House Revenue & Taxation Committee Part 2
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All right, members without objection, we're going to hear HB 2064, some cowling. Right there, recognized.
Thank you, Mr. Chair. You're recognized. I appreciate it. Now, this is my bill, but Representative King wants to run it again and all, and so I'm going to take the opportunity, and I'll let
Representative Bryan B. King
Unverified
1:18
Representative King have the floor. You're recognized. Thank you, Mr. Chairman. I'm going to quote Speaker Moore, who's basically said, a minority can't control a majority. And I agree with that until the majority lets the minority control them.
And on this tax deal that got done a long time ago before a lot of things got fairly heard, that was wrong. You know, leadership should be from the ground up, not from the top down. That's what goes on in Libya, okay? We should have heard and gave a fair hearing to all the tax cuts and then make our determination based on the members. It shouldn't have been just a few people down here out of 135 people making a deal that everybody else has to go along with. Have you passed out everything?
Let me wait and talk whenever everybody gets the material. Has
everybody got the material? Members, does anybody not have the handout?
Representative Bryan B. King
Unverified
2:36
Okay. Proceed on. If you look at the handout, starting in the last four years, if you're looking at Arkansas's employment, and let me tell you where I got these statistics. I had the Bureau get these statistics, and they got them from Moody's. Okay, this wasn't something I came up with. 2007, Arkansas's employment in thousands, look at that number, look at the number in 2010, actually went down. Arkansas's unemployed in thousands went up.
We all know that in the last four years. Here's the telling statistic about where I'm going to with this. Arkansas's median household income went from $40,795 down to $35,075. So real-world income was going down during this time. Average hourly earnings manufacturing, you see where that's at. You see net general revenue where it's at. If you turn to the next page, and, folks, this is when I came to you last time
and this committee voted down the last time the tax deal, So, you know, I kept saying that there's going to be a way to pay for this, and I agree with the governor. If you come up with a tax reduction, you need to come up with a way to pay for it. Well, sometimes that comes up to tough decisions. As you can tell in the real world from 2007 to 2010, in the real world, families and small businesses and farmers were making tough decisions to make cutbacks. They had to. Their income was going down. At the same time, and I know the people that's going to oppose it,
the Department of Finance and Administration, personnel cost. And this is where I showed up to work in personnel and budget to try and find out the figures. If you look at DF&A's salaries, this come from them. 2007 was $105,950,687. In 2010, it went up to $127,080,120. That's almost a 20% increase, folks. At the same time, the real world, those individuals, working families, small businesses, and farmers,
their income was going down at the same time DF&A was increasing their personnel cost. Okay? So, you know, I'm going to say that we can cut back a lot of state government job growth that's happened here in Little Rock, and what your vote today will determine is are you for, Now, this is taking money. This is cutting back jobs. This is really cutting back government. This is really cutting back government for those of you that campaign on it. You can either make a decision to cut back government,
you can either have jobs here in Little Rock, or you can create jobs back home in your
Speaker 17
5:24
own communities. That's what this boils down
Representative Nate Bell
Unverified
5:30
to. Representative Bell, you're recognized for a question. Representative King, as I stated when we heard this thing the last time, I'm being a poultry farmer myself and feeling the effects of this. Over the past seven years, I've seen a net decline in my farm income before taxes and depreciation of almost 34%.
And I just appreciate you bringing the bill, and this is something that's very needed for our farmers in the state. Wouldn't you agree? Oh, absolutely. You're
Representative Bryan B. King
Unverified
5:58
either going to make cuts backs down here in Little Rock and create jobs back home. And let me tell you something. It's not fun to cut jobs. When I worked out in the real world in 96, 97, the poultry industry at that time made big expansions. I worked in the poultry equipment business. We were working guys. We couldn't find enough people to work. Green prices skyrocketed, and next thing you know, work went down.
And I had to go, my boss told me that I had to go lay people off. And let me tell you, I was driving about an hour and a half drive. It felt like I was driving to California to tell guys there was no work. But, you know, the reality was you had to make tough decisions or the rest of everybody wouldn't survive. Let me ask you this. Has Walmart salaries and personnel increased almost 20% in the last four years? No. Tossings? No. Any business out there, have they increased personnel costs? But that was happening in Little Rock. At the same time, people's personal income, they're having to make tough decisions.
