Revenue & Taxation- House

Thank you Mister chair Dan Vaught state representative district seven eighty seven. Public hearing DFA. Department shoulders poultry federation. So this is of this is house bill eleven seventy two it's a bill that we've been working on for a little over a year it's a company that we actually and there's handout so you can kind of see what these Composters look lack if the company that we actually beg to come to Arkansas and was told that we weren't gonna charge taxes on it on this Act equipment and it ended up being and that we had several. That was charge several that was charged by a lot even in your districts if you have chicken houses in your districts I charge taxes but it's not this is a. They've never collected any tax on this because it is been exempt as AG of commitment and is used to look at the picture you can see that the it can't be used for anything other than composting chickens so and I let Mr Martin and Mr call talk from there Sir that's alright with you you may go ahead. Thank you members of Paul hearing with the FAA so at the conclusion of the two thousand twenty one session Mr Childress got in contact with me to talk about an issue and I was not aware of this this type of machinery and equipment specifically the insulin Arkansas so that's what we rely upon our counterparts in the industry to educate us so we were made aware about this the large composting device that essentially farmers poultry producers they are required to dispose of their mortality in a manner that is environmentally safe and consistent with our environmental laws they can use a composting device they can incinerate or to some other type of process to to dispose of their mortality I learned that this. This type of device is able to over chemical processes in time convert that mortality into fertilizer that can then be used for purposes of on the farm for growing crops and the issue that that we did come become aware of was that we have currently in our Arkansas law that generally assemblies Act enacted several decades ago we have an exemption for machinery and equipment that is used exclusively and directly in the commercial production of food or fiber as a business so um if you have a tractor that you use or combine that you use to you know plan to or to harsher crops that does for use directly to make food the problem with this item is this is this is not used to make food this is an item for your mortality that has to be disposed of so we we made aware of this issue we then began two you know bill art bills support by talking to the get to the former administration about possibly running a bill in the the next session to try to get this issue fixed so we drafted this bill we worked with Mr Childress in the poultry federation also your former chairman Jett was also involved in in this issue so we would the current administration is supportive of this clarification to Arkansas law to make sure that if a farmer or poultry producer that makes this necessary investment to dispose of their mortality and based upon our data these are about forty four thousand dollars apiece um to be able to purchase and mortality composting device exempt from sales or use tax now based upon our own understanding of of the mark. It. When a farmer goes to a seller of some type of agricultural machinery equipment that seller is going to collect an exemption certificate from the farmer to certify that that item is qualified for the current exemption. So what we then what DFA would have to do is if this you know if this clarification was not authorizes that would make put us in the position that we would not be auditing the the poultry pretty the poultry seller of the item we'd be going out looking at the farmers in verifying these exemption claims that's that's result that we're trying to avoid is making it very clear to create this this exemption for this specific item so that we have clarity in our law that when a farmer makes this investment they can buy this item exempt from sales or use tax I'd be happy to answer any questions about the bill members any questions. Okay thank you for that I appreciate it. The representative body you have in your house you want to add or not because the bill okay. Okay all right uh we. We do have someone sign to speak for the bill but I seem at the end of the table Marge everything on that are you good I'm I'm good thanks all right anyone in the audience will speak for against the bill. All right see known about your clothes for your bill yes Sir and I appreciate a good vote. Thank you ma'am you her possession the bill we do have a motion do pass by representative Fortner any discussion. President ray you're recognized. Thank you Mr chairman I'm gonna vote for this bill and I support this bill for two reasons. One is that this is a business and put and generally speaking business input should be exempt from sales tax the second reason is as I talk to DNA beforehand. I think that. This is not gonna have the best fiscal impact. That it says on the sheet of paper because general practices this is not being collected but this is the only one of these that I plan to vote for today because my understanding is that we're not letting bills out of this committee with the fiscal impact unless there went till we've heard them all and have an opportunity to rank them and determine what the top choices are and I know these bills don't have a big fiscal impact but they do have a fiscal impact and two hundred thousand here and two hundred thousand there hundred thousand here and fifty thousand there. Adds up to a couple of million real quick and I just don't think it's fair to everybody who has bills in this committee with the fiscal impact that we're gonna let a bunch of the other splice out so I am for this bill the voting for it thank you. All right any other discussion. Seeing none all those in favor signify by saying aye. Posed the ayes have it thank you. I representative Tosh you're recognized. Thank you Mr I'm representative Dwight Tosh. You're recognized thank you Sir I'm here with the. House bill thirteen