Revenue & Taxation- House

Three just for the moment a representative Mayberry is waiting on some of her folks to get here and we'll move down the house bill thirteen thirty. Representative Richmond Richardson if you could make your way to the table you are recognized to present your bill. I thank you Mr thank you committee for hearing this bill this morning thirteen thirty is a constituent bill but it also hits a spot in my heart tell you a little bit of backstory I when I was a kid living in St Charles excuse me Atkins Arkansas at the time we had a lady in our church an elderly person that ended up losing her property to the state and that really struck a chord to me we did as as a young youth twelve years thirteen years whatever was we did of course some some car washes and other things to try to help her out but the reality that the state had the authority to seize an individual's property was of great concern to me an instructor court this individual was she was as I said elderly had lost her husband sometime in the past and I don't know what the circumstances were how much she even but the the reality was that was pretty strong there and then when it met with a constituent during the election cycle who had a similar problem with the aunt of theirs and was very concerned of the same kind of problem in in Northwest Arkansas we have a. Same kind of problems that most of our cameras have been county is has a little bit of property value increased unfortunately ours is going up really really fast this particular individual talk to me about the House that his aunt lived in for forty five or fifty years she ended up losing the house because property taxes just got outrageous one of the challenges we have often times you put in a a school down the road from from home the home value shoots up on no no account of the individual and now you have an increased steady increase property taxes which it creates a a bit of a constraint for the individual this bill is a fairly straightforward the meeting the bill comes on that second page when it really just stops the collector from transmitting the property for a period of time right now once you're delinquent for a year and then the the property is transmitted to the state for seizure ventrally selling they had to have some opportunities course within that cycle to To redeem your property but in this particular bill it would give our elderly specifically those that are retired a little bit more time there was some opposite opposition from the assessors and the county and I try to work with them to do some changes on the bill unfortunately we weren't able to get together and and make any adjustments I went ahead and changed some of their concerns they have expressed in the bill lowering the threshold and making a little bit less of an increase but overall that's the bill it's really does help or elderly people that have been their homes for a very long time given them an opportunity to stay in their homes I see this bill as a a bit of help to the state if we kick up individuals at this age out of their home they're gonna end up going to some sort of state supported environment we leave them in their homes for a little bit more time give them that opportunity to stay there it's not an additional cost to the state and we still accruing the taxes associated with that that could be creeped out a different time so with that I'll be happy to take questions thank representative representative Fortner you're recognized. Thank you Mr chairman of. I appreciate to. Your effort I probably qualify for a all that. But there's just one thing that I'm a little different appear than most the I've always paid my taxes. And I was just wondering I understand that this is a couple of your constituents but why is it so narrowly focused if we're going to help the elderly why not help all the old folks and not just in your approved. I guess so I'm maybe a little more clarity what what do you mean by narrowly focused only those who own the property now is this not applying did I in a five this read this to you I'm sorry you correct me is this applying to add again homestead. It specifically applying to homestead property and or homestead property that's attached to a piece of Agra property. And is not address the property the lowest taxed property in the state it is it is and I say this this could apply all to me and I appreciated being taxed lower than the normal property that you and I appreciate my homestead and so I I am I pay my taxes sure if people are concerned about their aunts uncles fathers and mothers help. Sure and and in those situations where individuals have additional family I think they are I but unfortunately that doesn't happen all the time people are not always in a position to help out others in in our county Benton County over the last since I guess tax years two thousand and fifteen all the way through two thousand nineteen there were fifty eight properties that were seized which is not a lot of properties considered over all that totaled on average about a hundred and fifty dollars per property is these properties were or turned over to the state which is also not a lot in in taxes but an individual who's in that kind of situation like the like like some of our elderly who were on a very fixed income most of these people when they when they have that kind of situation that comes up where they're unable to pay this bill kicking them out of their home doesn't give them doesn't really provide us with any relief as a state now they become even more susceptible to issues and they end up being in most cases state funded for their housing as they move forward. Thank you for your explanation thank you Mr Speaker Sir Fortner representative Lundstrum you're recognized. Representive Richmond I Richards and I'm sorry I am. Just clueless on it a little bit of help on. Page two. lines thirty one through thirty six and going over to the next page or give the name of an owner bill brown John does Jon Jones can you help me with that I'd never seen that a bill and I don't understand that's already in the law and the statutes that we're not making any adjustments to any of that that's already current law that's just. No the current required pieces of of existing legislation that's not any addition that we're doing and no changes to that portion of it just happens to be part of that section okay you so did they and like do you as to why that's in there can you educate us on. It's an example it's an exam yes ma'am all right example thank you that helps all right thanks. Representative Cavenaugh you're recognized. Thank you Mr chair. I to have a heart for people over sixty five that's why I have a bill here in this committee that does away essentially for people over sixty five in their homestead that they actually get a complete tax refundable tax refund on their their homestead so if we're going to try to do something for people why don't we do something like that rather than have in the counties in the city or the actually the counties have to bear a burden of not having the money that