House Revenue & Taxation Committee
Video
Transcript
Bills discussed (4)
| Bill | Title | Sponsor | Status |
|---|---|---|---|
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HB1369
· 3 mentions in chapter, transcript
Matched: “HB1369”
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Pre-2017 bill | ||
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HB1429
· 2 mentions in chapter, transcript
Matched: “HB1429”
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Pre-2017 bill | ||
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HB1012
· 1 mention in transcript
Matched: “…missed a few. Representative Smith, are you prepared to run House Bill 1012? He's not, not running it. Representative Shepard, HB 1369.…”
|
Pre-2017 bill | ||
|
SB217
· 1 mention in chapter
Matched: “SB217”
|
Pre-2017 bill |
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Representative Davy Carter
Unverified
0:00
All right, I'm going to read the bills. I think we do have a few that will be presented today. I'm going to read them all off just in case I missed a few. Representative Smith, are you prepared to run House Bill 1012? He's not, not running it. Representative Shepard, HB 1369. Okay, you are recognized to explain your bill. And I would remind if anybody in the audience expects to speak for or against any bill,
so if you'll just sign up over here on the sheet, it would be very much
Speaker 21
0:40
appreciated. Representative Shepard, you recognize. Thank you, Mr. Chairman. Thank you, members of the committee, for your
time. I'm here today on behalf of speaking on behalf of House Bill 1369. The purpose of this bill would create a sales tax holiday for certain items, including clothing under $100, clothing accessories under $50, and then certain school supplies.
And I'd like to begin by thanking Representative Wright, Representative Vines, and Representative Bell, who have worked with me on this bill. and we feel like it's a bill whose time has finally come in the state of Arkansas. I understand that this is a bill that has been brought before the House a number of times through past sessions. You should have a copy of the fiscal impact statement. The total impact of the state in fiscal year 2012 is just over $2.1 million.
I thought I'd share a little bit about our motivation in bringing this bill. One, every state around us has some form of sales tax holiday. And certainly in my district in South Arkansas, and I'm sure this is the case in many other districts around the state, when that sales tax holiday rolls around, many of my constituents leave to go to Monroe or Shreveport or Bossier City, Louisiana, or Dallas, Texas, for that matter, to take advantage of the sales tax holidays that those states enjoy.
Arkansas, being a small state, I believe virtually every citizen in the state is within a two-hour drive of an adjacent state. And as I mentioned, every state around us has a sales tax holiday. We believe that this bill is targeted to help families. It's targeted to help students with the cost of school supplies. And then it also is designed to protect Arkansas businesses.
With so many dollars flowing out of state, we hope that this bill, should it be enacted into law, would serve to encourage people to shop within the state of Arkansas. And certainly I'm under no illusion that every person in my district would shop in Eldorado or Union County should this thing be passed. But I think what it would give is an opportunity for people to shop in the state of Arkansas. And I personally would rather see people shopping in Little Rock or Hot Springs or other areas in the state
as opposed to leaving the state to do their shopping. With regard to the fiscal impact, you know, I think myself and the other sponsors believe that this will be offset to some degree by the fact that when people take advantage of these savings, that they will be buying other items. As I said, it's targeted to certain items of clothing and then certain school supplies. And then additionally, as people travel to take advantage of these sales, that there
will be additional revenue generated through lodging taxes, food taxes, and the like. Thank you, Representative Shepard. Don't see any questions.
Chair
Unverified
4:05
Link, you're recognized. Thank you, Representative Shepard, for bringing this to
Representative Kelley Linck
Unverified
4:12
us. I'm not a big fan of tax holidays, but I do appreciate this bill,
and I can see that there's some good merit to it. You and I have talked a little bit about it, and I want to bring it to the attention of the entire committee and to the audience regarding the timing of your bill. If I understand right, it would be the
Speaker 21
4:37
first weekend of August? That is correct. And what's your reasoning for that? Several of the other states' tax holidays are set for that particular weekend. I know Louisiana's is set for that weekend. I believe Tennessee and Missouri's as well.
