House Revenue and Taxation Committee
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Transcript
Bills discussed (3)
| Bill | Title | Sponsor | Status |
|---|---|---|---|
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HB1137
· 3 mentions in chapter, transcript
Matched: “HB1137”
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Pre-2017 bill | ||
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HB1023
· 1 mention in transcript
Matched: “…. I think the representative of English, be prepared to run House Bill 1023.”
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Pre-2017 bill | ||
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HB1257
· 1 mention in chapter
Matched: “HB1257”
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Pre-2017 bill |
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Chair
Unverified
0:00
I would just encourage you, let's get them, you know, let's start thinking about getting them filed and let's start talking about them. So, I'm
just going to throw that out there for everybody. All right. I think the representative of English, be prepared to run House Bill 1023.
Woods 1042. Lindsay 1056. Tracy, Representative Pernartz, you're not running 1118, right?
You're running, okay. Representative Lee, 1134. Representative Pernartz, House Bill 1137. Okay, you're recognized. You're recognized. Thank you, Mr. Chairman.
Representative Tracy Pennartz
Unverified
1:10
Good morning, committee members. It's a pleasure to be here this morning to talk about House Bill 1137. I'll let my co-presenter introduce herself, Mr. Chair, if you
Speaker 12
1:23
will allow. Good morning. I'm Pam Carter from Fort Smith, Arkansas, and I'm very pleased to be here with our representative Tracy Penartz to hopefully give you some information with regard to this bill that she's presenting on our behalf.
Representative Tracy Pennartz
Unverified
1:40
As you can tell from the copy of the bill that you have in front of you, it's a very simple bill in the sense of length, but the impact of it in the sense of what it will do for Western Arkansas, it has a significant impact. The bill basically asked the committee to give a tax exemption to the Arkansas-Oklahoma Regional Education and Promotion Association. And let me tell you who they are, committee members.
This organization, as you can see before you, is a longtime organization in Western Arkansas. They're, I might add, an all-volunteer organization. The people that work in this and that are committed to the mission of this organization are volunteers, and it's also a not-for-profit corporation, and it was organized exclusively for the purpose of educating and informing residents of western Arkansas and eastern Oklahoma about agriculture matters.
And their primary purpose, really, in terms of that, is to work with youth. And I have seen when I have gone out to our fairs and other activities that they hold there in Fort Smith, where their regional office is located, are involving youth in activities where they raise a calf or other types of farm animals, take great pride in doing that. the way are involved in being able to be taught values as a good citizen.
One of the other things this organization does, which is the reason why I'm especially promotive of the activities, is that the organization really, as I said, is a not-for-profit, and They use their net income to hand out scholarships to the local areas, to those youth who are involved in the activities, who go through the application process. And in fact, Ms. Carter will testify more to the actual facts, but they hand out around
$30,000 in scholarships annually. Sometimes it's not as much if they have to pay out for more expenses. But they've been consistent over the years in their giving scholarships to local kids and the youth there. And I might add, just to brag a little bit, over the years they've given out nearly just under a half a million dollars worth of scholarships. So I'm very proud of that. Because some of these kids go on, you know, they come from family farms and they go on to get their bachelor's degree in agriculture, graduate from the university or other universities in Arkansas, and they go back home to that family farm.
And so I'm very proud of that. You'll hear later from a witness who comes from one of those small towns in Arkansas and has been very successful. in his endeavors and his involvement still as adult today in the activities of this organization. Now of course, always because of your special task for the House, and that is in dealing with the impact that this tax exemption would have, I believe that you have before you,
the staff may have included in your packet, the legislative impact statement. And I'm sure Mr. Tice, I saw Mr. Tice earlier, he will testify if needed, if I say anything incorrectly here from the legislative impact statement. But as you can see from the revenue impact, this projected the first year, a loss of $10,000 in general revenue, and the second year is estimated at $15,000.
You might add, well, what about that local sales impact? Well, I've talked to our mayor in Fort Smith and a couple of our city board of directors, and they think we can withstand a $3,300 impact loss and a $5,000 impact loss that's projected in these figures in the legislative impact statement. So having said that, I think that I'd like it, Mr. Chair, with your permission, if Ms.
Carter could say a few words
Speaker 12
6:34
MR. Ms. Carter, you're recognized. MS. Thank you very much. I just want to hit some highlights about what we do. As Tracy told you, we are solely an all-volunteer, not-for-profit corporation. We have brought the Arkansas-Oklahoma State Fair to Northwest Arkansas and Eastern Oklahoma
for 75 years. We will be celebrating our 75th birthday for the fair this year in the fall. Our fair is a district fair. We encompass 13 counties in Arkansas and 10 counties in Oklahoma. And from those counties, this enables all of the youth of those counties, all the 4-H, Future Farmers of America clubs, to raise, show, and sell their livestock and present their creative arts at our fair. As I said, we're a nine-day event.
We're represented in the Arkansas Fair Managers Association and the International Association Affairs and Expositions, which brings a great amount of money and also a boost for tourism not only to our area of the state but to the state of Arkansas. Also this year, we'll be celebrating the 78th birthday of the Old Fort Days Rodeo in Fort Smith. I'm happy to have with me today Mr. Denny Flynn, he's over to my right. Denny started his rodeo career at our rodeo in Fort Smith, Arkansas, went on to become
a world champion bull rider. He is now executive director of our K. Rogers Park there in Fort Smith, where we have a home of all of our events. This past year, Denny was inducted into the Pro Rodeo Hall of Fame in Colorado Springs, Colorado, and also the National Cowboy Hall of Fame in Oklahoma City, Oklahoma. He has brought through growing up. He's from Charleston, Arkansas, grew up, attended the fairs and the rodeos there, and went on and has now come back home and is a tremendous asset to our association.
