe not last, but at least down the list on things that we consider when dealing with educational and revenue issues. Yes, sir. I
Chair
Unverified
29:32
want to – if I could have one more thing to say.
Sure. There's a United States Supreme Court case pending in Arizona that Martha's prepared to talk about. I don't know if you want to go into details, but it involves this type of tax credit, as I understand it. So I think the case has been argued, and they're waiting for a decision now and might affect this very thing, and I think it's brought along some discrimination issues involved with their program. And as part of what I'm saying is that we don't know if these schools are going to accept the kind of people that the state money is required to pay for anybody that wanted to
go to school. Representative Ingram? No. Representative Love? No. Representative Westerman? No. Representative
Representative Nate Bell
Unverified
30:24
make sure I heard correctly. Did you just testify that it's not a good idea for us to act if there's a Supreme Court decision pending? I
Chair
Unverified
30:38
make you aware that there was a decision
that was pending, and you might want to consider that as part of what you're doing because we don't know, we haven't had time to discuss, neither have the experts been here in education to talk about the programs to know if that's applicable to this case or what the end
Representative Nate Bell
Unverified
30:58
result might be. So your professional recommendation would be how should we proceed based on the
Chair
Unverified
31:04
pending Supreme Court decision? My opinion would be, as an attorney, any time there is one, that I would not do it without
Speaker 80
31:12
having a full discussion of what was out there, what this program would do, and whether it was
Speaker 115
31:22
applicable of it. MR. Charlie, are you – let
me be clear, because I want to make sure I know what we're looking at doing today because i'm i think you've got a an idea here that is interesting and uh... it does make me a little nervous just kind of generally on the topic that we're speaking but on them on the funding formulas etc there are d are
you go are you looking to to move this out today or yes sir mr chairman is there anybody from the audience that they will speak on the bill i guess Mr. Leathers,
Representative Homer Lenderman
Unverified
32:00
Representative Landon Linderman, you're recognized. Thank you,
Mr. Chair. Mr. Leathers, you may need to come back up here at the table because you said something. I'm not sure I totally understand all this. What if we, in one county, have 10 employers that make this contribution and we've got 15 kids that apply?
You said that one of the things is that they, I believe, Mr. Leathers, in this court case is that there was some discriminatory issues or discrimination issues? Well, the money's not going to stay in the county, first of
Speaker 81
32:33
all. The money would be in a stake pool, as I understand it, and
Chair
Unverified
32:38
then somehow it would get you back through these organizations to these children. And I think the issues there – so you might have everybody in your county give money,
but your children in the county not qualify or some of them qualify, so I don't know. Martha's here. She's read about the case and knows more about it, who's our chief counsel, and she can get into the details, but as I understand it, it's over the fact that you're not providing for students in that process equally under the federal civil rights laws to treat them equally in that process when you're picking and choosing who would participate in that
program, and it's because those programs don't provide access as the public schools do. And, you know, when you get equal in our – it may even be more so in our Constitution where we have to give an adequate and equal education, if we're doing this and paying for some of these kids in the private schools, even though they choose them, then they may not be getting an adequate and equal education there, and then we may have a state constitutional issue. And I'm no expert there, but those are the things that need to be thought out before
we do something like this. Thank you, sir.
Thank you, Mr. Chair. Representative Colin
Representative Colin
Unverified
34:02
Smith, you recognize. Thank you, Mr. Chair. First of all, Mr. Collins, do you know that this particular program has to abide by the laws of the State of Arkansas in every manner, including race or disabilities? Could you just explain that?
Speaker 57
34:23
The State of Arkansas does not require private schools to accept
Speaker 48
34:29
students with disabilities the the scholarship granting organizations cannot be discriminatory in in who they give scholarships to that is part of their requirement thank you representative Viviano you recognize motion
proper time do pass any more
discussion I would like to close you recognize close first of
Representative Charlie Collins
Unverified
35:01
First of all, I agree with Mr. Leathers with regard to it's absolutely true. Rich people can in fact and do in fact send their kids to private schools. He's absolutely correct. The beauty of this bill is that it gives those very same individuals the opportunity to help send some poor kids to private schools. That's the whole point. The magic in the bill comes from the fact that these schools and these scholarships in these credit amounts are actually substantially less than the state funds we're currently
spending for these kids. Now, of course, nobody's going to be forced to go, so anyone that likes their current situation will be able to keep it. Only those that are desirous of going will be able to go.
Here's the other beautiful point. When the Titanic went down, there were only a certain number of lifeboats, so only a certain number of people could be saved from the freezing water. The beautiful part about this bill is if we start saving kids now and we decide it's working,
we can bring more lifeboats later. I'd appreciate a good vote. All right, members, the motion in front
of you is do pass. All in favor say aye. Aye. Any opposed? No. Aye's have it. Roll call. Call the roll. Thank you.