I believe those three as well as maybe Oklahoma. Some of the others are set for that weekend. And so it seems with our motivation in part being to encourage shopping in Arkansas and to protect and keep our dollars in the state, that it makes sense to schedule our holiday to oppose those other states' holidays. But I certainly appreciate your thoughts, and as you and I have spoken before, it's something that I did take into consideration. Well, to go ahead and ask the
Representative Kelley Linck
Unverified
5:16
question for the benefit of the whole committee, and I've got two reasons for this.
Would we fare better having it on a different weekend than all the other states do to bring their people to us and play the same game, be the competitive game, and actually hopefully build the market, if you will, to our businesses from other states' people? And secondly, as you know, I'm sitting beside my representative Linderman here. We've discussed back-to-school issues, and I feel like a tax holiday after school starts would keep the mentality of the parents to where they're not trying to get their kids back in schools. and hopefully continue the travel through the summer as long as possible mentally.
I'm not thinking back to school at the 1st of August. I'd like to see this holiday move to
Speaker 21
6:06
a later time in the month. I certainly understand those concerns. And, again, I guess from my viewpoint, in many ways this bill is driven by what's going on around us, And, therefore, I would tend to believe we should set it for that first
weekend in August. But I do appreciate
Chair
Unverified
6:22
the question and the point. Representative Cowling, you're recognized.
Representative Larry Cowling
Unverified
6:27
Thank you. You said paying for this. What did you say again how you
Speaker 21
6:35
think we'd be able to afford this? Well, the fiscal impact in 2012 is 2.1. And certainly that falls within the anticipated increase in revenue that's projected for the upcoming fiscal years. But beyond that, with regard to what this bill hopefully would encourage is many people travel to take advantage of these holidays.
And I think it's been well documented even in some of the literature that may be in opposition to these holidays that people get out, they travel, they shop, they go out to eat, they buy other items, and that we believe through, as they take advantage of these holidays, through shopping, eating, traveling, that very likely that that will generate additional revenues ancillary to what, to the loss of revenue with regard to clothing or school supplies.
And furthermore, with regard to any savings that an individual may enjoy, if they're not paying sales tax, then that's money in their pocket, and that's going to be spent somewhere else very likely. And so it's our belief that that revenue would be obtained through other means. I guess it's kind of a statement and all,
Representative Larry Cowling
Unverified
7:54
but with the price of fuel going up as much as it's going up, and don't you think that it may cost more to go somewhere else to shop
Speaker 30
8:06
and just stay here in Arkansas and shop? That's true, and that's certainly a great point and
Speaker 21
8:13
one that I failed to mention. You know, one of my motivations in bringing this bill forward is that there are many people in my district that are not in a position to take a weekend to go to Dallas or to go to Monroe or Shreveport, and I believe that they should have that same opportunity to buy their clothing and their school supplies at a reduced rate. And so I certainly understand that. You know, to be quite honest, you know, a tax holiday is probably not something that would be at the top of my list,
but I think it's something that because of the fact that the states around us have it and because of primarily due to that fact, I think it's something whose time has come here in Arkansas. So I think that's a great point. Rising fuel prices, it may hurt people's ability to travel, but I think that that may be all
the more reason to provide that type of a relief here in the state of Arkansas. Thank you for this good bill.
Representative Nate Bell
Unverified
9:13
I really appreciate you working with those of us who had similar bills and allowing us to combine the bills to bring what I believe is a good product here. I wanted to make one additional point, I guess, as much as anything else about this bill. Not only does this bill allow our working families to have some tax relief, but it also allows our classroom teachers who are purchasing large volumes of school supplies for their classrooms to also have some additional relief, and I believe it's an important step in this bill
that's somewhat different from some previous bills. So I just mainly wanted to make that point, that I appreciate your willingness to work with us on it. Thank you,
Speaker 21
9:52
Representative Bell, and I certainly appreciate your work as well. And as I said in the opening, this was kind of
the culmination of a number of representatives who came together to try and bring something that we felt like we could all get behind. Mr. Chair, I have a motion to the proper time.
Chair
Unverified
10:09
Very well. Representative Kerr, recognized for a question. Thank you. Thank you, Mr. Chairman.