Another proud tradition we have is what we call the Old Fort Day's Dandies. This is a group of young women who are chosen not only for their horse riding skills, but also their character and scholastic achievements. The Dandies are charter members of the Fellowship of Christian Athletes and serve as goodwill ambassadors for Arkansas at rodeos and events throughout the United States and abroad. We also are home to the Hangin' Judge High School Rodeo for all the high school cowboys and cowgirls from the state.
And also we host something we're very proud of is the Black Stallion Literacy Foundation. This event helps children discover the joys of reading and the excitement of learning through the wonders of live horses and is for all fourth grade students from all schools in northwest Arkansas. And as Ms. Pennartz told you, our association is very proud to present scholarships to all of the grand champion winners at the Arkansas Oklahoma State Fair to be used at a college of their choice. We're very rich in tradition, not only in Northwest Arkansas, but in Arkansas in general.
And we feel that our association over the last 78 years is a tradition that we want to keep. The economy has hit us like it has everyone else. We started looking at areas where we could maybe save some revenue, found that this option was available to us, and so that's why we're here today. And I am a fifth generation. My grandfather took my mother to the rodeo and fair there. My mother took me. I took my boys, and now I'm taking my granddaughters.
It's a tradition we would like to keep in our area and in Arkansas, and we really appreciate the opportunity of
Representative Tracy Pennartz
Unverified
10:21
bringing this before you. Thank you. Thank you. MS. Mr. Chair, if that concludes our part of the presentation, we'd be glad to entertain any questions committee members may have or
Chair
Unverified
10:32
yourself and Mr. Vice Chair. MR. Thank you, Representative Penarch. I think we do have some questions.
Representative Fredrick J. Love
Unverified
10:38
Representative Love, you're recognized. MR. Thank you, Mr. Chair. First of all, I'd like to applaud the Educational Association, Education and Promotion Association
for the scholarships that they award. However, I do have this question. Does Oklahoma have
Speaker 12
10:57
state of Oklahoma have a sales and use tax? Yes, they do, and I have researched that. I wanted to approach them. If this opportunity was available in Oklahoma, I wanted to approach that also. I did check with the Oklahoma Tax Commission, and they have a very strict criteria. And in looking over the criteria, we unfortunately didn't fall into any of those.
Representative Tracy Pennartz
Unverified
11:23
Let me add on this particular thing. What we're doing, I've discussed that with Pam, and we're looking into one of the categories possibly being where the association could apply. But we've just begun those initial discussions. There, you don't have to go before a committee and ask for the exemption. it's more of a regulatory process so we've begun those initial discussions and we have the application and we're going to fill out the application but
that's a process we're involved in and I appreciate the question because we're not just asking Arkansas we're also asking Oklahoma because we serve Oklahoma youth too through this association so we're
Speaker 25
12:08
in the process of that application process.
Chair
Unverified
12:14
Thank you. Representative Penards, what's procedurally, how would, I guess you would get some sort of certificate, I mean, how would Walmart know that you've got this exemption when you
show up to purchase goods? How would that work just from a practical standpoint? I
Representative Tracy Pennartz
Unverified
12:35
think Ms. Carter will answer that
Speaker 12
12:37
question. Yes. Excuse me. We would be issued a number, a tax-exempt number, that we would, I guess, have a card or would be able to present to any of our retailers that we would be
Chair
Unverified
12:52
purchasing from. Thank you. Representative Burris, recognized. Thank
Representative John Burris
Unverified
12:58
you, Mr. Chairman. A couple quick questions.
How does this – well, it sounds like a good bill, a good organization. How would this exemption vary from the other exemptions for nonprofits or similar
Representative Charlie Collins
Unverified
13:13
organizations? I couldn't speak to the actual impact of what dollar amount they would
Representative Tracy Pennartz
Unverified
13:19
project would be used. But in our case, the Arkansas-Oklahoma Promotion Association, I believe, Pam, you gave me those figures. I don't have that paper in front of me, but you would be able to save how much money that
Speaker 12
13:34
you could use for scholarships? I'm sorry, sorry, I was looking for that. I want to say, Tracy, that it would be around close
Representative Charlie Collins
Unverified
13:47
to $30,000, I would think. Right. I think when we had, I began initial
Representative Tracy Pennartz
Unverified
13:52
discussions with Pam and her people, she gave me a sheet And she shared that information with Mr. Tice, and if you'll give me a moment, Mr. Burris, I'll try to flip through here.
Okay, here it is. Right, for 2010 projection, we could save, is this the amount? These are actually the amounts that we actually spend. They spend, let me just tell you what they spend on hospitality $10,000, sanitation $30,000, and utilities $151,000. And we project that they would be able to save a sufficient amount of money in that that they could give additional scholarships.
Representative John Burris
Unverified
14:45
Okay. And this is the. It's a
Representative Tracy Pennartz
Unverified
14:48
percentage of that amount. Okay. That they would then save in taxes at the tax rate what our sales and use tax is.
Representative John Burris
Unverified
14:56
Okay. Well, and like I said, I think it certainly sounds like a reasonable thing to ask for. From a broader perspective, as a committee, we've already heard several bills. I know other committee members are probably getting tired of hearing me say these words, but we do have a very serious obligation, you know, I believe on this committee
to act responsibly and then with any tax cut or tax relief proposal or just any bill that has any impact, you know, offer where that
Representative Tracy Pennartz
Unverified
15:31
money would come from. Do you have
any suggestions on how to pay for this? Well, thank you, Representative Burris. I actually do. Through our action already, the General Assembly has saved $473,000, and I project that part of that, $10,000 of that, could be used to pay for this tax exemption, and
there should be enough of that money in the second year that we could use $15,000 out of that amount. So there is a source for this tax exemption and the savings that we have in the amount of money we saved from not giving pay raises to elected officials like ourselves. So I think that this would be an excellent use of that money to return that money to our citizens, and that would be the source.
