Revenue & Taxation- House

For the moment house bill twelve sixty three and will run it at the end of the agenda with another bill up by the same sponsors so if we could go to House Bill ten thirty two representative fight. Lanny Fite. You're recognized to present your bill. Thank you Mr chairman Committee you all heard this a about six weeks ago I believe in all we're doing is in the home state credit we originate from three seventy five to four twenty five. that will be going on the tax bills next year. and we did a fiscal impact on it and it's going to be in two thousand twenty four B. thirty four million and then twenty five it will be thirty four point eight million is coming out of the US special revenue I have sent sales tax for this purpose and I'd be willing to take any questions at this point. Our members any questions. That. Roger Lynch a question you're recognized so represented by this is not a state general revenue it does not affect your revenue. All right members any other questions. Taxing under anyone the audience like to speak against the bill or for the bill. I'm seeing that we have no one signed up either way so representative fight would you like to close for your bill I'm close from the bill I commend you for the presentation of the bill Warner the will of committee. The motion do pass any discussion on the motion all those in favor signify by saying aye. Posed the eyes have it congratulations to pass the bill thank you Mr thank you. Our members that takes us to. House Bill. Eleven ninety representative back. And I believe representative back has an amendment. Yes chair of the. I'm Rick Beck district regular paying description of the compact that amendment out and then we'll have to have you present amendment adopt the amendment and then we can go to the presentation but just when it gets passed out of you would just explain amendment will go from there are. Thank you. Members only giving just second to read over that amendment that will continue. Representative that you want to explain your amendment. Yes thank you Mr. Of all the amendment all the amendment does is What those feedback all the amendment actually does is just adds additional livestock operations to an existing bill you guys can probably remember member well all right to let in this by now but it's just adding additional. Of livestock to the bill that's all the amendment does. All right members you've heard an explanation of the amendment we need a motion to adopt that amendments we can present as bill the motion to adopt the main all in favor signify by saying aye. Posed does have you can present your bill as amended thank you Mr about four years ago the poultry. Federation guys came and talked to me and I said well the problems that they had was that they were using water it was being used to produce poultry and I said why can't we did why is that not tax free for us just like fees and all the other things are so we we did that representative Christiansen ran that for me the last time so we got that done well then long held its line farm operations came and talked to me said you know it's is the same thing applies to us so I wrote about so we will lead you to that so I had them and then the with when I got with that then they the dairy operation said you know the same thing also applies as to what I did was I said I'm just gonna write one bill and it will include all the last operate this is this is water that is metered separately and is consumed in the process of producing fibers you may wonder why some of the. Different livestock a bison sheep not that actually comes from another place in the call referred to livestock so it makes it line up with that. Okay. Mayberry you're recognized. Thank you Mr chair so in other words the fiscal impact that we're looking at because of this amendment will be updated is that correct yes okay. Members I failed to tell you at the beginning this is a bill that we're going to hear and and discuss but we will not be voting on this bill at this time this will come later I would imagine in the next few weeks. Any other questions. Acting on anyone in the audience want to speak for or against this bill. But given they want to come to the table and have any position on this bill are you good the. Clear there there's been changes made to the bill that will update the fiscal impact you're going to get that forces quick as you can okay all right thank you all right this president of operettas thank you I just wanna say thank you for bringing this bill I know for a lot of small operations it's just pennies on the dollar in terms of profit and every little bit helps and this will really help ensure that future for future farmers and continuing the here in Arkansas we really appreciate your efforts on this thank you thank you. All right. Seeing no further questions representative back would you like to close for your bill. Anything you want to add. I'm close okay we'll we'll circle back around when we get the new fiscal impact and then get you back on the schedule in the next few weeks thank you thanks for the presentation. I members next up on the agenda is house bill thirteen sixty four. Also we will not be voting on this bill today that will come later but we do want to hear the details and ask questions and discussion the representative council welcome revenue tax thank you Mr chair thank you Committee morning This bill is is the bill that will exempt breast pumps and accessories from sales tax in Arkansas we know that breastfeeding provides innumerable benefits both for moms and babies it is one of the single most effective steps that a mom can take to protect the health of herself and her baby Arkansas has been really on the leading edge policy wise and a lot of ways when it comes to incentivizing and supporting breast feeding mothers in our state but this is one way that we can go up even further and do even better by the moms in Arkansas I'm currently breast pumps and their accessories are taxes that six point five percent state rate and then whatever acid in county sales tax on top of that this bill would drop that at two zero. Breast pumps X. and their accessories really help working mothers and really any mom that has to spend more than about three hours away from her baby continue to breast feed and continue to optimize the health of her baby so I'll leave it there and I will be happy to answer any questions that you may have about this. There's any questions representative Mayberry you're recognized. Thank you actually I'd like DNA to come to