Representative Allen Kerr
Unverified
10:20
bill. Just a brief question. You've probably got younger children than I do. Do they still publish supply lists prior to school starting like they used to? That's
Speaker 21
10:32
correct. In fact, I believe in Eldorado, although my wife primarily takes the kids shopping, so she would find it entertaining that I'm talking about that. But at El Dorado, many of the stores actually have copies of the supply list.
And so you can go, and depending on what district you're in, you go, you get a copy of the supply list, and then,
Representative Allen Kerr
Unverified
10:56
you know, you do your shopping based on that. You think
Speaker 21
11:00
you'd have those lists by the first weekend in August? Is that? I think that I would see no reason why you couldn't, because I think the supply lists tend to be the same year after year for that appropriate grade level. And then furthermore, if we have a back-to-school tax holiday set, then certainly I think it would encourage districts to work with retailers
to make sure that that is available in a timely fashion. Okay. Thank you, Mr. Chairman. It's a good bill.
Representative Homer Lenderman
Unverified
11:35
Thank you. Representative Linderman, you're recognized. Thank you. A couple of questions. You mentioned other states also have this, and I notice you've got a $100 cap on single items? That's correct. Okay. Is that similar to what other states
Speaker 21
11:47
do? There are other states that do provide for that cap.
You know, one of the reasons we included that was to really try and target the relief that we're providing. You know, we didn't want this to be something where people could take advantage of to go, you know, buy a fur coat or whatever. We want this to be something that is providing needed relief. And other states do have caps. I'm looking through
Speaker 20
12:16
a summary. There are several other states that do provide for that same $100 cap on clothing. What I
Representative Homer Lenderman
Unverified
12:22
was actually thinking of is, you know, anymore we're doing so many computers and
you guys are more technologically advanced, I'm sure, than I am, but there are so many of the things that we use that would exceed that level. That's kind of where I was thinking about that. And was, okay, and my next part of the question is retailers, how are they going to, I mean, is this a big problem for them
Speaker 21
12:52
to actually exclude these items? Representative Linderman, Polly Martin with the Arkansas Grocers and Retail Merchants Association
is here. They're in favor of this bill. And certainly there would be some work on the retailer side of it in implementing it. But as I said, their association is in favor of it. And I'm sure she could, if the committee so chooses, I'm sure she'd be glad to address the practical
issues of implementing it from the retail side. Thank you. Thank you, Mr. Chairman. Representative Meeks, you recognize?
Representative Larry Cowling
Unverified
13:30
Very well. Representative Cowling, you're recognized. If you're talking about, you've got an amendment on here that says emergency clause will become
effective by the approval of the governor, and you're not talking about August, so why
Speaker 21
13:52
such a rush to put it in effect? Representative Cowling, that was something that the Bureau suggested to me that would assist DF&A in going ahead and implementing the changes.
There are some things that would be required on their end administratively in preparation for this year. And so that was recommended by the Bureau.
And so when I amended to add some co-sponsors, I likewise made that amendment. All right. Thank you. Representative Love, you're recognized. Thank you,
Representative Fredrick J. Love
Unverified
14:22
Mr. Chair. Matthew, I want to thank you for this bill because I believe it's a good bill. Me and Mr. Biviano are down here laughing.
He says, is this finally a tax bill that you can vote for? And I said yes because I believe that it helps the working families of Arkansas and you'll get my full support. Thank
Representative Davy Carter
Unverified
14:48
you for the bill. Thank you, Representative Love. I certainly appreciate that. One quick question. So this is items less than
Speaker 21
15:00
$100, correct? That's correct. And okay. And
I wanted to clarify that, that this is with regard to clothing items less than $100,
clothing accessories less than $50, but then with regard to the school supplies, there is no maximum or cap on the per item value. And, you know, one of the things that may have been raised with regard to these definitions, we use the term and clothing, clothing accessories, in order to comply with the streamlined sales and use tax
Chair
Unverified
15:35
agreement. Okay, thank you. Representative Lenderman, were you? Okay, you're recognized.
Representative Homer Lenderman
Unverified
15:41
My colleagues had to help me out. What I was thinking of a while ago was like a Kindle. I think those are $160 or $70 or something like that, and computers. There's no cap on those, and will they be included as these
Speaker 21
15:57
items? We would need to look to the agreement. At one point, we had talked about specifically including computers. We did not include that. Again, we were trying to be – we tried to keep in mind the fiscal impact and make sure that this was something that was manageable.