forty five this is to amend the income tax read a deduction for a teacher's classroom expenses and to increase state income tax deduction for a teachers like I said classroom expansion from five hundred dollars to. Seven hundred and fifty dollars and if they're filing jointly option that would be fifteen hundred dollars that's what this bill does And the fiscal impact on this I think is around a hundred sixteen thousand dollars. Members any questions. The representative ray you're recognized. Representante should create you bring this bill today My recollection is that I think we I think we did something similar to this last session did did we did we. I think we increased the exemption we used to be two hundred and fifty. And we increased it to five hundred. Do you room am I right on that I'm not sure it was the last session of blue I doubt I know we made that increase out over the last one or the one before I can't be sure about that but what if we did go from two fifty to five and the this is just another two hundred fifty dollars a committee to try to help them with that offset that experience Mr chairman could I have someone from the FNA to address that question you better have. And that they're looking for volunteers right now. But I believe it was representative former representative Tom let's Bill per member correctly. I thank you Mr call again with the if they could you I'm sorry could you repeat the question. yes Sir thank you Mr Gehring this bill increases the income tax credit on teachers Buying classroom supplies. from five hundred to seven hundred fifty dollars I think last session there was a bill enacted in the law that increased it from two hundred and fifty to five hundred. Is I remember that correctly I represent I think you're remembering that exactly correct I'd be happy to go back and look at that but I believe that bill passed through this committee two years ago twenty one okay thank you yes Sir. Follow up with the right recognized representation yes could you could you just speak to the need to increase it again why then why that's necessary I thank the teachers up I well know this state by a invest a lot of money out of pocket and I think they need to be compensated that for that I I personally I had actually looked at the increase in this two thousand dollars but I decided was seven fifty with you know with what was going on and all the other things we were doing so I think there will deserving of it I I know the I know a lot of teachers as each one of this table does and they invest a lot of their own personal of time and and a lot of the their own personal money and to they should be compensated for that one way to do that is to give on this tax credit and I think it's obviously I brought this bill I wouldn't I was right thing to do. Thank you Sir. Thank you representative represent Beatty recognized at two points one represent ray you're exactly correct I think the Bill buy to let raised it from two fifty to five hundred did pass out of revenue tax did go on the floor the house it was passed My question now as far representative Tosh with the inflationary impacts that that we're all experiencing down the cost of supplies and other things for these teachers would you say this is the perfect time for bill such as this to be passed by this body now the chamber. I would and that's the reason I said while ago actually considered to be in all fairness to the teachers I actually was looking at a thousand of knowing what the what they're up against but no one that would probably be may be a little difficult to to get through at this point in time raised it from five hundred to a thousand with the two hundred fifty dollar increase that we did people the last session of the one before. Representantes embodies a very thoughtful process both taking into account the the budget in the in the revenue constraints in the state as well as taking the consideration teachers thank you for bringing serial representative will you're recognized. Because she's too late to change it to a thousand dollars yes sure it is a bit representative probably is because of this late in the game so it probably be too late to get it through both chambers. Thank you thank you of I just talked to Senator the representative body makes a of a very good point the we're we're looking at inflation of about six and a half to seven percent and these teachers amend buddies with that thank you thank you Mr chairman. Thank you for representative Fortner you're recognized. Thank you Mr chairman The members I think These ones that are Minimal amount but are worthy I think we ought to pass and you know why because I've heard that the Senate says they're not going to pass anything we send over there so let them wiggle their way out of this if they want to be the people let him be the people let's pass it over there and just see where they're going or not that's what I say I'm sick of them telling us what they're going to pass a what we're not gonna pass. Yes. Members any other questions. Question. Anyone to John speak for against this bill. Rising number presented Dr Jart close rebuild measurement I'm close for the bill and about a very shady good both party chairs hi motion of a representative you're recognized records representative it is a motion to do pass any discussion representative gene you're recognized. Thank you Mr chairman of members I I am not against teachers of we've got to remember that we But a big investment teachers this section of we've we've brought their starting pay up from whatever number you want to make forty seventh forty six forty eight to the fourth highest paid starting teachers and the the nation this may be a bill before but a better time and I'm not against the teachers and I understand what. My friend representative Tosh trying to do but I think this is this the the the bad policy for right now because we have made a huge investment in our teachers earlier in the session and I'll be voting against any other discussion representative rate you're recognized. Along similar lines what represent Jean said this is nothing against