the table if if that's okay because I'm just really surprised that this is that high that. At the. Of the of an amount. And forgive me because I haven't had a chance to read over all of it but could you can explain how you came up with the number. One part is the upbeat and introduce yourself for the record you can go and answer those questions. Thank you Mr chair Paul Goehring DFA of also got drew Smith with are. It miss this is an administrator for sales tax. AS true Smith sales tax for DFA the way that we calculated this information was utilizing data that can be found a with the US health department CDC as an Arkansas department so what we would utilizing those situation Hayes Mister Smith would you pull that Michel of clothes were having trouble hearing you down here absolutely every human now all right so what we would do in those cases as well as what two other states to see what if they've had any bills that have been submitted in the same format and kind of you laws similar information that they had had as well. Using so what we look at with the. The Arkansas health department data is actually comparing their birth rates and how many births that they have per child and then also factoring in whether or not it's a mother would be purchasing a breast pump multiple times if they have multiple offspring and things of that nature so I'm not sure that fully addressed your question maybe they got a start. So is this mean that every mother will breast feed or how did you come up with the number. No this is not assuming that every every mother would residence this gave us an idea of how many births there are and how many mothers were having birth to multiple births and then we took there's also with the breastfeeding report card that was issued by the CDC and they show that only sixty one percent of mothers actually even attended breast feeding at least one time so we we try to pare it down based off of those percentages as well and then also like I said before if you had multiple births you might not be actually purchasing skews me purchasing breast pumps if you already have so we we pare that down significantly. Thank you it just seems like a really high number for for but maybe it also includes a lot more than what I'm thinking about so right and that only a mention for their other states that passes and their number is actually significantly higher than ours so we did a lot of pairing them. Thank you representative Mayberry representative will you're right so you're you're telling. Will you number is an objective you don't have any the. there's not any information that's reported on the taxpayer's tax return this specifically itemized bill so it is subject the what we used as industry data center thank you. Members any other questions. Paul do you have anything that's given to second public Senate race you're recognized. Well my my questions for the sponsor. Okay good represent cloudy I know in at least some instances if not many answers instances insurance will cover in part or even in in all of the cost of a breast pump do you know or do you have some sense of How how many folks that would apply to or what what percentage of. Women have that available I don't know how many breast feeding mothers are insured versus uninsured right now I will say that I think even if you are insured the sales tax exemption will make a difference I think obviously that savings will be passed on to the consumer but more importantly the way it a lot of insurance company cover committees cover breast pumps is they They don't necessarily put a dollar limit some do but some say you are allow you know we will cover this kind of breast pump and they tend to of course be the cheapest kind of breast pumps on the thought would be that if we can kind of cut costs on the front and for those insurance companies maybe to come kinds of come to pump that they would be able to cover with improving quality. Thank you representive any other questions members. Paul did you want to or could you touch a little bit on I guess your thoughts on the cost of it but also how and we think we talk about this order this keeps us would keep us in line with the stream stream on sales tax. Yes that's right so Mr chairman and members of the committee Arkansas is a part of the streamlined sales tax agreement in order for there to be an exemption and sales tax for specific products there has to be a at an established definition this bill does not create any issues for us within streamlined so if the General Assembly were to pass this we we have these definitions that are providing the streamline agreement. Thank you members any other questions. Nineteen ninety one the audience signed up or want to speak for or against the bill. Mr Gilmore did you want to speak. Do not want to speak are you good. Okay all right thank you. Thank. Nineteen nine thank you Paul representative council dealing with LS left to add in closing of your bill thank you Mr chair thanks committee for the questions I did just want to add one point that I did not make initially which is that the formula baby formula is currently covered under grocery exemption and so that that that is taxed at a rate of one eighth of one percent I am by this state again where's breast pumps and things that would help breast feeding and are taxed at six point five so this is just an attempt to kind of leveled out again incentivize and support our breastfeeding moms in Arkansas and I appreciate your consideration thanks thank you for coming down members again not taking a vote at this time but keep those discussion in mind for the next few weeks as we start hearing these bills and voting on the. let's see. Representative Richmond. You got to ability right yes Sir you will start with the house bill twelve sixty three The Amendment. Yeah. Five members this fourteen to twelve sixty three is a concurrent and Senate amendment so representative go ahead and you can present it The Amendment thank you Mr thank you committee this amendment if you if you remember twelve sixty three come through here been through the House went down to the Senate. I guess it's good to know that there's actually Senator down there doing work because what they did was on page four line seven. the deleted the line and then the added all the information back. And the only changes the the added cash. To the list of payments so that's the only change in this. I'm open for any questions that you may have members any questions. Axing none anyone not able to speak for against this amendment. Not seeing none