So at this point, it's my understanding computers would not be included. Thank you.
Chair
Unverified
16:24
Representative Westerman, you're recognized. Thank you, Mr. Chairman. I
Representative Bruce Westerman
Unverified
16:28
just have a couple of questions regarding the details of the bill. On the items that have the limit, if an item is purchased that's above that limit, do you still get credit for the dollar amount up to the limit? My understanding, based
Speaker 30
16:42
on how it's drafted, is that it would just not be –
Speaker 21
16:47
that would not fall into the category of exempted goods, so therefore the full sales tax would
Representative Bruce Westerman
Unverified
16:54
be – would accrue. And then the other question, does this include items such as athletic equipment?
Speaker 21
17:04
It does not. I looked at the streamlined sales and use tax agreement, and many of these definitions are somewhat broad, but there is a specific category with regard to protective equipment and athletic equipment. And again, in earlier discussions with regard to the bill, there was some discussion of
including that. We specifically decided not to include that. So it's my understanding at this point that
Representative Lane Jean
Unverified
17:36
that would not be included. Thank you. Representative Jean, you're recognized. Representative Shepard, I've noticed a lot of these sales tax deal with just the state sales tax. This also deals with the city and county local sales
Speaker 21
17:49
tax? That's correct. There would be some fiscal impact to the
cities and counties. Okay. Thank you. All
Representative Davy Carter
Unverified
17:58
right. Seeing no more questions, is there anybody in audience that would like to speak for the
Chair
Unverified
18:05
bill? Is there anybody that would like to speak against the
Speaker 68
18:30
bill? You recognize? Ms. Chairman, Tim Leathers from DFA, in being consistent with our testimony on bills
that were not included in the balanced budget, and this bill does have a revenue impact as pointed out, both state and local, and it is $2.12 million in 2012 and $2.18 in fiscal year 2013, and, you know, that's not contemplated within the balanced budget, as we pointed out in other bills. Also we have sent some information to several of the members in regard to tax holidays for
varying purposes. You will see a lot of them. I want to, you know, compliment Representative Shepard, and he has drawn his in a concurrence with what we would expect to do within the realm of trying to be as clear as we could, and he's done a good job of that in providing the implementation date so that we'd have time to do that as we talked about. But I also want to point out a couple of things that apply generally to these that from an economic standpoint that, you know, politically they were in big favor at one time, we're
going to do this, and this helps out our local folks. From an economic standpoint, you know, the literature is looking at hindsight after everybody has all of these things or have implemented them that what you're really doing is you're shifting sales within the state from one time to another, and you are exempting items that are not for school purposes because there's no way to tell if a 30-year-old woman buys
a new purse as opposed to if a schoolchild is buying a new purse. So those are some issues within the economics of it. In addition to that, you know, our sales tax along with our other general revenue taxes go to support education. So they're supporting the very schools that are being provided for these people and these families out there. And I just wanted to make you aware of those as you can continue
Chair
Unverified
20:46
your deliberations. Thank you, Mr. Leathers has spoken against the bill.
Anyone like to speak for the bill? Okay. Representative Shepard, you'd like
Speaker 21
20:56
to close for your bill? Thank you, Mr. Chairman. And I certainly appreciate Mr. Leather's comments.
And, again, I think that as to his final point there, I think that, again, that brings me back to what I stated earlier. I think that Arkansas, due to its size and that we have surrounding states that provide for these sales tax holidays, that any shifting that might take place is already taking place
and that we need to implement something to try and protect Arkansas's share of some of these sales, and
therefore I would appreciate a good vote. Thank you for your time. Representative Bell, you
Chair
Unverified
21:39
recognize for motion? Move, do
pass. Motion is do pass. All in favor of
Representative Davy Carter
Unverified
21:51
the do pass motion, say aye. Aye. Any opposed? Motion carries. Congratulations, Representative Shepard. Your bill is passed.
Thank you. Representative Mayberry, 1389. Representative Ingram, 1397. Representative Ingram, 1257. Representative Patterson, 1421. Representative English, HB 1429, you're recognized to explain your bill. Thank you, Mr. Chairman.