representative Tosh this proposal I think substantively there are strong arguments for this bill but as I stated on the previous bill I'm I'm not gonna vote for a bill that has a fiscal impact if we're just gonna do it on some and not allow it on others so it's nothing specific to this bill but that's just going to be my posture on these bills today and I also want to say I tend to agree a little bit with what representative Fortner said I think he made some good observations so thank you. Members any other discussion. Currency none all those in favor this bill signify by saying aye. Opposed. The ayes have congratulations you pass your bill representative toss thank you Mr chairman thank you Committee. You're recognized president house bill thirteen forty six. Committee members this bill here what was brought to my attention by a I have a food pantry that is in my district and they serve a lot of people I'm telling you thousands of people and it's it's in a rule area and the struggle to be able to get by of you know what the only way they're able to survive is to donations it's obvious it's a nonprofit organization and they help so many needy in that community last year the County was able to donate to them a a man that taken all these supplies meals clothing whatever might be out into the community and delivered to the motion eighty and then I found out that when they went down to the department of finance and administration to license vehicle they were not exempt and here we got a food pantry that struggling to get by now they're being told by the OpenID the the they'll have to pay two thousand dollars I guess for sales tax or whatever and the lasting of the vehicle which two thousand dollars to a food pantry in a rule area I mean that's like no telling what that would mean to us or someone else you know trying to survive but so I brought this bill not just for them but it affects every food pantry to specially those in the rural areas that serve the motion eighty and you know I know what representative ray had sitting here today about you know maybe a time that would maybe we don't need to look at these income these a fiscal impact should not pass any yet but I will tell you of all the people that were out here trying to help and all the people at the I can't think of a another group of people that we need to be stepping up to the plate and trying to do something for them the. The food pantries that are helping those that are the motion eighty whether it be posted for the be closed because sometimes that's the only meal they'll get the day's time and to keep those who pantry doors open this will give them a tax break and it will help them and the. Now take any questions members any questions. All right thing no questions and we have no one signed up to speak for the bill or against those anyone in the audience like to speak for or against the bill. Taxing on representative talk would you like to close for your bill the bill and I will mention the fiscal impact on this was six of sixteen or seventeen thousand dollars that was it thank you members of our presentation of the bill what's will of committee. Okay motion to pass the representative Cavenaugh any discussion they would run student representative array you're recognized thank you Mr chairman again on this bill I find myself in a hundred percent agreement with the substance of it I just want to point out that I I presented a bill the other day that was also a sales tax exemption on vehicles it was on vehicles for people that are wheelchair bound and that is also I think deserving because just like food pantries and so I just want to keep in mind there's a lot of deserving causes and so but again just like on the previous bills I'm going to be a no on this one not because I disagree with the substance. Just because of how the process is moving along this morning. Members any other discussion. Seen on all those in favor signify by saying aye opposed. The ayes have it. Thank you Mr chairman thank committee members. Representatives your self and you're recognized present your bill representative lessees Thank you Mr chairman members this is house bill thirteen ninety eight that amends the stillborn child income tax credit this is a bill we ran last session that gives parents of a stillborn child a non refundable tax credit of five hundred dollars. So you're asking yourself why my back now and the answer that is to fulfill a promise I made to this General Assembly it last time sitting at the end of this table. Talking about this need. I was asked multiple times by the committee members on revenue tax on the house side and the Senate side. Some of those members are in this room today what I consider increasing that amount. By thousand dollars my answer back then was no because I want to just get the bill passed with again like now late in session so. I tend to be with someone who follows through with my promises I made a promise to come back in attempt to raise this of the states that have a stillborn child tax credit. If we raise it to fifteen hundred dollars we will be very close to half of what the other states do. It does have a fiscal impact it's pretty negligible and to representative race point. Regarding fiscal impacts I think we've all had some. Questions about the accuracy of those fiscal impacts. And I agree with that I also understand the FAA's position that it's extremely hard to get those numbers pin pointed to the dollars I think they're doing the best they can in most cases when we originally ran the bill the fiscal impact was estimated two hundred thirty nine thousand five hundred dollars. It turns out the actual fiscal impact was about twenty three thousand dollars. There were Sixty five parents who experienced a stillborn child that's a child that dies in the womb after twenty weeks. So they were able to take the five hundred are non refundable tax credit what they ended up benefiting from that. based on the fact that it was so low was about three hundred and forty dollars of actual tax credit so we're able to raise it to fifteen hundred dollars it would