House Revenue & Taxation Committee Part 1
Video
Transcript
Bills discussed (9)
| Bill | Title | Sponsor | Status |
|---|---|---|---|
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HB1760
· 3 mentions in transcript, chapter
Matched: “…members. All right, members, without objection, we'll take HB 1760. CIC, Rep. Summers, seeing none, Rep. Summers, you're recog…”
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Pre-2017 bill | ||
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HB1737
· 2 mentions in chapter, transcript
Matched: “HB1737”
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Pre-2017 bill | ||
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SB351
· 2 mentions in transcript, chapter
Matched: “…od. Thank you. All right. But without objection, let's hear Senate Bill 351. Reverend Calley, you're recognized.”
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Pre-2017 bill | ||
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SB594
· 2 mentions in transcript, chapter
Matched: “Off of the Senate Bill 594, this bill states that actual notice takes precedence over…”
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Pre-2017 bill | ||
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SB595
· 2 mentions in transcript, chapter
Matched: “Thank you, Mr. Chairman. Senate Bill 595, this bill requires that notice contained a partial or abbr…”
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Pre-2017 bill | ||
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SB597
· 2 mentions in transcript, chapter
Matched: “carries. Senate Bill 597. Thank you, Mr. Chairman and committee members. Senate Bill…”
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Pre-2017 bill | ||
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HB2103
· 1 mention in chapter
Matched: “HB2103”
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Pre-2017 bill | ||
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SB377
· 1 mention in chapter
Matched: “SB377”
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Pre-2017 bill | ||
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SB569
· 1 mention in chapter
Matched: “SB569”
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Pre-2017 bill |
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- October 5, 2026
Senator Jonathan Dismang
Unverified
0:00
Off of the Senate Bill 594, this bill states that actual notice takes precedence over a publication and also strengthens an interested party's position by mandating that notice be in substantial compliance with the notification requirements. Appreciate any questions. Members, you have Representative Bell, you recognize.
Senator Disbling, I received an email this
Representative Nate Bell
Unverified
0:24
morning that frankly is a little bit above my head. some of the commentary in that
are you familiar with the emails going around about the bill would you care to comment on
Senator Jonathan Dismang
Unverified
0:36
some of that stuff actually Rodney is a very good friend of mine I'm sure that's who's been sent out the email and I've tried to explain to him and we're just not getting to a point of being able to understand that there's a separate statute that discusses minerals and minerals at this time are not allowed to be sold and so there's no implication of this bill in regards to minerals which is what his concern is thank you
I appreciate that is anybody from the audience like to speak for the bill against the bill
you recognize for motion motion do pass a motion to do pass all in favor say aye any post motion carries congratulations pastor
bill move down to sp595 hey first before we do that, members, I do want to announce that we will be adjourning today, and we're going to come back after the House recesses for another meeting. We do have some bills, so if we can, make sure we're going to be here.
And, you know, personal privilege, I've got my oldest son, Jackson Carter, here with me. He told his mother the other day that if she could kind of do away with the PDAs. And so what's a PDA? It was Public Display of Affection. So with that being said, son, glad you're here. Love you. All right. All right. Senator Dismang, 595.
Senator Jonathan Dismang
Unverified
2:09
Thank you, Mr. Chairman. Senate Bill 595, this bill requires that notice contained a partial or abbreviated legal description and parcel number. Currently, there's no such requirement, and this should allow or help allow all interested parties better identify when a related property has become delinquent. In addition, this bill will limit the notification by the commissioner's office to interested parties, which should help with controlling costs associated with those sales. and just like Senate Bill 595, it strengthens an interested party's position
by requiring that the notice received be in substantial compliance with the section. Be happy to take
Representative John Burris
Unverified
2:48
any questions. Okay, I don't see anybody from the audience. Want
to speak for the bill, against the bill? Representative Kerr? Motion to the proper time. It's the proper time. All right, motion do pass. Motion is due pass. All in favor, say aye. Any opposed? Motion
Senator Jonathan Dismang
Unverified
3:08
carries. Senate Bill 597. Thank you, Mr. Chairman and committee members. Senate Bill 597, back in 1993, in an attempt to strengthen and validate the title of tax-delinquent property,
the legislature allowed the committee or the commissioner to use a confirmation process through Arkansas Code 28-38-301 as a way to make those titles more marketable. Because of the costs associated with the process, the commissioner has never used or never exercised that right. This bill, the bill's intent is to allow the redemptors, buyers, or donees of tax-delinquent properties to use that same confirmation process, and it actually adds a step of due diligence to that process
by requiring the property to be posted if they want to take advantage of the one-year time period, and if it's not posted, requiring a three-year time period. Be happy
to take any questions. Members, I don't see any questions.
Representative Nate Bell
Unverified
4:08
Representative Bell, are you recognized? It's my understanding that, looking at page 5 of the bill, that it actually
would allow some redemptions to go out to three years.
Senator Jonathan Dismang
Unverified
4:18
Is that correct? That's right. Sorry. Currently, I mean, what you have to keep in mind is that if a property is on the tax delinquent rolls and we're at this point in the process, that property's been delinquent for five years. That's five years of the owner of that property or interested party in that property not responding to notifications, not responding to the request to pay the taxes. And so, like I said, it would extend to three years if they choose not to post that property.
Of course, the encouragement is to post that property to get yourself in the one-year period, which then, in all reality, the property is on the state's books for six
years. Thank you. Anybody from the audience like to speak for the bill, against the bill? Most pleasure of the committee. Representative
Burris, you recognize? Do pass. Motion is do pass. All in favor, say aye. Aye. Any opposed?