The only time that government should have been increasing jobs and increasing personnel costs is if people's real-world income is going up. That's when you can justify it. So I've sit on the personnel committee, and I've asked every agency, I have pounded them to get me their personnel cost and look and see where we can make tough decisions. And, you know, I feel like this is the right decision. You're going to make a decision today. Either you want more jobs in Little Rock or you want more jobs back home. Representative Harris, you recognize for a question.
Representative Justin T. Harris
Unverified
7:24
Thank you, Mr. Chair. Representative King, is the DF&A the only diagram you have on personnel? No, I just received last week. Everybody sits there and
Representative Bryan B. King
Unverified
7:34
says, well, you're waiting the last minute. Well, guess what? A lot of the information I didn't receive until last week, I found where the AG's office on personnel and salaries has increased almost 30% in the last four years. I've got the figures, folks from them, that show that. But in regards to the bill, because I
Representative Justin T. Harris
Unverified
7:53
know we have to stay on topic, that you, this is where you would say we could save money to be able to do the tax cut.
Well, you know, in all fairness, and thank you for doing that, and I'd like to say that e-fairness, when I'm talking to a constituent this morning, which I am talking about this bill too, you guys are cutting so many taxes. You're going to cut programs, cut funding. And I said, no, we're not. Look at Little Rock and how the salaries of administrators have gone up, yet our unemployment still remains the same. I don't want to get on a soapbox or a campaign speech, but you are correct.
And thank you for bringing this information. It's aggravating. I don't understand it. I live in a rural district, and my farmers are hurting.
So it's pretty aggravating, and I appreciate it. Thank you. Well, and let me
Representative Bryan B. King
Unverified
8:46
expand on that. You know, everybody says, well, the legislature approves it, which is true. But the legislature
can also undo it. We have that power. And I want to tell you, in the last four years, I started seeing the real world where things got tougher. Believe me, I felt that in my own business. I'm sure Representative Cowling felt that in his own business. And in 2007, when revenue stabilization came up, and I saw that and I read that,
I said, we're growing government way too much. And I just didn't vote. I didn't want to be the obstructionist and the only no vote up there, but I didn't vote. And you know what? Because it wasn't something that I believed in, and the process went way too fast and funneled down there to make a decision, and I said no. And you know what happened? I was right. And then in 2010, when we had our fiscal session, me and some others here voted against revenue stabilization because we said it grew government way too much. Now, you can campaign on growing government or cutting less government, and you can talk about it or you can do it.
You know what? And it's not going to be fun decisions if this goes through, and I hope it does. But the reality is, folks, as you see, real household income has went down over the last four years. they've made tough decisions. Okay, you're going to put a tough decision on somebody. And I say we have had way too much job growth down here in Little Rock, and we need to make sure that if they're a farmer in Representative Patterson's district, Representative Lenderman's district in your district, and Representative Gene's district, we need to be creating the jobs back home, not in Towers and Little Rock.
Representative Justin T. Harris
Unverified
10:10
Are you aware that one of the major budget eaters on their diagram for saving money, Number one is constituent services and needs. Guys, let's stay
on the bill topic. I mean, we could talk about that forever. I mean, I appreciate the discussion. Representative Linderman, you recognize for a question. Thank you, Mr. Chair.
Representative Homer Lenderman
Unverified
10:32
And, Brian, some of these may have to be answered by DF&A. I want you to know I'm definitely on your side. I think that we do need to get some tax breaks in there.
But, again, this bill, I did not see any schedule for any kind of reduction or whatever. Are you saying that if we send this tax cut down there that somebody administratively somewhere will, the governor or whoever, will have to make a hard call and that they would decide that? Is that what I'm saying? It's not the governor's call.
Representative Bryan B. King
Unverified
11:02
It's our call to recommend the governor. I mean, they'd have to make the decision a reduction back in
revenue stabilization and what they spend, my understanding.
Representative Homer Lenderman
Unverified
11:10
Okay. The next question may need to be answered by DF&A.
My question is, and I think it's a good question, why, when we have had Arkansas's gross receipts drop significantly in the last four years, has DF&A's expenses went up? Brian, do you feel, do you feel capable, I'm sorry, if I had to answer that? Representative
Linderman, I mean, I don't
want to dive into the F&As.