representative are you close to your Amman am close appreciate a good vote members what what will of the committee keep in mind this is a concurrence and Senate Amendment. Representative wouldn't make a motion to concur in the Senate amendment any discussion all in favor signify by saying aye. Opposed you minutes past thank you and you can thank you and your thank you committee to two oh seven Senate bill two O. seven Senate bill two O. seven This is a secretary of state bill I've got some notes here that excuse me while I read them to be sure that I cover what I think needs to be covered again this bill makes minor technical corrections to the corporate franchise tax at including reducing the time from seven years to five years for entities to going to forfeited character status this will free up more names for new businesses the use. Senate bill two O. seven will also transfer or the online convenience fee from the current secretary of state third party vendor to the Secretary state to pay for upgraded businesses and commercial services IT system for both in house and online filings current system is approximately seventeen years old and they need a new system the vendor frankly is not going to continue performing and so they have really very little choice except to come up with the new system in this the system will combine for current systems into one streamlined system with faster more convenient services for the business community there is no new fees with this bill it just allows a secretary of state to capture the same fees that the third party vendor is currently charging for online filing fees is not charge of a business wants to mail in or drop off their filings now there was a question by the chair earlier about a cap you'll see in the bill it talks about a three percent fee when it reaches a certain amount. There's no there's no languages says cap however there is a cap because the most expensive filing fees for foreign is two hundred I think I think it's two hundred seventy dollars which the three percent would be about twelve Bucks and that the the actual cost of filing that most expensive fee is the cap. And I'm open for any questions that you may have at this time or the Secretary of State may be open for any questions that you have at this time thank you Senate members any questions. President Cavenaugh you're recognized thank you Mr chair of the phase that we're currently charging they're being charged by third party correct that is correct okay and they're the ones process and I guess the correct whatever it is how are we going how's the process going to continue or we don't have to continue to use that third party and pay them. And then we're just going to capture the fee no the third party is going to go away and secretary of state will be performing these new duties part of the reason why this fee is continuing if I understand this correctly and and I can bring somebody to the table here just a minute my answers not not substantial enough but part of the deal is because they are going to away in the past you know the system is so old they just refused to continue the vendor does And so secretary of state's going to take over this process and they're going to continue to speak to help continue to pay for this process. Follow up. So if we've had a third party doing this for so long and they charge these fees and now we're going to take it over have we had the ability to take it over and we've not and we continue to charge fees to people I think that this is one of those limits you know status quo let's kick the ball on down the field because it is substantial amount of money which has been budgeted to go ahead and and transform this old system and replace it that's that's where a lot of the cost is is trying to update the software in order to be able to to perform these duties okay since we have it in their budget and it's going to cover the cost of this new upgrade why are we continuing to charge the citizens of Arkansas I'll let them answer the question if I could bring somebody Secretary of State you at just welcome to the committee and if you would introduce yourself for the record and then you can answer that question thank you Mr chair said Rosenbaum director business and commercial services for the secretary of state's office we we currently the third party vendor uses these fees to provide this service for the secretary of state's office we have issue an RFP request for proposal for a new system we had four bidders are new or current provider did not bid on that so we're looking at getting a new system they use those fees to pay for the system so we will be able to capture these fees like they are doing just right now no change and use that to purchase a new I. T. system for both in house and online services for our for the business commercial services and how much is that approximately gonna cost approximately US six hundred thousand dollars a year. That's. About what they're collecting fees right now as well so it's going to be even okay so you the initial cost of it's going to be six hundred thousand dollars it is gonna be six hundred thousand dollars a year to keep it up how is that possible because if usually you're up front cost is the most expensive then your maintenance is less so how come it's going to be the same because we're going to spread it out over many years this is a system will keep for many years and so instead of paying huge up front costs were going to spread it out over many years so we're not hit with Committee offer you know three million dollars or four million dollars or whatnot so we're going to spread it over over many years to make it more cost effective okay some I ask again how much is the system going to cost you don't me six hundred thousand now you're telling me million six hundred thousand dollars a year for how many years it'll be probably five to six years something like that okay and after that say six years or five years of that are you going to quit charging the citizens of Arkansas the fate we can certainly look at that yes ma'am okay thank you. Thank you representative Lane Jean you're recognized thank you Mr. Of. Do you all have the ability on these fees if if there's a balance at the end of the year and you have more money that you brought in with these what happens that money I'll keep it in the secretary of state's office or or does it go to state central services or general revenue. It's my understanding that it will be a cash account and that it'll go into that fund and if there's anything left