Motion carries. Thank you, Mr. Chairman. Committee members. All right, members, without objection, we'll take HB 1760. CIC, Rep. Summers, seeing none, Rep. Summers, you're recognized to explain
Representative Tim Summers
Unverified
5:40
HB 1760. Thank you, Mr. Chairman and members. 1760 originated in Bentonville as an accompanying piece for the new Crystal Bridges Art Museum,
allowing us to develop an art and cultural district. Representative Burris, if you can see me in a cultural district, this legislation could affect any community in the state. It started out as something that we'd be able to give some tax credit for, both on the property ownership and on the income side for the artists that would fit the definitions on here, knowing that we wouldn't have much of an opportunity to do anything that would involve revenue.
There's absolutely no credit or revenue impact on it. All we're asking to do is authority to set up the district, which it explains how, in the bill here. And I'd appreciate a good vote. I've got Mr. Wills, who is in another room, so possibly he'd be back if I can't answer the question. And I do have a witness if you need. Very well. Representative Kerr, are you recognized?
I have a motion at the proper time, Mr. Chairman.
Representative Mark Biviano
Unverified
6:56
Mr. Representative Meeks, you recognize us? Mr. Representative Summers, just real quick, could you
Representative Tim Summers
Unverified
7:04
explain the benefits of the creation of these districts? What it does, it allows a community to have an artistic district where people would come in, and not just artists from the standpoint of what we typically think of as painters, but maybe people who make jewelry, clothing, furniture, any number of items like that. We estimate that the Crystal Bridges Museum is going to bring 250,000 people a year to Northwest Arkansas,
and that's going to help the tax revenues for all of us, and this is just a step to try to capture more of that opportunity. And again, this particular act can be used in any city or county that wants to pass the correct
Speaker 31
7:47
legislation. Okay, so these are city-sized districts? Districts. City,
Representative Tim Summers
Unverified
7:50
could be county, just whatever governing authority wanted to pass it. Okay. All right. Thank you.
Representative John Burris
Unverified
7:58
Thank you, Mr. Chairman. Representative Burris, you're recognized. Thank you, Mr. Chairman. More of a comment. Representative Summers, you've always been a multicultural man and very diverse.
It does go against the first thing you said to me, which the first comment you ever made to me was related to your underwear. I won't go through the whole comment, but since then you have impressed me with your You're open-minded in your diversity, so this is a bill that
I would expect you to run, and I'm happy to support it. Thank you. Thank you, I think. Does
anybody from the audience like to speak for the bill, against the bill? Representative Curry, you recognize for a motion.
I have to think about that motion there for a minute after that comment. Motion do pass, Mr. Chairman.
Members, if you can gather, collect yourselves and digest Mr. Burris' comments. All in favor, say aye. Aye. Any opposed? Motion carries.
Speaker 38
8:47
Congratulations, Representative Summers. You passed your bill. Thank you, committee. Okay,
members, without objection, we'll take HB 1737. Representative Burris, you're recognized to explain HB 1737. Thank you, Mr. Chairman.
Representative John Burris
Unverified
9:19
This is a bill for Representative Ingram. As you all know, I'm renowned for my kindness and my inability to say no. He bumped into me about ten minutes before this meeting and asked me to run this for him. Me being who I am, I said yes. So it is a bill that I do support. I think it's well-intentioned. I'll walk you through it briefly, and then I'd be happy to answer any questions. Essentially what the bill does is it outlines and dedicates revenue that could ever be generated from the streamlined sales tax agreement if it's enacted by the federal government.
A brief history on that. The streamlined sales tax agreement among the states is a compact. I believe there's probably close to about 30 states that have voluntary participants and members of that compact now, all in an effort to encourage the federal government to adopt streamlined sales tax, which essentially taxes sales on their point of delivery as opposed to their source of origin. It is a problem that requires a federal solution. Streamline would be the federal solution, but it has been pending before Congress for some time.
So this legislation simply says that if streamlined is ever enacted by the federal government, that the state of Arkansas will collect all of that money and it prioritizes it in the manner that it should be dispersed. The first priority is to reduce the grocery tax to zero. If it is not already done so, any revenue will reduce that grocery tax to zero. After that is met, any additional revenue that is received that is automobile-related will be directed to the Highway Department for construction and maintenance of our highway system.
Essentially, if you look in the legislation, the in-state and out-of-state sales of motor vehicles, motor vehicle tires, motor vehicle batteries, motor vehicle accessories, and motor vehicle services will all be dedicated to highway construction and maintenance. As you all know, the highway construction and maintenance has been a big issue for us this session. One of the big issues that I think the long-term solution to the problem is a dedicated revenue source out of general revenue on automobile-related products to actually fund our highway system.
Even the proposals that have been proposed this session are short-term and sunsetted and, by definition, temporary in nature. I think maintaining our highway system is a priority. It should be a priority for a long-term goal. This simply says that any new revenue generated from Streamline would be used to offset the loss of general revenue once we dedicate the sales of those items to highway construction and maintenance. And so essentially, again, what it does is prioritizes that spending, that new revenue, and uses it as an offset to dedicating general revenue to highway sales.
No guarantees that Streamline – or I'm sorry, to highway construction and maintenance. No guarantees that Streamline ever passes. In fact, it's kind of, you know, it's been a very ongoing process. There's people in this room that know a lot more about it than me, but it's something that's been discussed at the federal level for a very long time. Will it ever happen? I don't know, but this simply dedicates the revenue if it ever does. With that, I'll
Chair
Unverified
12:37
be happy to try to answer any questions. Representative Viviano, you recognize.