they need to operate because the tax when paid in full disclosure I'm not a property tax fan but while it's being enforced it should be enforced all the way correctly to everyone not a specific group and that's why the automated the bill that sixty five and over would actually get a full refundable tax credit for their homestead. I guess I'm confused that represent Cavenaugh on what you're what you're asking so help me you're you're saying that it's narrowly focused about your bill is open no I'm saying that what we're doing here is we're telling the counties that they cannot collect a tax on a certain group until they made all the specifications and the part of the specification I have to be fifty percent of appraised value they have to make sure about lanes and debts well they don't know about those lanes and debts and so it makes it hard to really figure out how far past due the property tax has to be before a county can do what they need to do to get the property tax paid thank you thank you for the question so first of all the lands are are have to be filed at the courthouse anyway and they're already there with the assessor's office so they have that data readily available to them so they can easily come up with the numbers associated with the fifty percent fifty percent and I'll I'll grant you as an arbitrary number I started out at eighty percent to try to grant these individuals the same individuals that you're trying to help more time there was some pushback in conversations around well no one will ever pay their taxes and then when you try to do sell the property state tries to sell the property to collect those taxes then you'll also not be able to sell the property because no one's going to want to be able to pay that so we ran numbers I looked at things and when we're looking at an individual average lifetime all those kinds of situations His taxes in this state came back and I was able to come back and say fifty percent is going to help almost everyone of these individuals so that's where that that number actually came from for the money from a money perspective the state surcharge use me the counties are still to collect this money it's still going to come to them at some point we're simply delaying this and from a financial impact like I said on average is about eight hundred fifty dollars per parcel and fifty eight over the roughly five years you're looking at ten ten per. Purcells maybe a year maximum in a large county like Benton County and you're still you're still only looking at eight or nine thousand dollars maybe ten thousand dollars a year per per for deferred taxes so we're not talking about a significant amount of money really what we're talking about is the ability for an individual who's been living in their home for significant period of time now being in the situation where they're unable to take care of themselves they have nowhere else to go and now we're going to kick them out of their home and not allow them to stay on the property I'll grant you we ought we did I did agree or did add the agro piece because we do specifically and then county have a number of of small farms where individuals are trying to May not have that farm specifically as a homestead obviously but they try to make a living what little living they can I know that maybe ten fifteen twenty acres it's Agra so I felt like that was burden that we give them that opportunity and add that in as well so if I have a homestead the price value is two hundred and twenty five thousand dollars so I'm gonna have to be in arrears how much taxes before it can be certified well that depends on how much you owe but those same thing yeah because the sixty five hopefully my my debts paid off I'm not sure that's and that's the hope for and generally speaking that is the case for most of these individuals you're looking at fifty percent of the equity in and what which will actually with the appraised value because I don't know what day it so how much past due taxes would have to be before it could be certified for that particular property in that particular situation I it would raise up to our guest a hundred twenty five thousand dollars okay and how long is it going to take this county to be able to certify that if these are the lowest taxed you're in the state well you have to exactly and since the property of the property would never reach that value that number would never be reached in a lifetime without medicine sixty five year old that let's say average and let's push them up over seventy five you're looking at ten years on average for an individual to stay on that property so we would never reach that number for that particular individual but if you're looking an individual who might have more of a a debt associated with it then then that wouldn't be as much equity in the home and therefore there wouldn't be as much time available for you it said that this was a shift of collecting taxes but if it's over ten years that's not really a shift of collecting taxes and if that person dies in it has to be certified who's going to want to go back and get on that property when they have such a pass the tax on it how are how are we not going to create issues with people not being able. To purchase these properties and be able to have the taxes paid sure which is why we do it fifty percent of equity right so in your case you're talking about a hundred twenty five thousand dollars worth of worth of back taxes and let's assume that you passed in that extreme circumstance after that crude a completely a hundred twenty five you still own a piece of property that's worth two hundred and fifty thousand dollars right so purchasing the property just like any other data if you have a mortgage on your property for a hundred twenty five thousand dollars when a person comes in to purchase property you have to enter required to pay back that hundred twenty five thousand before you can on the property you still on a property that's worth two hundred and fifty thousand dollars that you pay two hundred and fifty thousand dollars for but yet you only had to pay back a hundred twenty five in that debt it's the same situation we're talking about the state the state is simply in this circumstance the debtor and we're putting them in a position of a data so that they can receive their payment first as soon as a property transfers whether that's transferring to a child whether that's transferring to another individual wherever it's being transferred the property taxes have to be settled first so you still are able to to further protect the taxes for a period of time and then recoup those in that extreme circumstances yeah maybe it's ten years but that's an extreme circumstance. Well main in my view if we create an exception this way it will no longer be the extreme view because it will motivate people that are over a certain age simply not to pay their taxes because they gonna leave that burden I to to the people that they leave the asset to and to be honest with you right now when you're talking about farmland there the ask the people that inherit that