The challenge was us to find another source of revenue for it, and I
Representative John Burris
Unverified
16:38
think I found one. Okay. Not to get too hung up on the source, because that would be something with joint budget, But would you propose a continual or perpetual reduction of $10,000 a year to pay for this since it would
Representative Tracy Pennartz
Unverified
16:53
be an ongoing expense? It would be ongoing, about $10,000 to $15,000 a year, depending on how much activity or if utility costs go down and the total amount of that impact, the exemption.
It might be lower than that. That's just what DF&A has projected. They may could speak to that issue better than I. much more learned in the use of numbers, and so they maybe could speak to that. But I will tell you that with regard, if I may elaborate, Mr. Burris, the economic impact to western Arkansas is enormous in the Fort Smith area and even reaches out into Van Buren
and the other areas where people stay at our hotels for maybe up to four or five nights or a full week. Our fair is a nine-day event. A nine-day event in that case, and then we have people eating at our local restaurants and going to movies and engaging in activities. So the return on that money, on that $10,000 that we're asking for in an exemption through this and $15,000 the second year if that were what it were to be.
I think the economic return on that $10,000 is enormous in terms of return. And one more question, if I
Representative John Burris
Unverified
18:16
may. It might be more of a statement, but I appreciate the fact that you've got the folks for your community here. As I said, I think it's a good bill and probably something reasonable that perhaps the will of the committee will be at some point to pass out. I think from a broader perspective, generally the way I've seen the committee handle other bills,
it's been almost a wait-and-see mentality, allowing people to present. So the will of the committee will be what it is today. But I guess I'm just saying mostly no action doesn't necessarily mean that it's dead or that there's not a lack of support. But dealing with revenue and tax issues, excuse me, dealing with revenue and tax issues sometimes takes a little delay in forethought and time. So I appreciate the people coming down and the presentation. As always, you've done a good job and did your homework, and we'll wait and see.
Representative Tracy Pennartz
Unverified
19:14
Mr. Burris, I appreciate your comment, and I appreciate that being said in the presence of my community people. I know that revenue and tax has a big responsibility. You operate for the House, and I'm very respectful of what your function is in this committee, and I know that each of you on this committee will give due consideration to this request. So I really do appreciate your comments, Mr. Burris. Mr. Chair, I'd be glad to entertain additional questions of the committee.
Chair
Unverified
19:53
We've got about seven, so a few that are in the hopper here. So Representative Collins, you're recognized
Representative Charlie Collins
Unverified
20:05
for a question. Again, thank you very much for coming, and clearly your organization does wonderful, wonderful things. I think I also agree with you that taxes dramatically hinder the ability of businesses and organizations to do good things. And so with the wonderful things you're doing
and the way the taxes are hindering you from doing them, my question is, Representative Penartz, what would be your advice to us in terms of all the taxpayers that are out there deciding which ones should be exempt only among the ones doing good things versus those that would still be forced to pay these tax rates, as opposed to thinking about reducing the overall rate so that all the good folks would have a little less burden spread across all the taxpayers.
I'd just be interested in your thoughts on how we
Representative Tracy Pennartz
Unverified
21:03
ought to think through that. Well, thank you for that, and that's part of your heavy responsibility in here. And I think that the impact, if I can put it sort of in just purely economic terms for a moment, the impact that this tax exemption would have far outweighs, I think, the consideration
of where this $10,000 might be spread out throughout the entire state of Arkansas. So to me, in terms of economic return, which this will bring to our communities, and here's the other thing we didn't even mention, Representative Collins, is that many of these individuals during the summertime when a lot of these activities occur will go into other parts of the state and spend their money, like up to the museum up in northwest Arkansas, come
over here to Little Rock and go to the entertainment that's over here and down to Hot Springs maybe. So there is a far-reaching effect of that gateway event that this organization is involved in. And I think that that is a singular difference of this type of nonprofit organization compared to a local organization. I think the reach of the organization itself out into the different counties in western
Arkansas is a difference. And the fact that they – you will hear in further testimony that we have international visitors coming to this event from other parts of – not only just the United States, but from other countries that participate in some of these activities. So in terms, and Mr. Collins, I'm a person who comes from a record of community service on nonprofits in my community, and I don't believe that any of those nonprofits, knowing
the purpose and function and the scholarships that this organization gives to young people, giving them a chance at a better life through collegiate experience would begrudge this
organization a tax-exempt status. Thank you, Representative Bernards. Thank you, Mr. Chairman.
Representative Charlie Collins
Unverified
23:26
Thank you, Mr. Chairman. Both
Speaker 43
23:35
my children and my daughter-in-law have participated in events at the Fort Smith, the
Old Fort Days and the District Fair, but I have a couple of questions. One of them is, do only Arkansas students get the scholarships, or do those scholarships go to Arkansas and Oklahoma students
Speaker 28
23:55
both from these events? If I may, Pam, could
Speaker 12
23:58
you respond to that? Sherry Shoemate is our other lady who's come from Fort Smith today. She is chairman of the Arkansas-Oklahoma State Fair, And I believe I'm correct, Sherry, that all of the participants from our 10 counties in Oklahoma and 13 counties in Arkansas,
all the participants are, because the scholarships are given to the grand champion winners, they all have the same opportunity to present their livestock and to be voted on, you know, in
Speaker 43
24:30
the grand champion category. Okay. Thank you. The second part of my question is, the events that this organization sponsors, do you have a ballpark figure as
Speaker 12
24:42
far as the total economic impact on that area? It's huge. We, I think, Sherry, again, I think that we probably have probably half a million visitors a year to our events.
And I only touched on a few of our events that are held at Kay Rogers Park. We're also home to the world's richest barrel-race futurity, and as Ms. Penartz told you, we already have entrants from four foreign countries that have already entered in our barrel-race futurity. We give the most prize money of any barrel-race futurity in the world. Thank you
Chair
Unverified
25:25
very much. Representative Westerman, you're recognized.