Representative Mark Biviano
Unverified
12:41
Representative Burris, could you repeat that again?
Representative John Burris
Unverified
12:43
i'm flattered and uh you should never uh you should never give me the opportunity y'all know how much i love a
microphone but i'm going to pass i think my explanation was so
good it doesn't need repeating the um all right in all seriousness i'll make sure i'm following here we're talking about reallocating money from streamline if it gets enacted and then we're going to prioritize that extra new money.
Representative John Burris
Unverified
13:14
I don't know if Mr. Leathers wants to come speak on this
or not. It's more of an ABC equation. The new money from Streamline would be used to offset the general revenue that would be lost from dedicating the sales tax on vehicles, tires, batteries, and accessories to highway construction and
Speaker 50
13:32
maintenance. I kind of followed you on all that. At what point does, why is the property tax
relief fund involved and why is the adequacy fund involved? Mr.
Representative John Burris
Unverified
13:42
Leathers could probably explain it better than me,
but my understanding is those are stipulations. That is a dedicated amount that has to come out of any sales tax, revenue generated. And so they're essentially cuts that have to happen constitutionally. Is that correct? Yeah, it's a law. Can you? I mean, do
you mind helping answer the question? Mr. Chairman, Tim Leathers from DFA.
Speaker 57
14:18
Tom Ashley is here who administers the fuel tax as well as the sales tax and is our streamlined expert, so he can answer a lot of the technical questions that I can't. Are you recognized? I think there was a question as to the money coming off the top for central services, and That is just the way the mechanics of our funding system works, and that 3 percent comes off with central services fund on the revenues that we collect, and that goes to fund the government.
Oh, the property tax relief and education adequacy and also excellence are funds that come off our special revenues that are collected as a part of sales tax, so that when we collect that 6 percent on non-food items, you have those percentages of the tax. There's 1.5 percent that's for educational adequacy, and there's 1.5 percent of that tax that is for educational
excellence, and those are special funds. And there's also that property tax fund, which when we did homestead property relief, and that was passed by the people, then there was a sales tax passed to fund that so that we pay the counties back for the $350 tax credit. So those are just kind of special revenues that are part of our
sales tax. Members, any questions? Members of Meeks, you recognize.
Representative Stephen Meeks
Unverified
15:56
Thank you, Mr. Chairman. Mr. Minority Leader, hopefully this won't be too tough of a question, but the question I have is, since the tax that we're talking about, the general overall tax scheme we're trying to get streamlined, yes, thank you. Since the streamlined tax kind of looks dubious at best
at this point, why bother passing a law that may be basically worthless to us at this point?
Representative John Burris
Unverified
16:26
I agree with you with the sentiment.
I think generally I think this is a concept that a lot of us around this table support, and that's prioritization of how we're going to spend our money. And I think it really more or less settles the debate in Arkansas of if it is ever enacted, you know, how we're going to spend it. And I think that's good. It's kind of we kind of set up the fence and then know that we can't ever cross it. We can stop thinking about it. I guarantee you there's somebody else out there thinking about how they're going to spend this money, and they're for a lot less worthy causes than highway construction and maintenance.
And so this really just establishes the parameters to say that this is how the money will be spent. I think it's a worthy goal so we can set up that fence and not worry about the dog getting out of the yard if it
Representative Mark Biviano
Unverified
17:17
ever happens. Okay. Thank you. Representative Viviano, you recognize. Thank you, Mr. Chairman. John, Representative Burris, and here are you. The money, 76% of the money is allocated to the Highway Department. In light of the couple other tax increase proposals that we're hearing about that is directed towards the Highway Department,
do we have a need to direct this money
Representative John Burris
Unverified
17:38
to the Highway Department? You know, I think so. I thought I saw Dan Flowers in the room earlier. I may have been in another room, but I think so. Even the proposed, you know, the one thing I would point out, and never miss this opportunity, is that so far the legislature hasn't increased the tax. We have started the process of referring two to the voters for approval. There's certainly no guarantees that either one of those will make it out of this building.
And even if they do, there's certainly no guarantees that they'll be enacted by the voters. But we will get, you know, the idea is to give them that choice. And even if all of that happens, then you're still looking at, based on the department's needs that they have said they need for the next 10 years of public construction and maintenance, you're looking at those ideas essentially only generating about half of the total, I think it's less than half, actually, of what they've actually said they need. So even if everything goes right and the voters choose to adopt whatever tax increases the legislature refers to them,
you're still looking at a pretty significant need, especially when you look at it through the lens of both of those. The diesel tax would be used to renew the Garvey bonds. The sales tax, if referred out and approved by the voters, is sunsetted to expire in 10 years. And so certainly long term, regardless, there
will be the need. Seeing any more questions, Representative Cowling, I apologize if you recognize the question. Thank
Representative Larry Cowling
Unverified
19:11
you. Aren't these being taxed right now through the Streamline that people are participating?
Representative John Burris
Unverified
19:17
Some of the items might be there's voluntary participants in Streamline. There's several hundred voluntary participants. You know, for instance, if you order tires off of a Walmart website, they were delivered. You know, there's probably a better example, but that would be taxed because Walmart is a voluntary participant. But overall, these items that are sold in-state are being taxed when it comes to motor vehicles, accessories and batteries and tires and things like that. They are being taxed. Again, basically what this bill does is say any collection through streamline will be used to offset the dedication of general revenue
to highway construction and maintenance. Thank you. Representative Kerr. I have a motion at
Speaker 68
20:01
the proper time, Mr. Chairman. Very well. Is
there anybody from the audience who would like to speak for the bill? Against
Speaker 69
20:10
the bill? Representative Leathers? He didn't tell me this. Speak against the bill. Mr.