essentially make more people potentially eligible but what it would do would make the income level of the people that would be more eligible higher in other words at five hundred dollars you're affecting people that make about twenty two thousand dollars a year at fifteen hundred dollars you're going to. Affect people that are making somewhere around forty three thousand dollars a year again these are parents that suffer the loss of a child after twenty weeks the bill is named after a girl named Paisley who died one day before she was to be born so she would be considered a stillborn child it is comforting to know that senator Tom cotton has introduced a bill on the federal side that would mirror this law in Arkansas. That would allow families to get the full child tax credit on the federal side so that's going to help. The reason I think this bill is important is because when you have a stillborn child especially a very late term the the cost that the families in car are identical to the costs that families incur when they have a child that's born alive. Except they have the added expense of having to buy casket in a tombstone grave marker and pay for a burial and funeral. So that's what the bill would do it would it would help more families get this benefit with that I'd be happy to take any questions. Any questions from committee representative right my questions for David I. this is hearing I I was my curiosity was piqued by what chairman needs just said regarding the numbers on the fiscal impact if what he's saying is accurate I don't see how this fiscal impact statement could possibly even be close to accurate. Can you please. Walk me through or defender justify the two hundred thousand dollar fiscal impact it. You're saying this bill makes yes representative right Paul hearing with the FAA when this credit was enacted in two thousand twenty one we provided a fiscal impact statement that the chairman did mention approximately a hundred thirty nine thousand dollars that revenue impact was based upon the centers for disease control data that we had concerning the number of stillborn births that we were experiencing in the State of Arkansas over of a number of years which came up with an average of two hundred and fifty seven per year. Now when we started getting these returns that were filed for two thousand twenty one for the first year the credit was available we saw that they were only sixty five returns that were filed in Arkansas that clean the benefit of the credit so the sixty five file returns that would be eligible for a five hundred dollar credit resulted in potentially thirty two thousand five hundred dollars in credits that could be claimed on a return but because it is a non refundable credit the credit is limited to the amount of the taxpayer's liability so that resulted in two thousand two I'm sorry twenty three thousand nine eighty seven in real returns to a taxpayer so what we have a couple issues at play here is that the The number of returns filed doesn't necessarily reflect the actual number of average data from the CDC of the number of stillborn deaths. Also the nature of the nonrefundable nature of the credit results in that you don't get the full benefit of the credit if you are a lower income individuals and you don't have a tax liability on your return that is greater than twenty two thousand four hundred I'm sorry your net taxable income is not above that five hundred dollar net tax due on your return so what we did and we spoke with representatives we have no political conversations what we did is we did a an analysis to look at. If we just base the revenue impact on the two thousand twenty one return information only and we increase the credit to fifteen hundred dollars that we made an estimate about fifty nine thousand dollars if we just use that core. That one year for our data for making the revenue impact. It would be a minimum of fifty nine thousand dollars and we would have a range up to the amount that we placed in the original fiscal impact for the bill so okay okay you're saying okay all right let me I'm not trying to have just wanna make sure I understand it sounds like you're saying on the on the green sheet here that the revenue impact will be between fifty nine thousand and. Two hundred and fifty seven that's correct okay I was reading it to interpret that the current revenues fifty nine thousand and the impact would be going to two hundred and fifty seven thousand no it's a ranger you okay so you're putting a ranger okay I will and we will certain no more the more return receipt resented that makes sense okay great yep thank you yep. Representative brown. Thank you Mr Those. Of those People who did receive the credit do you know how many of them how many total and then how many of the total receive the full amount. I don't have that information but be happy to get that for you certainly we we can see that of the thirty two thousand five hundred that would be potentially eligible the difference is about eighty five hundred dollars of this of the total six sixty five returns that were filed but we'd be happy to go back to our income tax section and see how many of those sixty five receive the full benefit of the five hundred dollars well the reason I'm asking it's not a DFA really interest it some or tax interest it has to do with the the maternal and child health in Arkansas and I would think that that your numbers might reflect that. More children. The. We're still born in the lower income. That's that that's my and that in that base that may be bore out with that with our data because we have in Arkansas we we always strive to remove taxpayers off of the tax rolls as much as possible to me to minimize the number of actual people that are filing returns with us so if we do have a number of these individuals that are experiencing as a state have the birth of a stillborn child and they just don't even meet the threshold for filing return we're not going to get that information on returns because we're just not getting a return from those taxpayers. Thank you I'm I'm just I just think