Representative Bruce Westerman
Unverified
25:27
Thank you, Mr. Chairman. Representative Penartz, I, too, would agree with my colleagues that this seems to be an excellent program serving a good purpose. And I was wondering if you're aware of any other similar associations across the state that may be in the
Speaker 12
25:50
same situation? I honestly don't know of any other association that is so all-encompassing that we are that has such a far reach.
The late, I might just mention, the late Hugh Harden was the gentleman who put all of this together and did all the legwork and everything to get this association started. And his goal was to keep this tradition alive because he felt it very, very important that The children and grandchildren had the same opportunity to, and especially the agricultural side of it, and that these children begin the opportunity to raise their animals, show
them there's so much pride involved with that. And that was his main goal
Representative Tracy Pennartz
Unverified
26:40
in the beginning, and it's still ours today. And Representative, let me add, I'm not aware of one that has such far-reaching, Not just in the western Arkansas area, but really across the state. So I'm not aware of any that are similar in nature to this. Now I do know that other organizations, we have scores of organizations that work with
and work toward their youth, like 4-H and other organizations that work toward their youth being involved in these activities all over western Arkansas. I'm actually a 4-H-er myself, and head, heart, health, and hands, I still remember what the H's stand for. And I remember as a young youth going to these fairs and the activities in Fort Smith, and what fun it was.
And so we have, that's the thing I failed to mention before, that we have a lot of these types of organizations involved in the actual annual event that occurs in
Fort Smith. So, no, I'm not aware of any additional organizations of a similar
Representative Bruce Westerman
Unverified
27:59
nature. So to your knowledge, if we were to approve this, we wouldn't be opening the door for a lot of other bills of a similar
Representative Tracy Pennartz
Unverified
28:10
nature. MS. Well, I think not similar in nature to this organization.
You always, Mr. Westerman, have organizations that may come before this sincere committee to ask for tax exemption, but it's in y'all's wisdom that whether you choose to grant that exemption or not. MR. Thank you, Representative. Thank you, Mr.
Representative Bruce Westerman
Unverified
28:31
Chairman. MR. Representative Gene, you recognize.
Chair
Unverified
28:36
Thank you, Mr. Chairman. Representative Penarch, how
Speaker 72
28:42
are you doing? Doing great this morning.
Speaker 73
28:45
I have been to your rodeo. It's an outstanding rodeo. Maybe what I'm asking is going to become more DF&A, and maybe you know. Our Columbia County Fair and Livestock Show is also 501c3, and they also provide scholarships. Do you know how many similar fair organizations have this exemption? No, I am not,
Representative Tracy Pennartz
Unverified
29:08
and I think that's really a question for
DF&A, sir. If I had that knowledge, I'd certainly share it with you.
Speaker 75
29:17
Okay. John, do you know? Well, he's zero. Okay. Thank you, Mr.
Representative Tracy Pennartz
Unverified
29:28
Chairman. Now, if I may, Mr. Chairman, Representative, I do know that there are, of course, in the state of Arkansas, exempt organizations such as the Boys Clubs and the Girls Clubs that hold 501c3, I believe the American Red Cross, some of the Humane Societies, different types of organizations that have exemptions from sales tax.
And I'm sure, of course, you got the direct answer from DF&A right there. Thank you. Just
Chair
Unverified
29:58
a point of reference. I was going through some of the exemptions here and just pick one out. We do have an exemption for the sale of motor vehicles to blind veterans. Yes. Let you think about that for a minute, motor vehicle to blind veterans. Well, maybe they have a driver.
Yeah, I know. Interesting. Representative Collin Smith, you're recognized. As a veteran, I hope they have a driver. I don't mean any disrespect there. That's
Representative Linda Collins-Smith
Unverified
30:38
just the blind part. Okay. Thank you, Mr. Chair. Representative Penartz, one of the things that I want to do is applaud this association, especially on its volunteer efforts. But I do have some specific questions about the volunteers. How many volunteers do you have?
Are any of those persons paid? And if you were to get this tax break or this exemption, would you use
Speaker 12
31:05
all of those dollars to go towards scholarships? Okay. To answer your question, we do have 200, well, probably over 200 volunteers. We do have a paid staff, Mr. Denny Flynn, that I spoke of earlier. He's our executive director.
We have a secretary and a bookkeeper, and we have a maintenance staff. And I will tell you that in our efforts to downsize and to find revenue to put back into our scholarship fund, we have voted not to give any raises to our paid personnel. MS. Thank you. I think it's a wonderful
Representative Linda Collins-Smith
Unverified
31:46
organization. MS. Thank you. MR. Representative Bibiano,
Chair
Unverified
31:50
you're recognized. MR. Thank you, Mr. Chairman.
Speaker 73
31:55
I think actually my question has been asked in a couple different ways, but certainly no question your organization has a lot of honesty and integrity in its mission that it's carrying out. My concern is back to does this open a floodgate of opportunity for maybe organizations or associations to be formed that perhaps don't have the same goals and objectives and the mission and just using it to obtain some tax-exempt status?
So I would ask, again, the question if we've done any research with DF&A to understand what the impact could be if that
Representative Tracy Pennartz
Unverified
32:39
floodgate is opened. Well, I think that, if I may, Representative, that part of that question needs to be answered by DF&A. In my four years here in this great body, I have never seen a floodgate over at DF&A,
and if there is one, I want to know where it is. It's more like threading a needle trying to get any tax exemptions at all or tax credits from DF&A, but not to be flippant, it's I think that any organization that comes before this body that asked and request y'all to consider a tax exemption, I believe that y'all
are sharp enough to ask them questions about what their history is, how long they've been in the community, what they're doing for the community, the number, what they've done toward their mission and purpose. And if you, in your thoughtful consideration of that request, consider that they know that indeed they are not at the point in their history where such a tax exemption is credible, then I believe that you all would do in your conscience what is the best thing.