Speaker 56
20:25
Chairman, Tim Leathers from the Department of Finance and Administration.
Speaker 57
20:28
Again, Tom Ashley is here who administers these taxes to make some technical points. From a revenue point, I want to make some points that the committee has already hit on from the streamlined process is that we currently have some people that are reporting and in that mix there's going to be some items that would qualify as highway-related items under this bill, and we would lose that if this ever becomes effective, whatever
they're collecting. I think there's 8 million total. I don't know what percentage of that would be, so there's some revenue loss there. But also I want to point out that we don't know when or if this is going to take place, but in our sales tax law, as you know, we are seeing a shift of our sales tax being more and more to these companies that are not collecting our sales tax or those purchases that would normally be subject to that. So that's been growing consistently, taking away, and what we had hoped with Streamline
is we can build that base back. The theory is that you have a broad base in tax and you can keep your rates low, and that's what Streamline would help the states with. it helps the businesses to put them on an equal footing in your local businesses, but it also would help us with the deterioration of our base. So from the standpoint of not being able to get that tax base back, and we're going to keep losing and losing and losing, and then turning around and giving it up as a special
revenue, we think at that point the legislature then ought to make the determination we've got to have equal and adequate schools and we got a road issue over here rather than having something that automatically hits at some point and we turn around and we're giving up that part of our tax pay so you know that's from the general standpoint Tom wants to point out some technical issues with this related to both our regular reporting and to streamline the the main issue with the regular reporting there
There have been several bills, and we've talked about several proposals like this that would require us to separately account for the sales that are highway-related, and retailers don't report that. They only report their total sales, and this would require us to have them do a separate report of those particular sales. So that creates an issue for us and also for taxpayers, because you could buy a quart of
oil at the gas station. You could buy a quart of oil at Walgreens or Wal-Mart or Kroger, and all of those people are going to have to separately account for that, which creates an administrative problem. It creates extra reports for the taxpayer, and I think Tom will tell you it would also violate the streamline as it exists today, if we have
to separately account for that. If there was another law on the books
that dealt with collecting out-of-state Internet
type tax that's also on this Committee's agenda
that directed those funds to go somewhere Would this bill trump that? Let me back up. I'm speaking with things that you probably don't have back, you haven't seen yet. There's also a bill that's going to be coming up in front of this committee today that attempts to collect some, I think it's referred to e-fairness, you probably heard.
If, hypothetically speaking, if that bill included a provision that any monies that were collected pursuant to the passage of the E-Fairness Act, if they were specifically dedicated or set aside, would this bill affect that? It seems notwithstanding any of the laws the distribution of revenue received that this kind of sort of would trump that same scenario. Well, we
would have to look at that particular provision.
Speaker 57
25:01
I've seen an amendment, I don't know if it's the one that's going to be here or not, but we had the same issues about accounting for that and had a lot of questions about that particular amendment because of the way it was written. But, you know, the general rule is you try to read the two enactments together in paramateria and make them work together. And only where they're absolutely in conflict, you know, would you say one repealed the other one and then the latter one controls? That's the general rule.
Members, without objection, I'd like to pass over this until we get a chance to speak to the bill sponsor, if that's
fair with you, Representative Burris. It is, and
Representative John Burris
Unverified
25:42
you kind of, in some ways, you stole my landing. I will say, you know, the point I was going to make in closing, I'll say this, and then we'll wait for Representative Ingram to run this bill. But I think generally it's good policy to dedicate revenue, especially when you're talking about increased revenue, to a particular priority that the legislature determines should be the priority of the state. With this bill, it might be highway funding. With another bill that we hear later, it might be something else.
But I think it's a good way to do business to say this is our priority and this is how we're going to spend increased revenue if we get it. And that's what this bill does. It's what some other legislation will do. And I think
it's a good way to do business. So we'll wait for Representative Ingram. All right. Very good. Thank you. All right. But without objection, let's hear Senate Bill 351. Reverend Calley, you're recognized.
Representative Larry Cowling
Unverified
26:50
Oh, no, it's okay. You recognize. Thank you, Mr. Chairman. Committee, this is a bill from the DF&A and all that where they're wanting to be able to collect penalties on land that's owed for tax delinquent land, and I have Mr. Leathers here and all that I can let him explain it a little bit more Tim you're
Speaker 57
27:26
recognized Mr. Chairman Tim Leathers from DFA we currently can if we have a delinquent tax when the land commissioner sells land if it's owned by the taxpayer then we can take part of those proceeds to cover his tax indebtedness but to do that currently we have to file a lawsuit an action in court to do this this would just establish us as one of the priorities in that distribution so that rather than filing a lawsuit for five thousand
dollars or three thousand dollars we can just file a claim based on our perfected lien with a land commissioner
to receive that payment. Tim does this deal does this create
currently if you have if there's a mortgage out there and you file your suit? Are there any issues there? Who are you trumping in priority if we pass this? There's no difference in priority. It
Speaker 57
28:26
just lets us make our claim rather than going
to court to proceed. It gives us no different priority. Okay.
Thank you. Representative Meeks, you recognize. Any idea on
Representative Stephen Meeks
Unverified
28:37
the estimates of how much this could save the state by not having to go through the court system to do
Speaker 57
28:44
this? No, we typically don't get many of these, and they're small amounts. But by the time we file the fees and everything, we've got a lawyer that could be handling a big tax case, and they're spending their time on this because we try to go after every penny available.