I mean, that was discussed earlier. We could talk about that forever. I
Representative Homer Lenderman
Unverified
11:54
mean, I would like to stick to the bill. I'm sorry, I didn't, I don't remember that. My question is, did they have to add new personnel or something, even though we had a decreasing revenue? I'm sorry. No, I mean, that's a fair
question. I just, we could, you know, I hate to get into their. Let me
Representative Bryan B. King
Unverified
12:09
answer that in a real world how it applies to the bill, if that's okay, Mr. Chairman. You know, in the real world, when I talked about the tough decisions I had to be made, you know what happened when the company came back and said, hey, I still need things.
I need a raise. I need that. They said, well, you know what? We have tough times right now, and you're going to have to do more for less, and that was the reality. And that's the only thing I'm saying. Folks, we cannot let the real world go one way down, and we need to continue to stop and correct what has went up down here, and that is too much state government job growth that has happened down here. We need to turn that around and give the – either you're going to create jobs back home in every district in Arkansas,
help do that in the economy, or you're going to spend it
Speaker 51
12:57
down here in the building. Thank you, Mr. King. My apologies,
Mr. Chair, if I got off the subject. No, no problem. I just want to stay on topic. Representative Viviano,
Representative Mark Biviano
Unverified
13:06
I recognize for a question. Thank you, Mr. Chairman. Representative King, I appreciate you providing this data. I think you mentioned the AG's office. You had that data. Do you have any other data on any other departments? Obviously, I don't want to just
pick out the F&A. I mean, I'm sure we may have some other departments here in the state are guilty of the same thing.
Representative Bryan B. King
Unverified
13:24
The request was sent out. I'm on personnel, and the request has been sent out repeatedly to all the agencies. I have not got all of it. I have not got everybody to respond back yet. I have been continually dogging this to get responses and have not got. I went over to Tony at personnel, and I named another one that has
Representative Mark Biviano
Unverified
13:43
not got me the answers yet. But do we have any visibility of just the overall number of
state government, how that's increased over the same period of time? All right, members, I mean, I respect the deal,
but we're not going to go over personnel in every agency. Let's talk about the deal.
Representative Bryan B. King
Unverified
14:00
Mr. Chairman, if I could have a minute. I think what they're trying to say is every time it comes back, how are you going to pay for it? I'm talking about state government job. I'm trying to tell the committee how to
pay for it. So I think it is relevant. Point taken, but now we're off on the other agencies. I mean,
Representative Bryan B. King
Unverified
14:22
let's. But the overall job growth has happened, and I have not got all the figures back from every department,
and I'm trying to tell you based on the documentation I have received, I'm trying to make a determination how to pay for that and make a
tough decision. All right, members, anybody from the audience want to speak for the bill? Against the bill, Mr. Lathers, you recognize, speak against
Speaker 59
14:54
the bill. Mr. Chairman, to be consistent with the bills as we have throughout the session, it's just
the revenue impact that you have before you with this bill, and you'll see as we've come down to it, we haven't budgeted for it, and continue to make that point. I would like to discuss individually or together some of the points raised here. I feel like I ought to have a personal privilege to say we weren't able to respond to some of this today, but you will see that we've had programs added. I can name some of them, like bingo to audit, new gambling measures to audit, all of those things that we've had added on us have added to personnel, and I also point out that we
We decreased our budget for $4 million last year from the previous year by cutting back and one of the, I guess, the only agency other than the governor's office and central services that did that. But I know that's not relevant here, but I just want to make sure that everyone doesn't think that we're guilty, as someone said a while ago, of padding the budget. I also want to make the point that it's not just people in Little Rock that work for DFA. We have revenue offices, we have child support offices, we have driver's license hearing
officers all around the state. They work back in your counties, they're your folks, and we try to keep those offices running well and we've even cut back there and we've had members come to us and say put people back. So I just want to ask for forgiveness for having to respond, but I felt like I had to respond to that and want to point out that this is not covered in
the budget. Thank you. All right. Representative King, Kaling, do you want to close for your bill?