Representative Jane English
Unverified
22:39
I'm Jane English, and I am state representative for District 42. And I have a bill here today that is Arkansas Development Finance Authority Bill 1429, and what it does is it puts into statute some things that have been have taken place for many years that are quite legal, but it will give them the full authority to do the payment in lieu of taxes, I mean the industrial revenue bonds. And I have Gene Eagle with
Arkansas Development Finance Authority here to explain the bill. Ms. Jiggle, you're recognized. Gene
Chair
Unverified
23:20
Eagle. Good morning. My name is Gene Eagle. I'm Vice President for Development and Finance with the Arkansas Development and Finance Authority. I want to thank Representative English for sponsoring this bill. Jane and I worked together at the Arkansas Economic Development Commission when this bill was originally adopted in 1981. I know she had a good understanding of how it was used by local communities, and so I thank her for sponsoring it. And companies have come to Arkansas and for almost 50 years or more have utilized this
method of allowing local communities to provide an exemption to ad valorem taxes as an incentive to having the industrial facilities locate in their community. And this bill just allows the Arkansas Development Finance Authority to provide services as a bond issuer. Local communities have typically been the issuer of the bonds. They've owned the property as a governmental entity and leased it to these private businesses,
and that's allowed for the exemption. This bill would just give specific authority to allow ADFA to provide services as bond issuer, allow ADFA to be the owner of the property of record. There would be a lease agreement. local communities would still be responsible for negotiating the incentive. ADFA would just be party to the contract as owner of the property. So we're really not taking anything away from what cities can do. We're just adding another incentive, another method that we think will allow the companies
to save money. And in instances where the state is guaranteeing the bonds, it will reduce the risk to the state agencies because we've lowered the cost of the financing and hopefully lowered the interest rate on the financing as well. And when this was passed in 1981, the Development Finance Authority didn't exist. And when it was created in 1985, people just didn't have this on the radar screen. We did a few transactions.
The theory is still sound. to own property entered into these agreements, but this just gives us the specific authority to do it, and we think it's past time to do this. Thank you. Representative Kerr,
you're recognized. Mr. Chairman, I'd like to make a motion to use the proper term. Very well. Representative Viviano, you're recognized. Thank
Representative Mark Biviano
Unverified
25:57
you, Mr. Chairman. You said there's been a few transactions done in this fashion?
MR. Yes. What's been the experience level of those transactions? Has
Speaker 80
26:09
it been positive? MR. Yes. My best example would be
Chair
Unverified
26:14
in Mississippi County. That's where we have the steel concentration. A number of the businesses were financed locally. Mississippi County entered into these agreements. And some of the ancillary companies that located there, because they wanted to supply Nucor,
came to ADFA for financing, and we issued the bonds. We provided a guarantee, and there was still this payment in lieu of tax agreement that was entered into at that time. So it saved money for those ancillary facilities that located around the big concentrated facilities there at Nucor. So we thought it was a good thing for companies like Maverick Tube and others.
MR. Thank you, Mr. Chairman. MR. Representative Meeks, you're recognized. MR.
Representative Stephen Meeks
Unverified
27:15
Just a quick question to help me understand this. Prior to this time, was the municipalities the guarantor of the bonds, and now what we're doing is shifting that to the state level? Is
Chair
Unverified
27:26
that correct? Am I understanding that? No. No. No. The cities were the issuer of the bonds, utilizing local industrial development bond financing authority.
And ADFA was giving the same type of authority in 1985. So it was an extension of the way we had been doing things. And bond counsel, for the most part, were comfortable with the constitutional theory that you still had a governmental entity that owned the property, even though it was not the city or the county. It was still a governmental entity, and it worked at that time. We just think it's just cleaning it up and making it real specific that we're allowed to do these things.
Okay. Thank you. Okay. Representative English. I don't see any more questions. Is there anybody in the audience that would like to speak for the bill, against the bill? Seeing none, Representative English, you're recognized to close for your bill. Sorry. I'm closed for the bill. Very well. Representative Kerr, you're recognized.
Thank you, Mr. Chairman. I make a motion do pass.