So I don't have an exact cost to it, but it would allow us to process a claim for refund and handle that if we're getting negotiations. all the things that our lawyers do, rather than going to court to do something
where it's always uncontested when we've done it at the past. At any rate, it's just a straightforward claim. So not necessarily
Representative Stephen Meeks
Unverified
29:19
a cost savings, but maybe administrative savings? It would be an administrative savings, and it
Speaker 83
29:23
would allow them, you know, any backlog that we have. You know, we've had some discussions and had
Speaker 57
29:29
bills in here to help us with our backlog and hearings and those sort of things
that allow us to spend more time on that.
Speaker 73
29:37
instead of filing lawsuits, we could just send the claims to the Claim Commissioner. It wouldn't take a lawyer to do
Speaker 38
29:43
that, where a lawyer has to file the lawsuit. I have a motion at the proper time, Mr. Chairman.
Does anybody from the audience want to speak for the bill, against the bill? Representative Meeks, let's hear your motion. Motion is due pass. All in favor, say
aye. Aye. Any opposed? Motion carries. While you're down there, Representative Cowling, you want to run SB 377?
Without objection, let's hear 377. This is a
Representative Larry Cowling
Unverified
30:09
bill from DF&A also and all to clarify some stuff, and I'll let Mr. Leathers explain this
Speaker 57
30:21
for you. Mr. Chairman, this bill is designed mainly to help the taxpayer and the professional community out there. Over the years, we've had several different provisions in the motor fuel, and diesel fuel, which is just a special fuel tax laws for different penalties.
And now they come under the Tax Procedure Act. So we've got all these old laws out on the code books that are now superseded by the Tax Procedure Act where they're all uniform. So this repeals all those things that are not uniform. and it also provides that we can provide some motor fuel tax information to bonding companies when we're pursuing our bond claim to make sure that's clear. Anybody from the audience here to speak
for the bill, against the bill? If not,
what's the pleasure of the committee? Representative Burris? Do pass. Motions do pass. All All in favor, say aye. Aye.
Any opposed? Motion carries. For purpose of counting, without objection, let's hear SB 569.
Representative Larry Cowling
Unverified
31:30
Thank you, Mr. Chairman. This is another bill for them that is just to amend the code for clarifying of the saltwater disposal system tax credit, and I'll let Mr. Leathers explain that. Mr. Chairman, we
Speaker 57
31:45
currently have a credit for saltwater disposal systems, and Tom will
help me. capped at $370,000, and what happens is that the taxpayers will wait until the end of the year, and they'll be claiming this throughout the year on their forms, and we have to divide it up proportionally at the end of the year. So we've had taxpayers will be taking this, and they may have a million dollars outstanding throughout the years where they haven't had payment, and then we have to go through a a refund process on part of it, then sometimes they'll owe us a bunch of money because they've been taking it.
And recently we had someone that was almost going bankrupt and owed us a million dollars because they had taken this in advance over the cap. And we saw immediately, well, this has been a good game for them to play where they operate off the state's money for a year, but we can't run that risk and have a taxpayer out there where we have them owing us a big liability where they've not been paying their taxes all year and wait until the end of the year,
and then they can't come up with the money. So this just makes them get the credit, they apply at the end of the year, and we divide that $370,000 up among them proportionately. Representative Burris, recognize. Thank
Representative John Burris
Unverified
33:08
you, Mr. Chairman. I don't want to wade off into too much unrelated material matter, but I do have
Speaker 90
33:14
a couple questions about the tax credit itself. These are people that own the wells that qualify for the credit? I think they're maybe the owners and the producers on the wells,
the people that are actually producing and doing these saltwater disposal operations. How many of those operations are
Representative John Burris
Unverified
33:31
there in their state? Not many. About a dozen. Yeah, and so what's the intent
Speaker 90
33:36
of the credit? You know, it was done so
Speaker 57
33:41
long ago, it's hard to tell. I think it was to somehow give them some kind of help in disposing of that, but I don't know.
Representative John Burris
Unverified
33:48
So the $375,000, that's a pool of money that's divided among people that apply for the credit? Yes, sir. It's a credit against their tax.
Speaker 90
33:57
So essentially you're talking about probably a $30,000? Yes, sir, depending on the proportion by their tax that they pay. Well, the only reason I'm asking is as well as a rather lucrative. Yes, some
Representative John Burris
Unverified
34:09
of them are. I didn't know there was a tax credit out there for
Speaker 57
34:13
such a lucrative business. Yeah, there are lots of things associated with those and the chemical process and the chemicals
they take from that. So it's not just strictly disposal because they're taking that and getting chemicals from that. Right, yeah, and
Representative John Burris
Unverified
34:26
then making a lot of money off everything they do.
Yes, sir. How long, last question, but how long, you say this has been a long time. This has been
Speaker 90
34:33
a long time. Are you talking several decades or? Tom says 1959. That's interesting. It might be one you want to repeal at some point. Well, you know, one term left after this, so I'm going to have to look into that. Then
Representative John Burris
Unverified
34:48
you'll find out who's actually getting those. Well, no kidding. I mean, I could probably name you a few, but anyway, I'll have to look into that. That's something I did not
know, so thank you. How much you spent annually on this?