that this would substantiate some of our concerns are helps identify where to look that's yes ma'am thank you. See no further questions from committee we don't have anyone signed up to speak for against the bill if there's anyone that would like to speak for against the bill in the audience in the room see none Mr chairman you're recognized to close for your bill they have pretty well explained The impact of the bill would have so I'm closing with that I'd. A good vote make a motion to pass. We have a motion do pass any discussion. Representive right. I thank Committee I think this is a great bill when representative Eads present this bill two years ago I was not on this committee but I remember watching it and I was I was moved by his presentation on this and I support this bill I just simply want to state that I wish this and the other bills we're subject to the same process thank you. Any further from committee we have a motion to pass all those in favor hi eighty opposed. Congratulations your bill is passed thank you moving on to the next item on the agenda SP three sixteen represented more. You'll recognize yourself and you are recognized to present your bill thank you Mr chairman representative Kantor Board district twenty three. Mr chairman with your permission I'd like to invite Mr Greg Crowe from the Arkansas contractors licensing board to join me. You bet you're recognized just introduce yourself for the record and you can begin. Thank you Mr chairman of the committee Greg Crowe the Arkansas contractors licensing board which is part of the department of labor licensing. All right Senate bill three sixteen simply adds the contractors licensing board the residential contractor committee and the department of labor licensing to the list of claimant agencies who can offset a taxpayer's income tax refund to satisfy a debt. Representative Cavenaugh you're recognized. Yes Sir I'm gonna ask this question. If my memory serves me correctly either last session a session before we passed a bill that actually allow the state tax returns to be garnished for debts. If that's true why we need this. Balance. I'm aware I'm assuming. And I don't know the answer directly by much I speculate apologize for that and is that this process. You wouldn't be going to the full garnishment process we have to file the garnishment in circuit court pay a fee for the garnishment those those kind of things this process you would file this with the department of finance administration they would intercepted at that level was posed before I'm I wasn't aware that the bill I apologize for that I was aware of this claim agency bill processes from the books for fifty years or more but I'm not aware of the other one I apologize. Mr can I have the if they come down. Thank you. Paul if any other consumer or landholder anybody else has to go through the garnishment process to be able to garnish this tax refund and I would probably two sessions ago I think maybe we did that because historically we've not allowed tax returns to be garnished but now we actually do allow that represent cannot hold hearing with the FAA so there is a there has been prior legislation to allow civil judgments to go through the same set off process within DFA it has not yet been enacted by the General Assembly there is a bill that's pending in house Judiciary again this session that has not yet been heard by the committee but currently the set off process for income tax returns is limited to those specific claim it agencies like there specifically authorized to do that go through the set off process and this particular bill would add this this state entity to allowed to participate in the set off process but your question currently civil set off is not is that for civil judgment is not a part of claim that the clean agency set off program so I guess it made it through one chamber but not the other chamber is that what happened you are correct okay so actually we have an imbalance of power of the state can garnish consent that's what you're doing but you're just not going through that the normal. You know procedure for garnishment you're not going through the court system so the government has the ability to garner somebody's tax return but someone who is I want to debt actually has to go through the court can't even do it but if we were to ever pass it they had to go to the court the garnishment process that's correct that's the current state law is that a civil civil debt is not subject to garnishment in Arkansas through of the income tax refund okay thank you yes ma'am. We have any other questions from committee. See no questions from. Representing a very if you have a question. This may be from his lack of knowledge but when you're talking about lasting boards in and contractors committee I'm assuming you would talk about a fine line you should be licensed in your not in there to find the issue my question is can that fan be issued in seventy to this or. I'm I'm sure there's a an appeal process for them appeal against that my question is could that fan. Does this happen after the appeal look at the money be taken before the peace no Sir would to process all has to go on the they would not this would not be subject we could not put him on the list Intel after the full appeal process has been completed with the following the Supreme Court or consider circuit court or whatever it is thank you. Any further questions from committee. I see none don't believe we have anyone from the audience or anyone signed up to speak for against. so you're recognized close for your bill thank you Mr chairman I am close for my bill and would appreciate a good vote. Where the wishes of the committee. I have a motion do pass any discussion. Si none all in favor say aye hi eighty opposed. Congratulations your bill passes thank you Mr chairman thank you Committee. A couple things before we adjourn today after ten minutes after we adjourned from session will reconvene I think we have about four Bills that we're going to take up and wrap up today so uh will see all after adjourned. Ten minutes opponent we're done.