I think that with regard to this organization, it has proven through its history and through the activities in the community in western Arkansas and beyond that it is worthy of your consideration. So no, I do not believe, Representative, that it would open a FUB gate because of your scrutiny of such requests and because I know of the scrutiny of DF&A and their input to this committee.
So no, I do not believe it would open a floodgate by the singular exemption of this
Chair
Unverified
34:45
organization. MR. Thank you. We've got a couple of more that are on the list, and we have some folks from the audience that we'd like to
Representative Nate Bell
Unverified
34:59
speak to, so I've got Representative Bell, you recognize. Thank you, Mr. Chair. Ms. Carter, my wife is a fair board member in Polk County. My daughter's show 4-H sheep, been to the fair up there many times, been in the livestock barns, and very appreciative for what you do.
Those of us who are spouses of fair board members, we understand that the grass requires mowing and we have to operate our weed eaters and all the tasks that go along with that to make these fairs happen. So I commend you for your service. Thank you so much. I think my question is very simple and probably easily answered, but there is some minor local revenue impact associated with this. Has anyone from the local organizations, Judge Hudson or any city officials, had any comment regarding their position on it at all?
I would think they would be
Speaker 12
36:00
and thank you very much, and I applaud your wife as well. I know what it's like. Yes, our mayor, Sandy Sanders, is a member of our board, so he is 100 percent behind everything we do in the community. We have, as Ms. Penartz mentioned earlier, board members on our city directors who have direct impact and have direct association with our association, and we've never had
anything but 100 percent backing from our community and our community leaders. Thank you
Representative Nate Bell
Unverified
36:31
for that. Thank you. My additional concern has been mentioned several times here already today, and I think it just goes to equality. And we do have several other regional fairs around the state, and my heart's very much with making our fairs as the scholarship dollars as available as possible to the students that come out of these. And you all have obviously been very successful at that. But we do have in this committee's task with making sure that we equally apply
the law to people around the state, and I just want to let you know that we're going to do our best to give that due consideration and do what is best for your organization and other similar ones around
Chair
Unverified
37:14
the state. Thank you very much. We appreciate it.
Representative Stephen Meeks
Unverified
37:19
Representative Meeks, you recognize. Thank you, Mr. Chairman. As a former president of a non-profit organization, I can definitely sympathize with your organization and what it does. The question that I have is, does your organization purchase items and then resell them in any
capacity? And then also, kind of as a follow-up to that, do you have mechanisms in place to make sure that if we do grant this non-profit or this tax-exempt status, that it's not going to be abused by members or volunteers or within
Speaker 12
37:56
the organization? Thank you. Thank you. I can tell you that we do not purchase anything for resale, and we would absolutely, we have
a very good board of directors who oversee, and we keep everybody in point. There would be absolutely no abuse. We all have the same objective, and that is to keep this wonderful tradition alive in not only our community, but for the state of Arkansas and eastern Oklahoma. Thank you. Thank you. Representative Kaling. You're recognized. Thank you. Ms. Carter,
Speaker 102
38:30
lots of these events that you've talked about and all, do you have to compete
with other associations, farm barrel races and things of that nature? I'm not sure I understand the question. Well, I know that the State Fair Association has just got a stallion show, and I know the Four States Fair Association in Texas County has got
one. All of these associations kind of bid on different projects and promotional deals like that. Okay.
Speaker 12
39:07
Is that correct or not correct? Yes. Our Black Stallion literacy program is just for the fourth graders in Northwest Arkansas. There are other areas in Arkansas that are specific to that area that have that same literacy program. Well, are you
Speaker 102
39:26
aware that four states in Texas County and all, they have a program and all where
they are educating children down that way with their called farmyard program and everything like that?
Speaker 12
39:40
I know that you all have a wonderful program in that area. we've just come back the weekend before last we were in Hot Springs at the State Fair Convention and I know that your area, in fact I think they probably had the most people stand up when we had our board meeting, our actual meeting I'll get it right in a minute our grand session so I'm well aware that you all have some wonderful programs in
Speaker 111
40:07
that area Would this be included in theirs? Would they
classify for this exemption? Again,
Representative Tracy Pennartz
Unverified
40:17
let me just say, Representative Cowling, I think that that whether they come
before this committee and ask for an exemption
would be up to that organization. I don't really believe the association would be involved in that. And therefore, as I said to Representative Viviano before, that really is a decision
of this committee upon the request of an entity that would come before you all. Thank you. Okay. I don't
Chair
Unverified
40:52
have any more questions. I've got a few folks that are signed up to speak for the bill. Thank you, Mr. Chairman. And if there are any
Representative Tracy Pennartz
Unverified
41:01
additional questions at a later time or anything, we'll be right over here. Okay. Thank you. Thank you both. Thank you very much.
Chair
Unverified
41:12
Ms. Sherry Shoemate. Good morning, Ms.