Representative Davy Carter
Unverified
28:39
Okay. The motion before the committee is do pass. All in favor, say aye. Aye. Any opposed? Congratulations. Your bill is passed. Thank you. Okay. Representative, oh, I'm already down to there. Okay. I'm going to go to the end of the table and present Senate Bill 217. So, Mr. Kiley.
Representative Larry Cowling
Unverified
29:14
Senate Bill 217, Representative Carter, do you want to introduce your folks with you there? Yes,
Speaker 29
29:28
thank you, Mr. Chair. I've got Mr. Dan Young who's here with me
Representative Davy Carter
Unverified
29:34
to help answer any specific technical questions about the bill at the appropriate time. This bill amends the Uniform Principle and Income Act.
There are some compliance issues as it is currently written with some recent, relatively recent IRS rulings, and this will bring the act into compliance. And with that, I will pass the microphone to Mr. Young. Mr. Young, will you recognize yourself
Representative Larry Cowling
Unverified
30:05
for the record, please? Good
Speaker 87
30:07
morning. Dan Young, I'm a trusted estates lawyer in Little Rock, member of the Probate
Speaker 88
30:14
and Trust Committee of the Arkansas Bar,
former chair of that committee, and I appreciate the opportunity to come before you all today. The main crux of this bill deals with a situation where you have an IRA account that is payable to a trust upon death of the account owner, and the account owner's estate is subject to the federal estate tax.
The Internal Revenue Code requires that the surviving spouse receive all income from the trust. In 2006, the IRS issued a revenue ruling that said that to satisfy the all-income requirement that the trustee had to distribute all the portfolio income, meaning dividends, interest, to the surviving spouse if the surviving spouse requested.
Under the statute that we currently have, the trustee does not have the right to distribute the inside income of the IRA to the spouse. And so by passing this bill, it would prevent trusts that are already in existence that are irrevocable because the grantor is deceased from having to go back and amend these trusts to qualify with this 2006 revenue ruling.
This bill is part of a package from the Uniform Law Commission. So it's been vetted by the IRS. The IRS has said
Speaker 87
32:07
that this bill will satisfy their requirements. So based on that, it's moved that they passed
Representative Davy Carter
Unverified
32:14
the bill. I would like to just let me add, these amendments have been adopted in 17 other states, to my knowledge. The Arkansas Bar Association, after study by the Probate Section, Uniform Laws Committee,
the Jurisprudence and Law Reform Committee, and the House of Delegates of the Association, all recommend that we adopt this amendment. With that, I'll be
Chair
Unverified
32:36
glad to try and answer any questions. Is there any questions from the committee? See
Representative Larry Cowling
Unverified
32:43
it no question to ask, or is there anyone in the audience that would like to speak for or against this bill? Seeing no one in the
audience that wants to speak for or against this, what is the pleasure
of the committee? You want to close Mr. Carter, I'm sorry. I'm closing Mr. Chairman, thank you. It's closed for the bill. What is the pleasure of the committee? Move to pass, Mr. Chairman. The motion is do pass. All in favor say aye. Any opposed? Congratulations. You have passed your bill.
Representative Davy Carter
Unverified
33:38
Thank you, colleagues. I will say, sitting at the end of that table, these microphones are kind of in the way, aren't they? I don't know if anybody else has been down there, but they're a little tall. Anyway, just an observation. All right. I don't think we have anything else. Again, remember the pictures on Thursday. And, you know, we are approaching the deadline for filing bills. So if you've got anything in the hopper, I'd suggest you get it out there. We shall stand adjourned.
Agenda
Documents
No documents posted.
Speakers
Representative Davy Carter
Unverified
Speaker 21
Speaker 11
Chair
Unverified
Representative Kelley Linck
Unverified
Representative Larry Cowling
Unverified
Speaker 30
Representative Nate Bell
Unverified
Speaker 38
Representative Allen Kerr
Unverified
Representative Homer Lenderman
Unverified
Speaker 20
Representative Fredrick J. Love
Unverified
Representative Bruce Westerman
Unverified
Representative Lane Jean
Unverified
Speaker 68
Representative Jane English
Unverified
Representative Mark Biviano
Unverified
Speaker 80
Representative Stephen Meeks
Unverified
Speaker 29
Speaker 87
Speaker 88