Speaker 57
34:59
$370,000, and that won't change. It'll just be that rather than they're taking that percentage credit all year and then we get to the end of the year and we say, whoops, you didn't pay us enough. You owe us a million dollars. You only got this much credit when we divide it up proportionately. This way we'll get to the end of the year and then we'll just pay them what we owe them out
Representative Mark Biviano
Unverified
35:23
of the credit. Representative Bibiano, you're recognized. Would anybody
Speaker 57
35:26
be opposed to this bill? There might be a business that's been, in effect, operating off the state's money.
that might be, but no one has said anything in the process. Not the natural gas companies? They haven't said anything. I don't know that they do any saltwater
Representative Mark Biviano
Unverified
35:42
disposal. Yeah, I think they do, actually, but
okay. Tom says they've started. Anybody like to speak for the bill, against the bill? It was the pleasure
of the committee. Representative Burris, moves do pass. All in favor, say aye. Any opposed?
motion carries you know again I'm gonna comment that the group I really want us to look at all these things that we got on the books in the in the interim we you know we we have a long list of exceptions and credits and things that are out there and we try to see where we are from a broad standpoint of some of our other rates I really would like for our group here to take that in a lot of consideration
over the next 12 months just seeing what we're doing all right
without objection let's hear HB 2103 seeing none represent Harris are I recognize to run the bill for Representative King. Thank
you, Mr. Chairman. With me today I have Sylvester Smith from the National Federation of Independent Businesses.
But first, I have an amendment to this bill to add co-sponsors. Okay.
Members, you already have the amendment. What is your pleasure on the amendment? Motion to do pass to adopt the amendment. All in favor, say aye. Aye. Any opposed? Amendment's adopted.
Representative Harris, you're recognized to explain
your bill as amended. All right. I also have some information to be passed out on this bill. Okay. House Bill 2103. First, I wanted to make note that this bill will have no effect on general revenue.
We are presenting the bill on behalf of the 3,600 members of the National Federation of Independent Business in Arkansas. At this moment, there are 60,000 Arkansans who receive unemployment benefits, and the Unemployment Insurance Trust Fund is more than $340,000 in debt, a million in debt. House Bill 2103 establishes a market-based solution which would help ease the pressure on the unemployment insurance trust fund by putting Arkansans back to work. HB 2103 would establish a $1,000 unemployment insurance tax credit for any employer who
creates a new job and fills it with an individual who has been receiving unemployment benefits for at least eight weeks. The credit would be applied to the employer's unemployment insurance tax obligation at a rate of $250 per quarter for each quarter that they keep the newly hired person unemployed. By the time the first $250 credit is applied, the former beneficiary would have been working and of unemployment for three months. This program creates a tax credit and not a rebate,
so an employer could not receive a benefit which is larger than his obligation to the Again, this program will have no effect on general revenue and will be revenue positive in the Unemployment Insurance Trust Fund. And if you have, I'd like a, I think this is a good bill, I'd like it to get out of committee, and if you have any questions, I have Sylvester
Smith to answer. to answer so to make sure understand if if if a business hires someone who is
currently drawing unemployment then that business would get a credit towards paying into the fund in the future and that amount the credit is to 250 to her quarter to a 50 a quarter total of a thousand dollars it could never be over That's correct. Okay. The maximum is about 451, so this would be a couple of months. I'm trying to
Speaker 109
39:50
do the math in my head on what savings that the fund would have.
The savings, if I'm not mistaken, is $13,560 per person. Okay. And also understand that
there's provision in the bill that, you know, you're basically going to need to get the check off from the federal powers to
be. And if you get that, then it'll be implemented, if not. That is correct.
And what I passed out here is the state of Michigan has also done the same thing, the tax credit.
So it is something being implemented in Michigan. Representative
Bell, recognize for a question. Motion
Representative Stephen Meeks
Unverified
40:42
to proper time. Representative Meeks. Thank you,
Mr. Chairman. One concern that I have for this bill is you said that it takes effect after they've been unemployed for eight weeks. So does this not create preferential treatment? You know, if I've only been unemployed three weeks and I'm competing against someone that's been unemployed nine weeks, then an employer is, you know, maybe going to hire that one versus the other.
I'm going to refer that question to Mr.
Speaker 116
41:11
Smith. Yes, sir, Representative Meeks. That's exactly what it does. We consulted with the Department of Workforce Services as we were coming up with this concept. And one of the concerns that they had is they wanted to make sure that this helped the people who really need the help. They've done some studies, and I've actually seen some anecdotal evidence that the longer you've been out of the job market, the harder it is for you to get a job. So we wanted to help those that really need it the most to get an opportunity and really get some consideration.
Representative Stephen Meeks
Unverified
41:39
Has this, I know you've got the information from Michigan, has this been implemented in any other states, and what kind of success are they having, or are we going to be kind of a test bet here? No,
Speaker 118
41:50
sir. Michigan has a similar concept in which they do an unemployment insurance tax credit, but this is an entrepreneurial and creative approach, and Arkansas would be the first to establish this exact
Speaker 119
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program. But, you know, Arkansas has a history of being entrepreneurial, and we believe that we have an opportunity to take a leadership role on this very significant challenge of having 60,000 Arkansans who are currently unemployed, many of them who have been for a year or more.
Right. Okay. All right. Thank you. Representative
Representative Mark Biviano
Unverified
42:19
Bibiano, you're recognized for a question. Thank you, Mr. Chairman. Representative Harris, is there any qualification for the number of employees? Do you have one employee? Do they qualify? The
Speaker 119
42:30
bill authorizes the Department of Workforce Services to promulgate rules and regulations in which they would have discretion to determine if there were any limits placed on the number of employees that a company could have. The only stipulations that they asked us to put into the actual legislation was that if an employer was deficit-rated, meaning that in the eyes of the department they've been a bad actor, they would not be able to participate in the program.
And also if an employer had a debt to the fund, they would not be able to participate. But, you know, we see this as if you've been talking to small business owners, you know they're running scared. Many of them are not inclined to take a risk right now. And the important thing is to participate, you have to create a new
Speaker 116
43:15
job and fill that job with someone who is currently on unemployment and
Representative Mark Biviano
Unverified
43:19
has been for two months. We currently have a number of programs in the state of Arkansas that provides some tax credit relief for creation of jobs with the Equity Investment Fund and Accelerate Fund.