Shoemate. You are recognized to speak for the
Speaker 116
41:24
bill. Thank you for having us. I'm the Arkansas-Coloma State Fair Chairman. I have been on our Board of Directors for 15 years. I want to thank you all for your time today. As Ms. Carter stated, the tax exemption, if you so choose to give it to us,
those dollars will be put back into our scholarship fund. We want to see all children prosper, as all of y'all do. And I would like to invite you all to come to our fair in September, our rodeo in May and let you see what we do and how we operate on a full-time volunteer basis. There's not one volunteer that is paid a dime. In fact, it
probably costs our volunteers to volunteer. But again, thank you for your time today and if you have any questions, please let us know. We are just so thankful for your time today. Thank you. Thank you, Ms. Shumate. Anybody
Chair
Unverified
42:30
in the audience would like to speak against the bill? If not,
I've got Denny Flynn that signed up to speak for the bill. Mr. Flynn, you are recognized. Good morning. Thank
Denny Flynn
Unverified
42:46
you, sir. My name is Denny Flynn. I'm the
executive director for the association i've been there for about three years one of the things that that i would like to uh speak on is is we talk about the scholarships for the kids and and i know when i started out in in rodeo business and wanting to fulfill a dream uh come from a small farm there and and i know a lot of a lot of basketball and football and all that's got all the scholarship and there wasn't a whole lot offered for uh the farm kids uh the
people that show cattle and the rodeo people and now uh after going through the rodeo business and being through uh now in the hall of fame and and spending a career in in in that field i get to see a lot of it and and i'm involved in the arkansas high school rodeo association We go all over the state of Arkansas and promoting kids, and I've got kids that's in it. And one of the things that we try to do is raise scholarship money for those kids,
whether it be rodeo and those kids growing up that don't get a chance to play ball or anything. And to promote that association and being involved in association up there to give those scholarships and give those kids an opportunity to go to college and help the parents, you know, to pay for those college educations through scholarships and everything that they might not ever get to receive one. And we try to do as much in that association for those kids as we can, and I'm proud to be a part of it.
I think our association is we have, like she said, we have a really good board up there. We have the mayor, he's on our board, Judge Hudson, that you mentioned a while ago, is on our board, and we have some really, really good representatives. They control the association and the people that are running it, myself, and I really think they handle it real well and oversee everything that we do, and the full intent of that is to better educate and promote our association.
And we just thank you for the opportunity to come and speak and, you know, represent our association here today. Thank you. Thank
Chair
Unverified
45:16
you, Mr. Flynn. Representative Burris, you're recognized. Yes, sir. Thank you, Mr. Chairman. Mr. Flynn, to have
Representative John Burris
Unverified
45:22
accomplished some of the things that you've accomplished in your life, I bet you had some really great people around you in high school and college and friends that maybe kept you on the right path and helped you succeed and do the things you want to do.
Speaker 109
45:41
Is that fair to say? Oh, yes. You know, you just don't get through life without having some support. And, you know, you don't
Denny Flynn
Unverified
45:48
really realize it until you go through it and you just don't thank those people enough. But I've had a lot of support. Yes,
Representative John Burris
Unverified
45:54
sir. Well, now that we've made that clear, somebody was bragging about that earlier. Is it true that Mr. Stubblefield, our colleague, might be one of those friends? You
Speaker 118
46:04
know, Gary, he tried to ride a few bulls himself, you know, but I don't know, he was better at playing ball than he was riding bulls, I'm going to tell you.
Speaker 43
46:13
All right, I just wanted to clarify that for the committee. Thank you, Mr.
Speaker 118
46:17
Flynn. He did win the bull riding at Ozark, Arkansas, one time when I ride out of
Chair
Unverified
46:26
you. Thank you, Mr. Chair. Thank you. Representative Kelly. Thank you very much. Representative, one more question,
Speaker 102
46:31
I think. Representative Cowley. Mr. Flynn, how many children, how many kids are in your high school rodeo association
Speaker 118
46:37
there and on now? There's probably about 100 contestants, I think a little over 100, that participate full-time.
Denny Flynn
Unverified
46:46
We start out, you know, everybody starts out, we'll have 120 or 30, and then by the time the year end goes, and they're not doing any good, there's a few that drop out
Speaker 54
46:56
by the end of the year. And the high school rodeos don't get any appropriation or
Denny Flynn
Unverified
47:02
anything like it from anything? We do get some support. The High School Rodeo Association for the state gets support from the Arkansas Livestock and Poultry Commission. Yes, sir, we do. To your individual? Not to our association, to the High School Rodeo Association that is based out of CrossFit, I think, is where they're at.
Thank you. But our association up there, we put on one of the state high school rodeos out of the 10 that is produced in the state of Arkansas. Well,
Chair
Unverified
47:33
thank you. Thank you both for coming and all of you for coming to speak. And thank you for accommodating our time change. We moved it up a little earlier, but I appreciate that. And thank you all for being here. Representative Penard, sir, you want to make any closing comments for your bill?
Representative Tracy Pennartz
Unverified
47:59
Yes, sir, I do. I want to thank, first of all, driving all the way from Fort Smith over here in this cold weather, the citizens that came today to request this and support this request. I would ask for your positive consideration of the House Bill 1137. I understand also what your responsibility is, so I leave it to your discernment with
Speaker 131
48:37
regard to action on this bill. Mr. Chairman, members of the committee, Ms. Penartz, as she always does, did an excellent
Speaker 132
49:13
job of explaining her bill for this worthy organization, and, you know, we hate to have to come in here and talk about these things. We like to just have all kinds of money to do lots of things, but over the years we've been put in a position because of the way our law works where we have to, you know, talk about the revenue impact and the many organizations that are out there that would also like to be exempt. You know, we don't generally exempt charitable or nonprofit organizations.
So there are literally hundreds and thousands of them out there that in various categories and members are approached by their home fair or their festival, those sort of things wanting to be exempt or a local club. And what we have testified before is that if you start doing this and you enlarge the category, then you have to face the fact that there are others similarly situated which
the committee has discovered here today in the discussions that there are other regional fairs and county fairs and there's a state fair just in the fair category and then there are festivals and you've kind of opened up a whole new door in that category by doing this. Besides, we've had several members contact us about particular organizations back in their district that are not fairs or festivals. So, you know, keeping in mind that this is a minimal impact, still one of those comments
we have to say that there are a lot of bills that could impact the budget out there. And the governor has presented this balanced budget. Plus, if we start going down this path and adding to those that are exempt, that we open the door for you back home with all of your worthy organizations, which I'm sure some Some of them are as worthy as the one that was here today. You'll be faced with the fact that they're wanting to become exempt, too. Just wanted to make that
Representative Tracy Pennartz
Unverified
51:21
statement. Mr. Chair, since I had already closed for my bill, not knowing that DF&A was going
to testify, may I ask the indulgence of the committee to respond? You bet. You're recognized. You bet. Thank you. Although what has just been stated may have some merit, I do believe that this association is not just a festival. There are many worthy festivals across Arkansas that are held. This is a regional association that reaches out beyond just the county borders of Sebastian
County. It reaches into western Arkansas. It reaches into the central part of the state, all over the state, and the activities and the dozens of activities that are held there even has an international reach. So I think that I've already indicated sufficient rationale from our standpoint what might give you in your consideration of our request. So I do, again, leave it to your discernment and ask that strongly urge, if I may, a positive action.