Representative Charlie Collins
Unverified
37:28
Thank you very much, Mr. Chair. I would like to refer to interim study as a backup plan. So do I just need to do that with you,
Speaker 44
37:55
Mayor Carol, or? You need to speak to Amber and withdraw the bill and ask her to turn it into an interim study,
and it will be referred to revenue and tax to be studied in the interim.
I will do that. Thank you. Thank you. Okay. I know Representative Westerman was wanting to address this bill. I will say, and this is the second time this has happened to you, that we've got about ten minutes. So we are going to meet tomorrow, but we can start today. Finish tomorrow, do it all tomorrow, your call. I
Representative Bruce Westerman
Unverified
38:30
would like to put 1552 on the deferred list, and the only one I've got to present is 1553.
I can do it today or tomorrow, whatever the will
of the committee is. It's your call. I mean, I don't think you're going to get done, but you can start and finish. Okay, I'll start. Okay, all right, you're recognized. on 1553. We need to be in chambers at 415, so we're going to leave here at 410, okay? Okay, and we'll pass the hand up.
Representative Bruce Westerman
Unverified
39:19
May I begin, Mr. Chairman? Just continue when you're ready. Okay, thank you. Members, this bill is similar to Representative Collins' bill. It actually saves the government money and cuts taxes at the same time, so it may be too much of an idea for this session
and it's actually probably too late in the session for it to happen anyhow and I started to just, instead of presenting the bill present its last will and
testament but I did want to get the idea out there in case we wanted to maybe look at it in interim study I've given you a handout it's just an example to kind of simplify what this bill does It removes sales tax from materials on bonded road construction projects.
I thought it would be a good bill since we have so much emphasis on road projects in this legislative session. But if you look at the handout in the middle, I've given you an example of a bridge that has $10 million worth of materials in the project. If that project were to be funded with a bond, then if you see there, step one, you go to the bond house and you sell a bond for $10,600,000, $10 million for the material, $600,000 to pay for the sales tax.
That bond goes into a construction account. The project is bid, and the $10.6 million is paid to the contractor, at which point the contractor puts $10 million into the bridge, and he pays $600,000 to the state in sales tax. Okay, so there's actually been no tax money collected on this bridge project yet. So, in essence, the state's taken out a loan for the sales tax that gets funded into the bond program.
As money is collected from the taxpayers, in this example right here using a 20-year bond at 5% rate, each year you end up paying $802,000 for the materials in the bridge and $48,000 for the tax on the bond. And at the end of the day, you've paid $963,000 for $600,000 of sales tax. So it cost you $362,000 for the sales tax that you included in the bond project.
I've been through various amendments with the governor's office and the Senate trying to get something worked out on this, but we've just run out of time this session. The next page is just a graph that shows the ratio of sales tax bonded cost versus sales tax revenue. And the purpose of this was to show you that no matter what the rate on the bond is and no matter what the term on the bond is, it still costs less if you take the sales tax out.
I think hopefully you get the gist of it. I'll answer any questions. Representative
Representative Charlie Collins
Unverified
42:40
Collins, you're recognized. Representative Westerman, I love
you like a brother, and I love the concept of saving money, but I'm a simple guy. Couldn't we just take the sales tax revenue and make an advance principal payment on the bonds that exist and achieve the
Representative Bruce Westerman
Unverified
42:56
same economic effect? You could probably do that. Maybe you might have to pass a law to make that happen.
Thank you. You could look at it in different ways. The impact on this was about $62 million. So one way you could look at it, for the same bond cost, you could build six more miles of interstate highway and save the interest cost on the taxes.
This may be a good point to
stop. Tim, Richard, I do want to talk about this tomorrow. I mean, this does seem like, I mean, I'd like to hear the other side, so to speak,
because this seems like a pretty good idea to me on its face. So, Representative Westerman, because of the time, are you going to come back in the morning? We're going to meet at a regular time in a regular room. I'm sorry. We're going to meet at 9 tomorrow in a regular room. But with that, let's stand adjourned.
Agenda
Call to Order
SB256
SB731
HB1771
HB1553
Adjournment
Documents
No documents posted.
Speakers
Speaker 1
Speaker 3
Speaker 4
Speaker 7
Representative Allen Kerr
Unverified
Representative Mark Biviano Chair
Unverified
Representative Stephen Meeks
Unverified
Representative Davy Carter Chair
Unverified
Speaker 10
Representative Larry Cowling
Unverified
Speaker 29
Representative Keith M. Ingram
Unverified
Speaker 38
Speaker 39
Representative Charlie Collins
Unverified
Speaker 48
Representative Kelley Linck
Unverified
Speaker 63
Speaker 64
Representative Bruce Westerman
Unverified
Speaker 75
Chair
Unverified
Speaker 78
Representative Fredrick J. Love
Unverified
Speaker 81
Representative Nate Bell
Unverified
Speaker 85
Speaker 95
Representative Homer Lenderman
Unverified
Speaker 99
Representative John Burris
Unverified
Speaker 106
Speaker 50
Speaker 80
Speaker 115
Representative Colin
Unverified
Speaker 57
Speaker 44