Representative Bryan B. King
Unverified
16:36
Can I close? Let me tell you something. I understand, Mr. Leathers, and this shouldn't be about bad government, you know, this thing. What this should be about is I understand, Mr. Leathers, I understand the programs and what they have to do. I'm going to go back. Representative Carter, you talked about a personal experience about when he had the state police retirement issue. I want to go back to a personal experience of what happens in the real world, whether you're a mayor or you're in a business or whatever, when things are declining, you have to do more for less, and that's just the reality. You can't have one standard over here and one standard it has in the real world.
This vote today will be about, and the budget's not finished yet, folks. Everything's up in the air until we vote on it. That's the reality. Don't think that this thing is over with. If you do, let's go home today, okay? Everything is up in the air until we finally decide. And I want to tell you, your vote, what we're going to do is either you're for more jobs back in your community or you're for more jobs in government. Thank
Chair
Unverified
17:30
you, and I appreciate a good vote. Representative Bell, you're recognized for motion. Move, do pass, Mr. Chairman.
Members, the motion in front of you is do pass. All
Speaker 66
18:01
in favor, say aye. Aye. All opposed, no. No. And those have it. Vote, call it. Vote, call it. Call the roll. Thank you.
Speaker 72
18:24
Yea. Representatives King. Yea. Representatives Law. No. Representatives City Honor. Yea. Representatives Collins. No. Representatives Winterman. Yes. Representatives Lee. No. Representatives pH. Yes. Representatives Sharon. Yes. All right, the bill failed.
Thank you. Representative Cowling, are you wanting to run SB 270 while you're down there? Without objection, seeing none, we'll take that out of order. You're recognized. Explain the bill.
I think everyone's got the handout
that we had, and it's just a fairness bill. Senator Madison's fairness bill is what it is. Representative Gene, you've
got the hand out there right there.
It's the deal on you there. Yeah, that's what we're
Chair
Unverified
20:03
on. Representative Harris, you're recognized for a question.
Representative Justin T. Harris
Unverified
20:07
I just, you know, we ran this this morning, but I'm not really, you know, we're talking about fairness. And I talked to you earlier, so it's nothing new that you know that I'm going to say. But we're talking about fairness. We just cut tax. Now we're going to add tax.
And so just fairness there. Anyway, I would like to make it clear that on these consignment shops, some of them are people that don't have very much money. They either go to Goodwill or they go to places in just different places to find cheaper clothing. This helps large families. They go there because they know they can get a good deal and they can afford to clothe all their children, the Duggars being one of them, a family of children of 20.
So do you feel like this bill would actually hurt low-income families or large families?
Well, I'm sure under that circumstances it would hurt. But they also, they will go, people when they are in need, they will go to a pawn shop and they will pawn their stuff. And then when they buy it
back now, they pay sales tax on it. So basically, what's the difference? You know, you're paying it
Representative Justin T. Harris
Unverified
21:23
here or you're paying it there. Well, once again, it's not against you, Representative Cowling, but against the bill is to state that or ask the question that these consignment shops donate their clothing that they can't sell to Salvation Army or to Goodwill.
And if they have to be taxed when they purchase it from somebody, but they're giving
it away, I just, do you see what I'm saying? Well, if they can't sell it
and they have to put a tax on it and they don't sell it, it seems like that you'd get more clothes out of them. So
Representative Justin T. Harris
Unverified
21:54
what you're saying is when they buy the clothing, they don't have to pay
taxes from the buyer. Is that correct? Just clarify that. I don't know that it's in the
bill, right? Okay. Okay. Thank you. Looking from the handout, this
looks like this particular store looks more like a Target.
I mean, it's a big outfit. Are these common across the state? I mean, I'm out of the loop on
Speaker 82
22:23
that. On page three right there, you see
where there's one in Fort Smith that runs a big billboard where they get new items all the time. And then they bring this stuff out front and display it out front and things like that. It's just a – resellers have to – when they buy it and resell it, they have to charge a sales tax on it.
Representative Nate Bell
Unverified
22:49
So. Representative Bale, you recognize for question. Thank you, Mr. Chair. Representative Cowling, you know, I mentioned something to you while we were in recess that I believe is a very important point on this bill. There are many poor families that depend on consignment stores for clothing for their families as well as the yard sales and the other venues. And I believe the effect of this bill is going to have a stifling effect on the options
that our lower-income families have in finding clothing for their families.