farmland already so burdened with inheritance taxes they're having to sale that property just to pay inheritance taxes so are we going to create it where would you can't hold on to your regional homestead because we've created another issue of taxes that they have to pay it happens every day and farm families but they have to make a difficult decision to sell property because they cannot pay taxes what represent can appreciate question again but again we're we're still doing that and we're still going around in circles the taxes are still out right the individual who was supposed to pay the taxes didn't pay the taxes and so they're still up in transferring that property you're still owe in taxes you you may differ as an individual it in this case you may deferred that to your children but I would I would ask you the same question our if this bill passes and becomes law are you planning not to pay your property taxes I pay my property taxes now because I have the ability but and I realize that there are some our cans and that don't have the ability but also understand we're creating a loophole if we pass this that motivates people not to pay the property taxes thank you thank you. Thank you representative Cavenaugh representative ray you're recognized. Thank you Mr chairman I guess I share some of the same concerns representative Cavenaugh but it have you done any calculations to determine how long it would take under this bill for people to avoid. Forfeiture delinquent property under it a typical scenario under typical scenario in Benton County most individuals would not in their lifetime forfeit their property and I guess that's the goal of this particular legislation is that if the individual fell on hard times let's say I'm at sixty six or sixty seven they have some sort of unexpected expenses and they're on a very fixed income and on their property out right and have a significant amount of equity in that property let's assume a hundred thousand dollars for average and actually I believe state averages two hundred and forty two thousand but let's assume that this and that this particular individuals been living in the home for quite a while it may not be quite to that standard I had a hundred thousand dollars it would they would be able to remain on their property for about fifteen years before this would get close so I mean what you're doing what you're describing to me sounds sort of like a reverse mortgage where the states holding the note I I mean I don't disagree with that so are you are you worried about are you worried at all that this is going to create a moral hazard. Where people have a. Sort of a perverse incentive to not pay their taxes I'm not concerned about that from my perspective when I ask individuals just like **** representative Cavenaugh the same question would they pay their property taxes people generally pay their property taxes somebody that they pay them because they're required to that but they just take it off their property can be forfeited if they don't act in differing a property tax doesn't change the reality that it still owed right and that's I think that's that the key to this particular element I would love to be able to do away with property taxes for all of those individuals that are sixty five and older unfortunately I think I ran the numbers and they were about two hundred forty million dollars that we would have to figure out how to deal with that's a significant amount of money this is specifically dies designed to try to help those that are most vulnerable in this population if if we can look at it another way and I did try to work with the committees the county assessor's I said let's find a way that we can incentivize people throughout the idea that maybe we require people that aren't paying their their real estate property taxes would not be allowed to get their driver's license renewed or potentially car tax when it as potentials to tie backs as an incentive for individuals to pay these kind of like we do with personal property yet that conversation went nowhere and I got no help from that side so with and this is the way the bill came out and I'm happy to pull the bill down and have a conversation around what additional incentives you guys would like to have to to put that to to make this a better bill and if if that's something that the committee would like for me to do happy to do that but I think that the end result here is and what we're trying to accomplish is we're trying to protect those that are most on a bill that don't have the means and not making them end up being a ward of the state so to speak I depended on the state even further I appreciate that I think that that's up to you I I do think there's a lot of folks that do have. The same the same concern but thank you for answering questions okay thank you representative ray representative Warren you're recognized. Thank you Mr chairman basically my question was along the lines of represent Cavenaugh basically it's going to take a lifetime for these people to accumulate fifty percent in taxes so they would basically get to live there as long as they lived basically is what you're trying to accomplish is that correct that that is what we're trying to call okay not kicking out. Grandma if you will out of her house and letting her remain in her home until she passes so would it not be better for. Those individuals to sell property that it's better state and utilize that money to go somewhere where they can get taken care of. I don't think really what we're talking about here represent Warren is is what's best I know a lot of people I've I've bought and sold a number of houses through my time and I'm sure that you have to but an individual who's lived in their house for sixty five seventy years and selling that home would be like selling the kid okay so thank you thank you thank you senator Warner representative why you're recognized. Thank you Mr chairman. Of representative Scott I tell you what concerns me on this one Sir. You know. Every year when the sessional coordination department comes and does an audit of the county. It has to fall between eighteen twenty two what journalists and foreign language a lot of people but here's what you run into let's just say that. Let's just say in a school district it was gonna be something like One point five million dollars. But actually at the same time on the matrix is still into the AC Day for the term back let's just say that you you had that amount of money that you're talking about that was not included inside of of the funding formula. Okay now if that's things off six or seven hundred thousand dollars is just a one of that that can have a big impact on the kids in school because if you don't seventy three seventy four hundred dollars for student then you know you may be black and that back to where the state has to come back and overcome that that amount law right you know right so representative rail I'll tell you what in Benton County the numbers present right I can't tell you what all counties because I didn't do all seventy five but I can tell