over then you know will go to joint budget I guess and and show that we have money there I mean the money will be there and it'll be up to joint budget and the legislature how to utilize those extra funds that's my understanding. But will. Well I've heard a lot of things that that that was your understanding and we thank and with my of. I'd I would just like a little bit more time on this I think there's a lot of unanswered questions before we before we pass this this bill out but I appreciate your openness about it yes Sir representative wouldn't. I will follow representative genes question. What is it going to be five years six years is it only three million dollars is only three and a half million how much is going to call and have you all entered into a contract yet or do you have a copy of the contract you know Sir we we have not enter into any contract well do you have four point five and four point eight million dollars over the five to six year period of time point eight million over six years on from three to four point eight percent in the table I think we need to look at this a lot closer yes Sir thank you. Thanks to your baby you're recognized. Just a question of the the six hundred thousand a year that you're talking about that's just the purchase of equipment and software correct. Correct and maintenance each year okay so maintenance maintenance agreement system software equipment but also there is a processing fee that your payment processor whoever you accept these payments and and and they process the payment for you they're going to assess some type of payment processing fee that will be accounted for do you know which payment processor you're going to use and in in the system no Sir we're we're going to put that out for bid and we haven't got that far yet okay so they'll be additional costs beyond just the software maintenance and equipment side yes all right thank you. Okay right representative Cavenaugh you're recognized. Thank you Mr chair Just wanna make sure we're also changing. The length of time before somebody gets replicated site from seven to five years is that not something we're also doing yes yes that's correct okay we'll if we do that are we not going to get more people to be able to file. Just say in this morning I tried to file and somebody had the name so I change it up a little bit do you project any others this to increase the number of filings so over the past four years we've increased by twenty thousand our filings so we we are increasing each year making more names available we're hoping that it will certainly be the better most people like what you said I'll just change your name a little bit and go going continue to file that we do increase and anticipate more filings each year. Have you put that into your projection. of how many phase if we're increasing the filing the all the time you're collected more more fees have you put that into your calculator and figured out how much you're going to be collecting no ma'am I really haven't we just not it's an unknown number so we just. We have not okay thank you. But your baby you're recognized. Just one other question the the new system and and the capabilities the system to handle more transactions I would this system be expandable to other agencies and other areas of state government right now I'm I'm I understand is we do not have a centralized contract at the state for payment processing so kind everyone just kinda does their own thing when it comes to that processing and and maybe negotiating on behalf of the state for a payment processor the system would save the state considerable amount of money in processing fees so my question is would this system be expandable to serve other agencies and departments of the state. The system itself is very is highly specialized but the payment processing part of it can be utilized by anyone and if there is you know another agency where we can go in and save some money we would definitely be B. I want want to look at that yes Sir. Thank you. We're doing the questions. I'm saying none. Anyone the daughters was speak for against this bill. Thank. Seeing none representative. Thank you Mr chair hi this is been lovely. And so I think at this time a lot of questions I think a lot of people still have questions that they have been answered adequately and so I'd like to go ahead and pull this bill down so that there would be an opportunity for secretary of state to gather more information and then come back at a later time in order to answer some of these questions to be sure that you're comfortable with what you're trying to pass out of this committee. Thank you representative we appreciate the courtesy to do that so we'll just hold but you take it off for now and then we'll bring back whenever you're ready clearly sector states always needs to contact on the members of that questions and try to work out some of the details I thank you thank you thank you thank you Committee. That takes us down to Senate bill one eighty four I'm a give the reigns over to vice chair made. Remember that but obviously without objection we're skipping over Senate bill one eighty five and go down to Senate bill one ninety four not to be the last one for today. Mr chairman if you reduce yourself and present your bill. Representative eaves and I am presenting Senate bill one eighty four. Give me just a moment. So currently the if they have the process of going to petition is which is filed with their office that it goes by the postmark date we fail to catch that and make it consistent with the tax appeals commission the way it stands now when the petition is filed with the tax appeals commission is when date that document is received the intent was to make it when it's postmark to get taxpayers a little more leeway and that that's all the bill does. You have to answer any questions. Members do we have any questions. Representative right. Yes Sir thank you Mister chairman of representatives would be the postmark that would count would be the one that would be mailed out to them would be them receiving it be on the postmark that would be considered it would be considered received up based on the postmark thank you Sir yes and thank you Mr chairman. Members we have any other questions. See none anyone to speak for against the bill. No one to speak for against Mister chairman you may close for your bill I am close from bill and I'd like to make a motion do pass usually have a motion do pass all those in favor. By any opposed. Your bill is passed. And we will stand adjourned.