I know in many years when my family has had a tough time making it, it's been an option to shop at consignment stores. And the net effect of this is to increase the costs on these families by the rate of taxation because they're currently not taxed on these purchases. And I believe we need to take a serious look at the effect that it has on our lower-income families. Well, I'll agree with you on
Speaker 21
23:42
that, but they're going to these consignment shops where the clothing is already cheaper than it
would be if they went to a department store to buy it. So they're going to be saving money by even going to it, even what small percentage they have to pay on tax.
Representative Nate Bell
Unverified
23:57
And I agree with that point. But, again, that small percentage to a family that's trying to provide clothing for
a bunch of children on minimum wage income is pretty tough already, and what you're asking us to do is just make it tougher. Yeah, but you
also have to realize that they're just not low-income families just going to these shops and all. Oh,
Representative Nate Bell
Unverified
24:15
I understand that, but it is a significant portion of that market, and I think the folks that have large amounts of disposable income are prepared to go to Dillard's, and some of the rest of us might not be.
Speaker 97
24:28
Anybody from the audience want to speak for the bill, against the
bill? Sir, if you would just please go down at the end of the table and state your name and where you're from and what organization, if any,
Speaker 41
24:50
you're affiliated with. Thank you for being
Speaker 98
24:53
here. I'm John Cooper, Jonesboro, Arkansas. I'm a minister and my wife works at some of the consignment operations on a voluntary
basis and a lot of the things that she does is buy things in connection with just being there to give away. And through that, they have the opportunity to put kids in good clothes to wear to school. And I don't think that there's much of a relationship, as far as
I'm concerned, between the consignment shops that I'm aware of and pawn shops. I don't know that there's very many people that volunteer to work at pawn shops. The material is considerably different. Consignment stores are largely clothing and family items. And I just don't think we need to be in the business of adding taxation to $3 little girl's clothes
and little boys' pants to wear to school to keep from the other kids laughing at them because they have worn-out clothes. So I'm not in favor of that. Thank you. Thank you, Mr. Cooper,
for being here. Mr. Cooper has spoken against the bill. Would anybody like to speak for the bill? Representative Kaling and Senator Madison, welcome. I'm sure you'd like to speak for the bill. If
Senator Madison would like to address this here, she's here now. You're recognized.
Speaker 103
26:40
Thank you, Mr. Chairman, and I apologize for not being here earlier. And I don't know what's been discussed, but consignment sales are now a very, very big business, and it's not just $2 pairs of pants. It's $30, $45 used little girls' dresses that I've seen. There's a consignment store in Conway called Yours Truly that advertises on a billboard that says they have 15,000 new items a month, and you have sellers of used clothing that
are consignment and sellers of used clothing that are not consignment, and it just seems to me that their customers ought to be paying essentially the same for the same goods. It was sort of a fluke that once upon a time consignment sales were exempted because they were deemed to be isolated sales because they were rare and infrequent. That's no longer true. They are indeed a major, major business model. I feel like that the weekend that there
was, well it was actually six days that there was a large consignment sale in Fayetteville, it was no doubt the biggest business in town that weekend, actually for those six days. waited in line to get inside to buy things, and yet they collected no sales tax. And to me that's just not fair. It's not fair to the other businesses in town who do the same kind of merchandising of the same kind of items for sale that every month have
Speaker 101
28:17
to remit the sales tax that they've collected.
And that's all I'm interested in here is fairness. Thank
Speaker 105
28:27
you, Senator Madison. Representative Link. It's proper to ask Senator Madison a question? You bet. Yeah, you recognize. Senator Madison, this particular shop
Representative Kelley Linck
Unverified
28:34
you're talking about in Conway, I think it's possible the tie I'm wearing might have come from there. My wife does go there. Is it all used clothing? I've not talked to her about it. Is it all used or any of it new? I don't know. It
Speaker 103
28:47
doesn't make any difference as far as the bill is concerned.
Representative Kelley Linck
Unverified
28:50
It's consignment. I understand it doesn't make a difference as far as the bill.