you what what Benton County over a five year period five year period we're looking at just under fifty thousand dollars. Which is not a significant amount to the budget and then count by a stretch yes Sir for all of please but it's three hundred dollars you talking about just one person or no I'm talking about total properties that were certified to the state during that five year period that the taxes owed on those properties the taxes though was just under fifty thousand dollars for the total amount in over sixty five years of age in the whole county in the whole county yes Sir over five years. But it but it still would affect the funding for well you look at ten thousand dollars a year which would be a significant impact by any stretch. Thank you Sir thank you Sir thank you represent school. Thank you senator Reid representative brown you're recognized. Thank you Mister chair I just want to clarify cannot speak to my fellow representatives. in any all correct me if I'm wrong but of course the funding matrix is not affected by county taxes. County council. Property taxes. Don't impact the matrix the matrix is strictly the state money am I correct. Property taxes. Are paid go to the schools from the county but they don't enter into the funding formula. okay I don't see of the exam. Let's just say lawyer school district you wait for those one point seven one four seven thousand dollars per child okay they'll decide that. You're not. Change your represented by push your button I want to raise your exam yes. What happens is if that's off two or three hundred dollars even per child it affects the matrix. Representative Carolyn because you're you're looking for this much from the lower level which is of the county level and then the seventy three or seventy four hundred dollars mates that local money which has an impact on on or how much is coming in for each child. I understand it affects how much coming in for each child I just want to clarify that when you talk about matrix I think about the funding formula at the department of education your forever so that that money is separate from the county money well yes ma'am but it all comes back to the well if it does but I guess I just want to make that point thank you. A representative Carol what or what I was trying to get to me was that the the figures you know that's out there you may have one district that only pays ten percent of what it takes to send a child to school but then you know you have some that actually produce more on local tax money then actually all costs of to the center school It's it's it's just a big formal and they can have an impact thank you thank you representative Ryan and representative brown president Jean Jett some to add to that. Well the property tax is all send me and and everybody has to be at a base of twenty five mills and then the that's divvied up into the education money for me to property district in the matrix has nothing to do with this bill I mean the I read no no no of this you're strictly of bill dealing with homestead exemption of people over sixty five not paying it but it has no effect on the property tax matrix from the state of Arkansas so don't don't get confused over that unless the property taxes are never paid. We the other just don't get the money right that would have an effect but by any other questions for representative Richardson. Not just. The property tax. Could be lowered. Are reduced because of this bill but it but it does not have anything to do with the metrics the dollar expended due. Of that money is reduced is income to the school district because the taxes are not you but the metrics is not involved in. ACT representative Beatty recognized. Representative Richardson that I think the committee understand your intent in the intention behind this this bill I would just point out with the homestead exemption increase that we just took care of this committee. Pretty much takes care of the three examples that you cited in in your bill would you agree with that. Maybe I'm confused on what the current exemption is is my understand that are exemption moved it from three hundred fifty four of fifty dollars separate the was four three seventy five to four twenty five forty five for twenty so you have fifty dollars to three examples that you had or what you know forty two forty four dollars in the bill. these these examples that are here are not my examples sorry these are examples that were provided are provided in statute currently and they just duplicated that they're not my examples sorry for the confusion no so would they that that exemption would absolutely help some individuals and I'd have to go back in and really dig into the data associated with the specifics of of the individuals in my in Benton county to see if that so that would resolve that and and I I think at this point based on the conversations of the committee and you bringing that to my attention I think it makes sense for me to back up just a little bit go review this look at the potential for adding some sort of stopgap to encourage people to pay their property taxes since that seems to be a big concerning the committee and also look at the potential that may be our exemption that we just passed out of the house would also provide some relief for these individuals as well so if if that's okay Mister chair I'd like to promote bill down for down the line that sounds like a little bit more to do on its with that be fine thank you for your testimony thanks so much for your time thank you Committee. Members we're gonna go and run Senate bill two O. seven sins representative Marcus Richmond it's been patiently waiting. Which five as we all know it's probably not his nature. Yeah and this bill does have an amendment stabs passing that out right now. Representative Richmond you're recognized to explain your amendment. Thank you Mr chair and. I'm sorry that the. Absent Richardson has left I appreciate him warming up the crowd for me here. On this particular deal The Amendment that you have if you recall as B. two oh seven is dealing with the continuation trying to to create a bridge so that the secretary of state can still offer online services for people that are trying to do work on franchises and and and there's a fee associated with that has always been associated with that well the question was what is that the go what how's it going to be monitored and this amendment takes it creates an account. Over with I believe the treasures state where that fees going to go and then. As the cost of this new system our curse then the money will be withdrawn from that account and will pay for the cost of the new system that they're going to have to try to implement. And that's basically that was the question that the committee had in the biggest concern committee had and I do believe this amendment answers that concern. Representative Beatty has a question to you for you on the amendment okay just paragraph D. on page two the reference to issue refunds and reimbursements of processing fees collected on the annual franchise tax can you go to a more