Chair
Unverified
52:44
Thank you. Thank you, Representative Penartz. What's the will of the committee? Okay. Seeing no motion, there's not going to be a vote on the bill today with no motion. Let me tell you what that means for everybody that came is that you will stay on the active calendar for three more times. And then ultimately, if you want to come back and we take up for a vote, after three, we'll go on the deferred list.
But you're still on the active calendar to be addressed
Representative Tracy Pennartz
Unverified
53:27
My thanks to the committee for their questions. They were very good, and I appreciate their time, the committee's time this morning, in hearing this issue. Thank you. Thank you
Chair
Unverified
53:40
as well. Representative Westerman, be prepared to run 1233. I'm still waiting for
Representative Bruce Westerman
Unverified
53:48
a fiscal impact statement, Mr. Chairman.
Chair
Unverified
53:50
It's all passed today. Very well. Representative Gene,
1255. Very well. Representative Ingram, 1257. You are recognized. Mr.
Representative Keith M. Ingram
Unverified
54:17
Chairman, Mr. Vice Chairman, members of the committee, I would like to ask Mr. John Tice to
come sit next to me and just give a brief history about this.
I want to assure the committee that Mr. Tice is not speaking in support of this legislation. He is merely a pundit of tremendous knowledge and experience in how this legislation came about. Mr. Chairman, I'd like to just have him just give
Speaker 136
54:49
just a brief little history of that. You bet. Mr. Tyson, you
Speaker 137
54:57
recognize. Mr. Chairman, members of the committee, the bill
Speaker 138
55:01
you have before you deals with a situation
where someone purchases a motor vehicle in another state and then registers that vehicle first in Arkansas. in some states sales tax is paid on a motor vehicle like it is in Arkansas at the time of registration there are other states that collect sales tax when the motor vehicle is sold by the dealership much like every other product if you go to a grocery store and you buy a loaf of bread you pay sales tax you go to a shoe store and buy a pair of shoes you pay sales tax but
in those states you buy a car you pay sales tax to the dealership whereas in Arkansas, you pay sales tax when you register that motor vehicle instead of paying the car dealer for the tax. Back about 20 years ago, a situation arose in states bordering Tennessee. Tennessee essentially said that we will collect sales tax from out-of-state residents who come into a dealership in Tennessee if the state of residence will provide a credit for the
Tennessee tax paid. Arkansas was one of those states that provided a credit. Tennessee law said if the adjoining state or if the other state does not provide a credit, then the Tennessee dealership is not to collect sales tax, and that purchaser will pay tax to the home state when they register. In essence, what Tennessee was doing is said, if the other state will provide a credit, we're going to take it. If the other state will not provide a credit, then we won't punish our customer for coming here.
Several states surrounding Tennessee, including Arkansas, were upset by Tennessee's tactic to basically take advantage of, If they felt like the Arkansas customer and a legislator from eastern Arkansas introduced what became current law that would say that we deny the credit for taxes paid to a dealership in the adjoining state if that vehicle is first registered in Arkansas. So if an Arkansas resident goes into Tennessee, buys a car and pays sales tax, we're going to deny that credit if that vehicle is first registered in Arkansas.
This was in retaliation to the actions of Tennessee. Tennessee, as I understand it, has now changed their law. But Arkansas and at least two other states adjoining Tennessee adopted legislation of this
Speaker 139
57:37
nature, and that forms the basis for this bill. As you can see,
Representative Keith M. Ingram
Unverified
57:44
John does such a great job in explaining that. I want to tell the committee I'm not going to ask you to pass this bill out today, so that's the first thing. I just wanted you to have the knowledge of the background.
Where this comes into a problem is there are maybe three states in the country, maybe Wisconsin, Florida, and South Carolina, somebody goes on vacation. Their car goes down on them, and they buy a car at a dealership to get home. When they come home, they are surprised to find out that they owe sales tax in the state of Arkansas. So in effect, they pay sales tax twice. We're talking about roughly six instances a year that this happens.
It's $15,000 is what the DF&A impact is. And I guess this sort of gets back to what I sort of consider the old Lou Holt's do-right law. I don't think this is anything that is anything that's major in shaping fiscal policy in the But I hate to see citizens of this state penalized for something that basically that they are unaware of. And that's the purpose of this. Again, I do not plan to ask the committee to pass this out today.
I understand the constraints that we're under. And, in fact, after hearing Tracy Pernard's great presentation, I thought about just asking you to take this $15,000 and give it to Tracy for her legislation. I'll be happy to answer any questions. Mr. Cowley, you recognize? I guess it would be for
Speaker 123
59:26
Mr. Tice that I'd need to ask you. If you
Speaker 136
59:32
want the correct answer, I'm certain of that. Thank you.