Speaker 103
28:56
It just kind of makes a difference in my head. Well, I think my
Representative Kelley Linck
Unverified
29:01
husband has worn used ties, so that would be okay. Well, I'm not sure that was it. I think it makes a difference in how I consider whether we should tax this or not. If they are consignment, so to speak, new clothing, then they're actually a retail shop. If it is consignment where they're just selling used items only, I would view
Speaker 103
29:19
it differently personally. I think John Tice could correct me, but I believe Arkansas has for a good long time taxed the sale of used items,
whether it's a high chair or a stroller or,
Chair
Unverified
29:34
you know, a onesie. Okay. Thank you. Representative Linderman,
Representative Homer Lenderman
Unverified
29:41
you're recognized for a question. One question, kind of quick, maybe for DF&A. They come up with a figure of $0.23 million. Doing a little bit of math there, I figure that to be $0.08 per person in Arkansas.
That's not a very large amount of money. We have about 3 million people, and this looks like the revenue is going to be $0.23 million. That's not a real large amount of money.
Speaker 113
30:13
John, you're recognized to answer the question. The .23 is based on a partial year. I think this bill is scheduled to come in in the middle of a fiscal year. The full year is .45. It doesn't change your
Representative Homer Lenderman
Unverified
30:24
calculation a great deal. $0.16 a year for the average Arkansans to spend on this.
Speaker 113
30:29
That's correct. And the estimate wasn't arrived at on a per-person basis. It was based on sales and trying to get as best information about sales at these large consignment sales that we could. But your math
Representative Homer Lenderman
Unverified
30:41
is correct. Okay. How do you arrive at this figure? If these consignment shops are this big and this huge, and if there's people spending this much money, I would suspect that it would bring in more revenue than this. So is there only a very two or three of these in the state that would be affected?
Or I understand Salvation Army's in places like that would not
Speaker 113
31:05
be affected by that. Is that correct or not? The Salvation Army, Goodwill Industries, those kinds of folks would not be affected by this. Okay, thank you. The information that we've been able to determine is these sales have changed over the years. last ten years when DFA was first contacted about these sales, they were small, isolated, one-time events, a group of families coming together. Over the last ten years what we've seen is these types of consignment sales maturing tremendously such that now they have computer
software, that they license the computer software, they license the name, they will rent a large complex, an auditorium, a convention center, something of that nature, and hold the major consignment sale over a span of three to six days like Senator Madison was saying. So the original decision that consignment sales were isolated sales and entitled that isolated sales exemption grew out of the fact that consignment sales were very much like the garage sale or the yard sale that you and I would have at our house.
After those opinions and those were first rendered, then the industry changed and has grown tremendously over the last several years. Okay.
Representative Homer Lenderman
Unverified
32:19
Thank you, Mr. Tice. Thank you,
Mr. Chair. John, why is this exempt today? Is there some, under what section do these consignment sales have an exemption? There is a current
Speaker 113
32:34
exemption in Arkansas State Sales Tax Law called the Isolated Sales exemption. It's intended to exempt you or I, if we're selling an item, that we're not
regularly engaged in the business of selling. That's why if you or I have a garage sale at our home and we're not in
Speaker 118
32:52
the business of selling our clothing or selling our furniture, that's an isolated sale. You don't have
to register and get a sales tax permit or collect tax. Well, these businesses in these slides seem that they would
not fit within that definition of an isolated business transaction. Remember I talked to
Speaker 117
33:12
you about the evolution that's occurred.
Speaker 113
33:15
When DFA first, about 10 to 15 years ago, started getting opinion requests and calls for a legal decision on whether consignment sales were exempt, at that time what you're seeing today did not exist. They were small. They were one-time events, things of that nature, and we said that's very much like two or three families coming together for a joint garage sale. And we issued opinions at that time saying the isolated sales exemption applies.
Well, has a similar challenge been brought on some of
these facilities that that we're talking about today, or whether or not they qualify under that exception? The
Speaker 113
34:04
same. What has changed over time is the volume, the length of time, and just the sheer volume of sales that occur. The business model is still very much like the garage sale, except now you have very
sophisticated businesses that are creating software, selling it, licensing it out, using a trademark or trade name to hold sales throughout the state. So you're seeing a much more sophisticated entity than you did back when those opinions were issued. MR. It
reminds me of, I think, Judge Arnold, I think it was Richard Arnold, he said a great quote that you can put a dress on it and call it Sally, but pig is still a pig.