detail on that no I can't but I'll try to get somebody up here that can can I ask somebody from yeah go ahead one you don't. You would when you get seated just introduce yourself for the record you can go unanswered questions. yes Michael here in general counsel managing attorney for the secretary of state that language is in there to give us the ability to issue those refunds if if the if it's necessary it can happen from Kate on occasion. Follows they give give me an example when you would think that would be necessary to re fun franchise tax thank gosh. You've got me on that one I don't know off the top of my head the last time we've we've we've issued a refund for that. All all. We're are you saying that the the refund would be issued. Back to the FNA to general revenue or were we talking about the refund going Paula you want do you have anything you could help explain. Thank you Mr chairman was the committee Paul Garin with the FAA we had an opportunity to review this amendment prior and discuss it with the Secretary of State and the way that I'm reading that language in subsection the Page two of the amendment is that it's for a reimbursement or refund of the of the private electronic processing fee and not a refund of franchise tax the processing fees are related to payments of the franchise tax but. Hi my reading was not that this is actually you're going to use this particular fund to refund a an overpayment of franchise tax. Got a question just a follow up I I I I miss but I was I was focusing on the processing fees collected at what point is this my I guess my point is is that paragraph in there so in the future. When the systems paid for. That you could stop collecting the fees and and those fees could be refunded back to the the filers is is that the reason that sent here I still understand why we would if that's not the purpose of that of that paragraph I understand what's in their. Well we seem to you not have an answer from the experts all shoot from the hip and see if I can give you what I think it means and that is if my chance. And and this is a rare chance I'm saying that this is actually paid for you for something you is needed then I believe that would provide an option. Where they could be done if they wanted to. And and I don't know what are the purpose it could have other than that okay representative gene you're recognized thank you Mr chairman of Mr Gerry what would you recommend that the the language franchise fee to be taken off this amendment. And I certainly for the purpose of the clarification on the amendment might benefit by clarifying that we're talking about if a processing fee that's specified elsewhere in the bill was originally filed should be refunded that's what this special fund should be used for is to collect the processing fees for purposes of paying for the system in the on going maintenance but also if there was any correctly code collected processing fee that should be refunded that this fund could be used to pay the refund to the customer to pay the processing fee is that is that helpful. So you'd like to learn more clarity in this amendment well it it did we would we would do if they review the amendment last week in our discussions we understood the intent but we can certainly understand that we we strive always for clarity in the code and if it if with the amendment would benefit from clarify exactly what you're talking about that's always a a preferred course of action I think we always get in trouble when it's intent yes I always think things are better when they're spelled out. Correctly the first time and I think we could do that now and. Not worry about intent. Well again that what I read paragraph D. it says the fund may be used by the Secretary state to issue refunds and reimbursements of processing fees collected for the annual franchise tax. Processing fees what other language would do we need to use to describe processing fees besides processing fees. Well franchise tax as a different tax. I'm happy franchise tax well I know franchise tax but fees collected for the annual franchise tax but we're talking specifically about processing fees. That are collected for the annual franchise tax which is what happens when you do it online. No the whole fee is because you're doing something online I think you could come down here and do it in person I don't believe you charge a fee. So needy I agree with you that line the says that you're going to have the ability to issue refunds and reimbursements of processing fees who is it being refunded to. Since that that would be money I guess held in the treasury would that be going back to the FAA back to general revenue or that be going to the consumer. Paul can you help do you have any clarity on that. Sure and. Just to get to that question also represented jeans question might that D. might benefit and clarification to specified processing fees collected under twenty six fifty four one oh four B. one which is. Earlier in the amendment under B. one to clarify exactly which processing fees or are being refunded and also potentially to clarify that the Secretary of State shall it shall issue the refund as the secretary deems appropriate with a issuing the refund to I would assume to to the actual customer that paid the fee or or over paid the fee okay I am represented luncheon. Just a quick question general why do we tax this in the first place we have corporate taxes why do we even need a. Tax in this nature at all I'd love to see is get rid of this it's a burden for businesses to costly be doing this but we can we can do this bill but to be do we really need to have an annual franchise tax when we already have corporate taxes just a thought. Well I think that running that bill you could run a bill like that hi this bill has really nothing to do with that this is dealing with processing fees of a system that is eighteen years old as we all know you know computers are like they're worse than dogs and dog years I mean you have a computer for two years and it's a hundred years old in dog years in computer years so the process is that we have is eighteen years old. The vendor is not going to do it anymore and so the ability to offer online services is simply going to end and that's okay a is if the people don't mind getting in a vehicle or some other way to come down Little Rock or some other method to do it but the whole purpose of the fee has always been to pay for this service so there's no additional going into general revenue or anything like that is to try to come up with this money and so I mean there may be a different way to do it but this is the way it's always been done and it's a paid kind of a pay as you go type system if you can get rid of the franchise taxes all cosponsored that bill in a heartbeat be happy to thank you thank your analogy in dog years and computers so spot on. Maybe there are. If you look at the referred bills to this committee they are. At least two other bills that deal with the franchise tax but the issue we're dealing with here now is the system and feel free to chime in if I'm wrong