Are you sure we don't have something like this already in place, or is this totally new? This
Speaker 119
43:35
is totally new, and the hope would be that someone who was taking advantage of one of those programs would fill that job with someone that's been on unemployment for eight weeks and more so that they can start receiving benefits on the fund and create a concept in which that employer starts paying taxes into the fund after the tax credit ends. Thank you. Now,
to be clear, this is not a tax credit in the sense that it's a tax credit.
No. It's just a credit that you don't pay into the trust fund. That is
Representative John Burris
Unverified
44:08
correct. Representative Burris, we recognize. Thank you, Mr. Chairman. I saw your amendment that's now part of the bill. It's got some co-sponsors on there. This isn't one of those last-minute amendments with a
bunch of wrong names, is it? No. One unique name I found on there was Representative Nichols. And I'd like to just make a statement to something he said yesterday was the employees do not pay into the unemployment.
It's the employer's responsibility, and right now, I think we're all indebted, so hopefully my program would be, but we're all indebted to pay this debt that we owe to the federal government, and so I think any tax credit that our businesses can get will definitely be a big help to, it's a very good pro-business bill. Well, it's
Speaker 90
44:54
certainly an eclectic group of co-sponsors. Yes. Thank you. Mr. Smith, do
wash, where does this work out in the wash?
Do you have any numbers that you can share with us that if we're giving up a little, paying in, that we're saving more? Where does it end
Speaker 118
45:15
up? Yes, sir, that's a great question. If I could just give you an example of how this would actually work. Let's say an individual has been on unemployment for eight weeks. The unemployment trust fund issues them a benefit of $280 per week, and many people are on, the average person is there for 17 weeks. Had somebody like that remained on unemployment, the trust fund would be out $2,520 over two quarters.
Under this program, the trust fund would only be reduced by a $500 credit to the employer over that two-quarter period. So it's a savings of $2,000, just over two quarters. And if you look at, as I said earlier, many people are receiving the benefits for a year or more. Over the course of a year, this employer who got this credit for
Speaker 119
46:06
creating a new job and hiring such an individual would save $1,000. But the state would save $13,560 because we're paying out an average of $14,560 a year.
When I say the state, excuse me, I mean the fund. And it's important to note that this is an employer-financed program. This is the employer's money, and it's administered by the state. So all we're asking is to help us implement this entrepreneurial-type concept so that we can induce our fellow employers to create some new jobs and fill them
Speaker 118
46:35
with people who are currently receiving benefits to save the fund money. Representative Colin Smith,
you're recognized for a question. Thank you, Mr. Chair.
Representative Colin
Unverified
46:49
So, earlier when you made a statement about, or let's look at line on the first page, on line A, under number one, where it says jobs created on or after July 1st, if you have not replaced employees, because business is bad. let's say there's five, six employees, could be a lot more, could be less. Those replacement positions after July 1, 2011, would qualify for this program under this tax credit.
Representative Colin
Unverified
47:31
do you mean? Well, you've not hired people for those jobs. It will be something that you're going to do someday if business picks back up, if you can afford to hire them, whether, you know, they'll be on unemployment. Let me tell you, those that were there, they're either going to be on unemployment or they found another job. But when those positions are filled, can you just explain how this will take effect in a situation where you just can't hire employees back until there's a time that you can hire them back
or that you get help in this situation so you can
Speaker 118
48:07
hire them back? Yeah. Now, you're not speaking in terms of people that I've had working for me in the past and laid off, are you? Are you just saying a situation which I've had to reduce and I'm looking at possibly increasing? From my interpretation of your question, this would induce them to possibly take that risk. Let's say I
Speaker 119
48:24
was a 10-person firm. I've now cut down to five, and business is picking up, and I'm thinking about going up to seven. And this bill would hopefully induce me to go ahead and get back up to seven, add those two new jobs,
and then fill them with people who have been on the fund receiving the benefits. And, again, that reduces the financial pressure on the fund. Okay. Am I answering your
Representative Colin
Unverified
48:48
question? Well, yeah, and you could answer it two ways. I mean, you could give me the scenario of, well, it's not going to work like this, but it will work like this. And I think that any help on that unemployment cost to that business owner, because I am one, might encourage them to hire and maybe put someone back to work.
So that's why I said you could answer it on two ways, and you did answer one side of that. And
that does help me. Thank you, Mr. Chair. Representative
Representative Homer Lenderman
Unverified
49:21
Linderman, you're recognized for a question. Thank you, Mr. Chair. I actually have about three questions. On line 34 on the front page, would you explain to me for
Speaker 118
49:31
any length of time? Yes, sir. That's another amendment that we added due to the concerns that the Department of Workforce Services had.
They're afraid that some employers, some, I guess, quote-unquote bad actor employers, would lay someone off and then hire them back six weeks later as a way to try to trick the fund out of the tax credit. So we wanted
Speaker 119
49:51
to make sure that no one was playing games. We wanted to make sure that these were legitimate jobs that they're creating. and that they're not trying to monkey around with the system by having me work for them, lay me off for a couple of months, and then come in and try to apply for the credit.