This seems to, you know, these examples to me do seem to look more like a target than a garage sale, but Representative Bell, you're recognized. I want to make
Representative Nate Bell
Unverified
35:04
sure I understand something correctly. I believe that what you've just told us is that basically this consignment model has been around for some time, but now it's more and more people are choosing to sell their used items through this model, and so now we feel the need to tax it because it's finding
Speaker 113
35:26
some success? I don't believe I would have phrased it that way. I think instead what we've seen happen is we saw a mother bring two or three of her friends together and have a sale. And back 10, 12 years ago, DFA received an opinion request, is this an isolated sale? And the answer was yes. One mother selling her clothing or having two or three of her friends come in, that's still the garage sale type model.
That mother then decided this is very, very successful and she created some software and she created methods to track sellers and she invited more and more folks to come in. somehow morphed from a small model into one that now rents a large arena and has literally hundreds of vendors coming in, and she licenses that name out to folks all over the state, and the model just changed, but that same threshold business plan is still the same.
It's still a garage sale with a few people bringing their things, except now it's not a few people.
Representative Nate Bell
Unverified
36:35
This kind of reminds me of something I heard years ago. So there's kind of a viewpoint out there that if it's successful, tax it, and if it's unsuccessful, support it. And I'm just wondering if this tax causes some of these businesses to fail. What would be coming back next to find a way to incentivize them? What I would say,
Speaker 113
36:53
this is not DAFA's bill, but we'd be glad to answer any questions and try to provide the information.
Thank you very much. All right, members, I've got one more question. I would like to bring this to a vote in the next few minutes. So go ahead,
Representative Mark Biviano
Unverified
37:05
Representative Viviano. You recognize. It was more of a comment on Representative Bell there. It was kind of interesting. We've got an enterprise here that we don't tax, and it's grown substantially. It sounds like a pretty good economic model. Maybe we've got to move that to some other areas in the
state of Arkansas. Representative Harris, you recognize for question. This is to DF&A.
Representative Justin T. Harris
Unverified
37:28
I mean, I do see a little taking advantage of the system. Rihanna, the Lana, is that how you say it? Would that still be considered incidental? Rihanna, thank you. Incidental sales, even
though this would pass? If it, I mean, I'm just saying if it could pass,
Speaker 118
37:50
would pass. Rihanna is actually one of those that has changed over the years
Speaker 113
37:56
from a small, isolated sale to now Rihanna has that software.
They license it to sellers throughout the state. and throughout the southeast, actually. So, no, they would be under this bill, Riolana sales would become subject to tax. Okay. And then just to
Representative Justin T. Harris
Unverified
38:10
clarify for me, $0.16 to every Arkansan isn't much, but it's not every Arkansan that goes to these sales, correct? I'm not familiar with these sales. Like I said, that's not
Speaker 112
38:21
how the revenue impact was derived, so I can't really answer that. Thank you. All right, we've got you all ready to close?
We closed. Senator Mattis, would you like to close
Speaker 125
38:39
for your bill? Yes, Mr. Chairman, and I want to make it very clear that this is
Speaker 103
38:44
about an issue of fairness. You have two retailers, one that collects sales tax from their customers when they sell a used little girl's dress or a stroller or a high chair, and one that doesn't collect sales tax from their customers when they sell a used little girl's dress or a trailer stroller or a high chair how can that be fair one of these retailers is remitting sales tax
every month they have to go through their receipts and fill out the paperwork and mail it in the other one does nothing and yet it's the same products and the same kind of customers a customer at one sale they go across the street to the other one I think it's unfair to the business person running the business that one has to go the extra you know go through the extra work and the other does not. This is not about revenue to me. This is about being fair. The little town of Elkins had a resale store.
I think it was just, you know, assortment of household items and they had a consignment store on the other end of town. Guess which one went out of business? The one that had more paperwork to do. And they were competing for customers with the other store that was not doing anything. I appreciate a good vote. Thank you, Senator Madison.
What's the pleasure of the committee? Reps of Love, you recognize?