with the system that they're using right now is down constantly it's outdated it's not supported I received multiple calls from folks back home we're trying to do online filings and they can't get it done and it's taking honestly I'm not trying to one really wanted the bus but weeks if not months to do these things because the systems are down it should be able to be done same day so our hope is that the new software will allow that that's that's my two cents worth representative Beatty you're recognized again I'm sorry went down this path I didn't I didn't mean for this discussion to go where it where it went I guess one of my questions it this that annual franchise tax kind of stuck out when I read that aren't there other processing fees collected that would be included on the system or systems that I missed the boat and and this is just for the franchise tax there other fees so would it not be maybe more prudent to strike that and it just in that paragraph with processing fees collected and. Well I think that the language that we have here was language that was provided by the DFAT and what they thought would be the best way to cover this and that's what secretary of state presented here so the question I guess DFA could answer that question but again what you're seeing is a language that that we were provided. But may I just go ahead for purpose of the clarification we did get a draft a couple of draft amendments from the secretary of state's office to discuss last week we did provide an example statute that existed in current law to assistance in clarifying this issue but this this particular language on page two was was drafted by this Secretary sixteen I just I just wanna make sure that the record was clear that. we didn't draft to completely drop this amendment. Just a follow up so notice respective representative. So right now refunds are provided for in in statute Paul that that the the secretary state can issue refunds and reimbursements now somewhere else is covered somewhere else in in statute. Mr vice chair I'm I would have to go back and check I I'm I'm not aware of another statute that addresses the a refund of fees that are collected by the Secretary state out I'm still aware Sir. What you're recognized. Okay so I just at this paid not franchise tax not before last it's a five dollar fee we're talking about at least nine was. We we spent more than that said you're talking about so. Not I don't think it's that big a deal but anyway. Members any other questions on the amendment. I am seeing on where the wishes of the committee concerning the amendment. The with a motion to do pass amendment all right any discussion saying none all those in favor signify by saying aye. Posed our the amendment is adopted representative press one would you like to present your bill as amended. I'm not really sure. Here we go so go out on the member how long ago we went over all of this and basically what's going to happen is if if we don't pass this legislation then at some point the ability of the secretary of state to do online franchise work will simply end I mean it's already hard enough there is no new tax there are no new fees this is simply a bridge to get to a new system. And you the the money that was the last time I was here the issue was what's going to happen to these fees how's that going to be handled that's been answered I know that you know you can always look at everything that we do here and you can find one more thing the pick at. But at some point all the questions has been answered and asked and I believe were we should be very close to that right now at least I hope so and so I think that this needs to be passed this needs to go forward because I do believe secretary of state has worked extremely hard with a lot of members in here that had questions to try to get to this point that we are right now and we need this the people of Arkansas needs this to continue otherwise it's you know I don't want to drive little rock I don't try to do the stuff you know in the mail or some other thing like that I want to be able to get online and and and take care of my franchise business for our business online as conveniently as possible and and I think you know again even though you take a look at that the president's of that you may be sitting here and that you have this this more transparency of these fees since ever been established before for any state agency is happening right now is actually going somewhere else we're the state agency is going to have to fish that money out in order to make the payments that. You know I hate to do this for anybody else but this might be something that you want to take a look at other state agencies that collect fees as well because I don't know where that money goes it goes into a dark well somewhere so I think good ideas set a good precedent here for to talk to other state agencies about in the future and so again I think we need this might affect I know we need this and I think that this this is as close to what we can make as perfect as possible without just simply spending here and end up with the as some type of amendment that is thirty five pages long. And every word having to be discussed and and defined and so I think we have what we need right now and I would appreciate if the committee can see fit I do pass. Members any questions. At this point I would disagree with you on one point your comment about the eventual the system eventually being down we're at that point right now the system does not work it's failing and it's hurting folks back home those are my two cents where the wishes of the case hold on anyone in the audience wanna speak for against this bill. Maxing unrepresented which one would you like to close. I am close would appreciate do pass and a good vote. All right. Which the committee. As we have a representative Lundstrum do pass as amended any discussion all those in favor signify by saying aye. Oppose ayes have it congratulations you have passed your bill as amended thank you Mr thank you Committee. I members are gonna run Senate bill two fifty two representative Hodges. You are recognized to present Senate bill two fifty two. Mr chairman good morning committee Deanna Hodges district nine and today I have Senate bill two fifty two it's a bill that amends the definition of manufacturing and processing for purposes of the use tax exemption for machinery and equipment used to retread tires to match their definition for purposes of the sales tax exemption so this is the clean up bill to make the sales and use tax exemptions for machinery and equipment used to tread tires consistent state law provides sales and use tax exemptions for machinery and equipment used to retread tires The exemptions were originally not available if the tire retread or so the retread tires directly to the consumer the prohibition against selling the retread tire directly to the consumer was later removed from the sales tax exemption but not from the use tax exemption state law requires sales tax and use tax exemptions to apply equally so this bill is needed to clean