Speaker 102
59:37
Legislation years ago, though, that said that there's just a certain amount that you can charge on trailers
Speaker 138
59:46
and all anyway, though. Under current law, if a car or a trailer or semi-trailer costs less than $2,500, there's no sales tax due on that. If the item costs more than $2,500, then sales tax is due on the full amount. Are you referring to big trucks and 18-wheelers? Yeah. Okay, I'm sorry. I didn't understand that. But the state law was amended a few years ago to basically collect a maximum of $600
on what you and I would call a tractor trailer or an 18-wheeler
Chair
Unverified
1:00:20
I was wondering about right there. Representative
Representative Charlie Collins
Unverified
1:00:23
Collins, you were recognized. Thank you, Representative Ingram and Mr. Tice. Well, today's law, since it punishes people for buying cars in another place where they're taxed, It sounds like it only happens in emergencies six times. Do you think, Mr. Tice, if we change the law to give people a credit for out-of-state sales
tax that we could see a dramatic increase in the number of people who take advantage of the
Speaker 138
1:00:53
opportunity to buy cars out-of-state? Mr. Representative Collins, our revenue impact does not reflect that. We believe that this does occur just a few times a year, and we don't believe that our Arkansas residents would purchase more cars out of state because of this. There are Kansans who currently purchase their automobiles outside the state of Arkansas and pay tax when they register that vehicle in Arkansas.
So we don't think this will
Chair
Unverified
1:01:24
change purchasing patterns. Thank you. Thank you, Mr. Chairman. Is there anybody in the audience that would like to speak for or against the bill? Representative Ingram,
you'd – oh, I'm sorry. Okay. Let me back up there. I'm sorry,
Representative Fredrick J. Love
Unverified
1:01:39
Representative Love. I'm misunderstood. You are recognized. Thank you, Mr. Chairman. Mr. Tyson, I'm a little confused because I have purchased a car in Florida, and I paid sales tax before they shipped it
Speaker 22
1:01:51
here. So how would this bill affect this? Because I'm a little confused about that.
Speaker 137
1:01:59
Representative, I'm not understanding. Did you have the vehicle shipped here? I had to, before I could have it shipped here, they had me pay the sales tax. You paid
Speaker 22
1:02:13
the sales tax of which state? In Florida. And then they turned around and they paid it to Arkansas on the
Speaker 138
1:02:20
tax. So I'm trying to see how this bill would affect that. Typically, if someone purchases a motor vehicle in Florida, Florida dealerships collect tax at the dealership location. If you first registered that vehicle in Arkansas, you would have paid tax again in Arkansas.
when you registered that vehicle in Arkansas?
Representative Fredrick J. Love
Unverified
1:02:42
Yeah, because they registered the vehicle for me. They registered the vehicle in Arkansas? They registered the vehicle. No, the Florida people registered the vehicle for me, so they just sent me my tags. So I'm trying to figure out how this works. In what state did
Speaker 137
1:02:56
they register the vehicle? I believe they registered in
Representative Fredrick J. Love
Unverified
1:02:59
Florida because they're the one that sent me the tags. So, I mean, I guess they registered in Arkansas, but what I'm saying is they took care of all the business for me,
so I'm trying to figure out how this affects that. Like, say, for instance, if this deal was in effect, would I have
Speaker 38
1:03:18
had to pay the taxes to Florida, or would I have just registered the
Speaker 138
1:03:23
vehicle here in Arkansas? In your situation, it sounds as if you first registered the vehicle in Arkansas and the tax was first paid to Arkansas. that is different than the situation most travelers find themselves in where the traveler is at the dealership, purchases the vehicle, and like buying a loaf of bread, the car dealership will collect tax at the point of sale.
Speaker 136
1:03:47
I believe if you buy the car and if you're in
Representative Keith M. Ingram
Unverified
1:03:51
Florida and you buy the car there and drive it home, you're going to pay sales tax twice.
Speaker 152
1:03:56
tax. If you take delivery in the state of Arkansas, you're only going to pay sales tax once to
Speaker 138
1:04:06
Arkansas. Thank you. Thank you, Mr. Chair. Mr. Chairman, I would like to add, as Representative Ingram has mentioned, he's not going to bring the bill up, but still DFA does want to remain consistent, like we did with Ms. Penaert's bill, that while the impact on this is relatively low, it does have a cumulative impact with
All others and governors presented it's a balanced budget, and, you know, as Mr. Leathers explained, there's just not room.
Chair
Unverified
1:04:32
Very well. Representative Ingram, where are you? I was
Speaker 136
1:04:34
so hoping he was going to change his mind before he got up. What I would ask the committee is to just lay this on the table, Mr.
Chair
Unverified
1:04:44
Chairman. Thank you. Okay. We'll just leave it on the calendar, seeing no motions. I would appreciate it if the committee would lay it on the table, please.
All right. Well, I've got a motion to table the bill. Representative Ingram made the motion. All in favor, say aye. Aye. Any opposed? Okay. Motion carries. Thank you. Again, if you've got something in the hopper, I would suggest that we get these things filed and let's start talking about them because it's, I guess, what are we, third week, fourth week?
Fourth week down, and let's start hearing some of these things. No other business. We shall stand adjourned.
Agenda
Documents
No documents posted.
Speakers
Chair
Unverified
Representative Tracy Pennartz
Unverified
Speaker 12
Speaker 6
Representative Fredrick J. Love
Unverified
Speaker 22
Speaker 25
Representative John Burris
Unverified
Representative Charlie Collins
Unverified
Speaker 43
Speaker 28
Representative Bruce Westerman
Unverified
Speaker 72
Speaker 73
Speaker 75
Representative Linda Collins-Smith
Unverified
Representative Nate Bell
Unverified
Speaker 66
Representative Stephen Meeks
Unverified
Speaker 102
Speaker 111
Speaker 116
Denny Flynn
Unverified
Speaker 109
Speaker 118
Speaker 62
Speaker 54
Speaker 131
Speaker 132
Speaker 133
Representative Keith M. Ingram
Unverified
Speaker 136
Speaker 137
Speaker 138
Speaker 139
Speaker 123
Speaker 125
Speaker 38
Speaker 152