I recognize you pass. Committee, the motion in front of you is due pass. All in favor, say aye. Aye. All opposed? No. I
think the ayes have it. All right, call the roll. Thank you.
Okay, the Eurson County votes yes. The bill did not – the bill didn't receive enough votes. Bill failed. Thank you, Senator Madison. Thank you for coming. Representative Collins is recognized to run
1771 members. House rules prohibit us from being in committee during sessions.
So, Charlie, you know, we're skimming it here, so just FYI.
Representative Charlie Collins
Unverified
42:05
Mr. Chairman, I appreciate that. What I'd like to do, if it's okay with you, is just spend however much time there is, four minutes going through this, and then just bringing it back on Thursday and digging into it a little bit deeper. But I'd like to kind of use the four minutes that we've got to do that since we're coming to the end of the session. What I'd like to do is invite Missy Newcomb to come to the microphone with me, but before she talks, I'd like to give an overview of the bill and start digging into it. This is House Bill 1771, and one of the things that a lot of the experienced legislators
told me when I came to the legislature was to think long and hard about what the problem is you're trying to solve before you go introducing legislation. So the problem that we're trying to solve here is improving the educational opportunity and choice for the least advantaged Arkansans. So if you think about the folks that are economically disadvantaged, the poor folks, and the economic and education opportunity they've got, HB 1771 is designed to help them.
Here's how it does it. It uses an ingenious approach to actually save the government money while improving choice. And if you're looking at your DF&A statement and you're saying, Charlie, how in the world can you say that when we're talking $30 million, $35 million in lost revenue? You must have lost your mind. Hang with me. Just hang with me, okay? So here's how 1771 does this.
It gives donors a tax credit for helping disadvantaged youth, those making 200 percent or less of federal poverty limits, get a scholarship to a private school. And yes, when you take that tax credit money and you reduce our revenue, these DFNA impacts are absolutely correct, as good as anybody can estimate them. But on the other side of the coin, we have an education funding model
that comes out of GenRevenue and other sources which exceeds the per-person tax credit. Let me repeat that. The amount of money we give in a tax credit to the rich donors to enable poor children to go to private schools is exceeded by the money we save in GenRevenue. So the higher this number is on the DF&A impact, the more money we save on the Gen
Revenue side. So that's the concept. And what I'd like to do is turn the microphone over to Misty Newcomb, an expert. She'll introduce herself and explain a little bit more how the moving pieces work if
we have time, Mr. Chairman. Representative Collins, it's 2-27. This may be a good break in
your presentation. And especially, you've got my curiosity now on the math, so that's in a good way. If okay with you, I think we should, you're not going to get very far.
So, you know, is that? Yes, sir. That works for me. All right. So without objection, we are going to, which, what purpose? Objection. Objection. Are we going
Representative Justin T. Harris
Unverified
45:34
to meet after the session to discuss this, or are we, because I wanted to make a motion to do pass. Mr.
Representative Bryan B. King
Unverified
45:45
Chairman, I'm fine with coming back Thursday, if we've got a committee meeting on Thursday. Okay.
We will meet, and we'll probably meet tomorrow if necessary.
Representative Harris, the House rules prohibit from this meeting at 2.30. I'd be more than happy to come back, but Representative Collins seems content, maybe even if we meet tomorrow. But we'll certainly circle up after that. Okay. So without objection, let's stop here. We need to adjourn and get back up in the chamber.
Agenda
Call to Order
HB2064
SB270
HB1771
Adjournment
Documents
No documents posted.
Speakers
Representative Davy Carter Chair
Unverified
Representative Larry Cowling Chair
Unverified
Representative Bryan B. King
Unverified
Speaker 17
Representative Nate Bell
Unverified
Representative Justin T. Harris
Unverified
Representative Homer Lenderman
Unverified
Speaker 51
Representative Mark Biviano
Unverified
Speaker 59
Chair
Unverified
Speaker 66
Speaker 72
Speaker 82
Speaker 21
Speaker 97
Speaker 41
Speaker 98
Speaker 103
Speaker 101
Speaker 105
Representative Kelley Linck
Unverified
Speaker 113
Speaker 118
Speaker 117
Speaker 112
Speaker 125
Representative Charlie Collins
Unverified