up the language of the code there is no revenue impact. And I take any questions if you have money thank members any questions. Seeing none all you want to add anything to that coverage that covered it perfectly thank you thank you anyone in the audience like to speak for or against this bill. K. Singh no we are close for your bill yes I would appreciate a good vote thank you all right members represent Lundstrum you're recognized. Do pass a five time that would do pass read the representative Lundstrum any discussion all those in favor signify by saying aye. Posed I have a congratulations thank you chairman the committee members are going to do Senate bill two fif two skinny to thirteen three thirteen thank you three one three representative car. Three one three. Representative call you're recognized to present Senate bill three thirteen. Thank you Mr chair today I bring you Senate bill three thirteen very good bill it to the corrects an issue with their retirement income regarding military retirement currently on line seventeen and eighteen of the income tax form a person can take a thank you to take their military retirement or they can take their non military retirement we've got situations which people have for example thirty five hundred dollars in military retirement and twenty five hundred dollars in non military and so they can choose one or the other what this bill does this will allow them to sensually take both military and non military up to the six thousand dollar cap that we currently have. To take any questions. Members of her presentation of the bill or any questions. Single questions call you want to add anything to that or does that cover that covers it happy to answer any questions members any questions of by Paul. Ninety nine anyone in the audience wanna speak for or against this bill. Ninety nine percent carbs like to close for you bill I am close I move to pass and the motion do pass by representative car all those in favor signify by saying aye aye opposed the ayes have it congratulations you passed your bill thank you Mr thank you committee members that takes us back up to the top of the agenda house bill one zero zero three by representative Mayberry. And members this bill we will not be voting on today we're gonna go and hear testimony dig into the questions will potentially be voting on it at a later time. Yes and we do have a handout that representative maybe would like us to pass out so staff is doing that now. Thank you. Represent Mayberry leave the handouts are ready so you are recognized to present your bill. Thank you Mr chair I had the privilege of being on this committee last time and heard many great ideas is we're continuing to care this time around and some of them didn't make it out of the committee and to the bill that I'm presenting to you right now never got voted on last time it was actually presented by our former Revenue and Tax chair Joe Jett and when I was thinking last year bills that I wanted to make sure that we continue to talk about this came to the top of my list if you noticed I filed it was house bill one zero zero three the very first like true bill that had wording it filed this session because I felt it was such a good bill in the committee last time seem to really like the bill we just never had the opportunity to vote on the bill so what I did was I took that bill and I went back and I watched the committee meeting and listen to what members were concerned about what that bill and I tried to address them in a new bill this year basically this is a beginning farmer bill but if you notice my latest amendment I've changed the name I thought maybe we needed something that didn't sound so juvenile and would like to call it our next Gen next Gen is actually the way that Nebraska re referred to this program and I really like the name and I thought putting a R. next to it gives it the Arkansas touch but basically this is a program that would allow the beginning farmer to work with a more mature farmer and they work somewhat in a mentorship but both would be eligible for a tax credit both the beginning farmer and the farmer who has the agricultural assets we have a real problem in the state of Arkansas and this not only affects Arkansas but it affects our entire nation when we start talking about relying on. foreign entities for things that we know how to do well here in the state of Arkansas and that's making our own food and products we have currently forty two thousand six hundred twenty five farmers in the state of Arkansas but sixty four percent of them are over the age of fifty five that's concerning and we really need to take a closer look at this I've brought some folks with me that can help share this picture why it's hard for a beginning farmer why it's hard for a younger person to get into this I'm gonna let them introduce themselves and share a little bit of their story what will it shall go first. As I would that button and then introduce yourself for the record thank you committee of the Brandon Martin six generation cattle farmer first generation full to producer from White County. I think this is a I agree bill it's very difficult for young people to get started in the industry just because it is a high capital industry to get into and right now the the input cost per hop but the revenue your see this is very tough to get started I believe with this it'll give. older farmers an incentive. To be able to rent to young farmer even being a sixth generation cattle farmer of gaining the knowledge in my head of how to form but I may be fifty five years old before my father decided to hang it up not realize any profit from that form and by that time. Young younger generations I could. Not everyone be on a form no more I could have my own job not everyone come back to it I think that's really putting farmers in a position where the you could skip a generation of farmers I think with this you'll be able to. Start forming at a younger age will give landowners an incentive to rent to a young farmer the bill to get their foot in the door get started because that's what most people need is just just to start to get in the industry it may not even be a big spread but it's enough to get you started a bill to get gain knowledge and how to traverse the industry of the bill to be profitable. Thank you for that. I Mark labor numbers state affairs director Arkansas farm bureau looking at looking at this beginning farmer tax tax credit thank you a representative Mayberry for bringing this to issue and she reached out early early on probably in October looking at this and saying that we do we need to look at anything make some tweaks to this and coming from a rule background and being on the rule counties the biggest the biggest concern that people have in looking at looking agriculture right now in getting getting started is you have to have somebody help you out of in in the land aspect that's the biggest capital a capital asset that that we're seeing right now land prices keep going up they don't make it they don't make anymore plan so the those prices keep