Speaker 118
50:10
How long is any length of time? No, it's
Representative Homer Lenderman
Unverified
50:14
two years. I cannot have worked. It says has not been employed by the employer for any length of time during the previous two years. How long is
Speaker 118
50:22
any length of time? If I work for you for one day in the past two years, then you cannot create a new job,
Representative Homer Lenderman
Unverified
50:30
put me in it, and seek the credit. So they would have
Speaker 119
50:34
to have been employed for two years continuously? No, sir, no, sir, no. This specifically speaks to you, a situation in which I used to work for you,
and then you want to bring me back. It doesn't relate to an employee that has never worked for you. Okay. This deals with layoff situations. We don't want you to, if I'm working in your company, we don't want you laying me off and bringing me back three months later and trying to seek the credit. Now, if you lay me off and three months later you hire someone else that's never worked for you, then you would have an opportunity to get the credit if you are legitimately creating a new
Representative Homer Lenderman
Unverified
51:11
job. Okay. I kind of am not really following our logic here, how we reduce a debt that we have by not paying as much into it,
so I'm having some problems with that. But I've already seen a credit here. I'm a farmer. I do seasonal work. My neighbor across the road, we get together, and he says, hey, you hire my farm worker, I'll hire your farm worker, and we'll save us $1,000 a piece. We'll hire them back. Didn't hire the same employee. He didn't hire the same employee. But you mentioned the term, I believe, monkeying with a system. I think this bill would make that system easy to monkey with, in my opinion. If I may respond to that,
Speaker 118
51:51
I believe that creative criminal minds will find a way to monkey around with just about anything. What we're trying to do is find ways to keep the less creative
Representative Homer Lenderman
Unverified
52:04
criminal minds from monkeying around with it. I didn't know I had a creative criminal mind, but anyhow. But I do have some concerns with this at this time. And so anyhow, I'm
not sure you laid my fears to rest,
but thank you for your response. Representative Bell,
Representative Nate Bell
Unverified
52:30
you're recognized for a question. Kind of go a little further with what Representative Colin Smith brought up earlier. I operate a construction business. Currently, the construction market has been terrible. I'm down about four to five employees from my normal workforce. The language here appears to say for each employment position created on or after July 11, 2011.
I'm not certain that this language would permit me if I get in the position to start to build my business back up to actually take the credit if I hire a new person because I'm not creating a new position. That position has existed in the past. How are we defining new position here? I think I have some concerns about that. If
Speaker 118
53:21
I may, that's a legitimate question. they're going to look at the number of positions you had on your roster in the previous quarter.
Speaker 119
53:30
And if you add positions in the current quarter, the quarter that you're paying the tax for, then you can apply the credit. So we're basically looking at a quarterly look back
Representative Nate Bell
Unverified
53:38
as opposed to a three- or four-year look back? Yes, sir. It will be a quarterly look back. Thank you. I think that answers my question that I had, and I think it goes more directly to Representative Colin Smith as well. Thank you.
Thank you. Okay, is there anybody, Mr. Curry, recognize? I just had a quick question.
How is this, how are they going to know that this is a new position? I mean, do they go by looking at your current number of people that you send in your quarterly reports, and it shows a new position on
Speaker 118
54:20
there? Yes, sir. Okay. They'll look at, to say, in quarter two, you had 10
Speaker 119
54:25
employees, and now you're filing your form at the end of quarter three, and now you have two additional employees.
Speaker 118
54:31
Right. So then you will have created two jobs over that past quarter.
Okay. Well, let's not hire any more people that I need. I just need one.
Well, yes, sir, one more. Thank you very much. Is there anyone from the audience who would like
to speak for the bill, against the bill? If not, what's the pleasure of the committee? Representative Bell, you
recognize. Move to pass as amended. Members, the motion is due pass as amended.
All in favor say aye. Aye. Any opposed? No. Okay. Motion carries. Is there anybody
else wanting to run a bill today that's in here? I'm not going to read them, so one clarification, and I want to make sure that Mary Carol, when I say this right, any bills that you want to refer to interim study, if you're the sponsor of the bill and you also sit on the committee in which your bill resides, right?
No, you can refer the bill to the committee that you're a member of. No, you can refer. I tell you what,
Speaker 147
55:52
Mary Carol, why don't you tell everybody how to refer a bill to the interim study? If you want to refer the bill, the first thing you need to do is withdraw the bill from current consideration, then take the bill to the bill clerk in the House and tell her that you would like to refer the bill to the committee that you are a member of.
And as long as there is language in the bill that makes it germane to the committee that you're a member of, it will automatically be referred as an interim study to the committee. And you will not have to go through legislative council after the session's over to have your bill referred. Has everybody got
that? If not, just follow up with questions later. Again, we're going to adjourn, but we are going to come back at whatever time that is read on the House floor today to meet again.
So I think we are going to take up the e-fairness. Representative Viviani, have you a question? Anybody that's got an issue there, you'll get with Mary Carol. I will stand adjourned.
Agenda
Call to Order
SB594
SB595
SB597
HB1760
HB1737
SB351
SB377
SB569
HB2103
Adjournment
Documents
No documents posted.
Speakers
Senator Jonathan Dismang
Unverified
Representative Davy Carter Chair
Unverified
Representative Nate Bell
Unverified
Representative John Burris
Unverified
Representative Tim Summers
Unverified
Representative Mark Biviano
Unverified
Speaker 31
Representative Allen Kerr Chair
Unverified
Speaker 38
Chair
Unverified
Speaker 50
Speaker 57
Representative Stephen Meeks
Unverified
Representative Larry Cowling
Unverified
Speaker 68
Speaker 69
Speaker 56
Speaker 83
Speaker 73
Speaker 90
Representative Justin T. Harris Chair
Unverified
Speaker 109
Speaker 116
Speaker 118
Speaker 119
Speaker 124
Representative Colin
Unverified
Representative Homer Lenderman
Unverified
Speaker 147