increasing and then if somebody helps you get that foot in the door then you can figure out ways got all go to auctions buy equipment and you can figure figure out ways to to grow your business this there's we've done a couple of research ideas on this a lot of the states up in the Midwest do this Nebraska Ohio aye in the number one complaint that we've heard out of each one of those states that we've done research on is the tax credit isn't enough we have more applications coming in and we need to raise raise that bar every single every single time Nebraska was one of the first states to implement this program it's been going on since thank you ninety nine in Ohio is just implemented this program so it helps them get the foot in the door and start starts their operation at a younger age and is represented Mayberry said the average. Age of Arkansas farmers or fifty seven there's forty two thousand forms in the state and that number keeps shrinking due to consolidation and formers I guess the the urban sprawl people moving to the urban areas of Arkansas and moving out of rural areas because there's not opportunity in those areas so. You want anything else representative may very. I'll be happy to take questions as you know we won't be voting on this today I am open to any suggestions in the bill I do want to point out that one of the things the committee was concerned about last time is that there was not a cap and so I did put in there a ten million dollar cap willing to make that go up or down based on whatever our circumstances are as we move further into the session just to get it started how I came up with the ten million is that last time D. if in a said that this would be a twelve million dollar a fiscal impact and I just went for an even ten million dollars so that's where that came in members any questions president Lynch you're recognized more of a statement than a question my son has to be a first time first generation farmer and Hey it's tough. To get land and these big farmers mega farmers or farm twenty five thirty five thousand acres they're always looking to pick up another thousand acres or five hundred acres and and frankly if you're land owner you look for stability and ability to perform and so these mega farmers come in they got they got fifteen combines and thirty tractors and so they just have a. Millions of dollars worth of equipment and then you look at a first time farmer that like you said he's picking his equipment up at a sale buying used equipment trying to get in the business and self an incentive the to prop the land owner to give this young person a chance this is very important the first time farm. That's my statement. President hockey recognized. Thank you and having come to Arkansas when it was the land of opportunity to start or fireman nineteen seventy nine I I do appreciate all of that And. one question that people may ask is why not other industries why don't we support support starting out other industries and I think you hit on the importance of both beating the world beating our state making sure that because Arkansas is a state in our country we're farmers can actually produce at a lower cost than in other states that we protect that and help in any way that we can to big those beginning farmers it's a huge investment with little return for the hours worked hi I know you probably don't want to calculate how much money you make per hour and with the investment and all that you have and yet we're so thankful for the people that will do that and we can never forget our gratitude for the people that are willing to do that and make that investment and I think this is a really good way that we can support them in a small way every little bit helps those young farmers stay in business during those up and down years crucial years and I would just thank you for bringing this to our attention and. Like to support the bill. Thank you members any other questions. Representative right you're recognized. Thank you Mr chairman German and ladies NO a lot of folks that go year by year own reigning farms you know some do it on hundred fifty dollars acre two hundred some is a percentage what did the older farmers say about this this three year. Package instead of just year by year could you give us an answer on that one. I don't have a lot of experience of that land Iran I do have a three year term on I think that that that could be an important factor because you don't want to put a lot of input into your land fertilizer chemicals branded bill to get that land built for the sake one and it's only on a one year basis that's why most young farmers would like would like a three to five year lease to be able to invest in the lands so it'll turn a profit for you. Thank you Mr. I have a question I'm represent Mayberry I notice in here there was an an exclusion of equipment. I guess manufacture maybe Quitman dealers. It had to come up with that or why is that in there and if you're I'm just trying to think through this year beginning farmer I'm assuming you don't have any equipment you need to buy some rent some. Well first of all that was in there from the bill before so I will say aye the I just patterned it after that my assumption is that because that's the dealer I would assume if it is a farmer who has that who wants to sell it to the beginning farmer that's for the tax credit would come in so that would be covered under what you have termed agricultural asset that could be equipment rand okay correct thank you members any other questions. Ninety nine anyone in the audience speak for against. Add commentary. Seeing none are represent Mayberry I know we're not voting on what would you like to close for your bill yeah I just want to point out something else too I I kind of made reference to a mentor ship anytime you starting out in something new the other part of this program that I I love not only are you connecting financially the the. Farmer with the agricultural assets and been doing it for a long time to the beginning farmer but they also the beginning farmer would have to start would have to participate in the certified financial management program just because you know how to farm doesn't necessarily mean that you know how to run the business side of it and so there's a lot of support that we come from that we want these programs to be successful and as you can see the on the sheet that we passed out from Nebraska They've had a lot of success with the program and I just think that it's important to the state of Arkansas just pointing out our Arkansas GB D. act right provides fourteen three fourteen point three percent so this is an important bill and we need to focus on things that provide our necessities and I can't think of something more important than food. So thank you for that all right members as as we've talked about before we're not yet gonna be voting on these bills have a the a decent fiscal impact thank you for coming down appreciate your testimony thank you representative Mayberry. Member saying nothing else on the agenda don't run off but we are adjourned for now.