Revenue & Taxation- House

Thirteen eighty two by representative Lundstrum and she does have an amendment that staff is going to be passing out to you momentarily so just give us half a second. Hi members you have the amendment representative Lundstrum you are recognized to present your amendment that will be the only thing will vote on today's the adoption of the amendment after president the amendment thank you chairman the Amendment is couple of corrections that I will review as we go over the bill I would appreciate the intelligence of the committee to pass the amendment let me go over both bill are you making a motion to adopt the amendment I am a member have a motion to adopt the amendment. All right all those in favor signify by saying aye. Lows the amendment is adopted okay you can not present your bill representative thank you colleagues some of you have heard this before so I apologize for the repetitiveness this passed overwhelmingly last session and then crashed and burned between two senators last session but I'd like to give you a little bit of background for the new ones in the state of Arkansas we have a fifty two percent recidivism rate and when we have about ten thousand prisoners that leave our penitentiary system every year and then over three years fifty two percent of those will go back and many of the times that is due to the difficulty in finding a job obviously they don't come with a very good resume and is difficult on businesses to take that risk it is a difficult process to onboard somebody who's been in a penitentiary it costs those businesses strong amount of money to especially comes to insurance so what this bill does is instead of having a government program we don't need another government program we need businesses to be willing to take the rest to hire those inmates and what this does is offer them a tax credit for hiring the formerly incarcerated three thousand dollars the first year two thousand dollars the second year and one thousand dollars the third year and what that means is on the anniversary of the first year. After they pass that anniversary they would get a three thousand dollar tax credit non refundable tax credit that was part of the adjustment in this. Non refundable tax credit so if they leave the business at three eleven months and three weeks they don't did get the tax credit but all that time and every single paycheck the city the county and the state will get those tax dollars. Running through the state and they will be able to pay their fines fees and restitution the business is completely permissive they can required drug testing they can get on in their insurance whatever they decide but the business is rewarded for taking that risk the second year it's a two thousand dollar tax credit and then the last year is a three thousand dollar tax credit this is a pilot program for only a thousand inmates the cost over three years the first year it's three million the second years two million the last year is one million but this is the cost of the state. Four thousand inmates it's thirty two million dollars. So if I were to give you thirty two million dollars for your investment of six million how quickly would you give me six million dollars. And thousand lives that's a lot of lives that we could have an impact on I figure this out the cost for three years. At thirty two million dollars that's ninety six million dollars. If the program's halfway successful we can generate forty eight million dollars for the state. That's a pretty good night for a six million dollar investment not to mention the impact on the lives and the families of those prisoners and their lives being regenerated or rebooted we nicknamed the program rebate I would love to see Arkansas have this type of program and give those prisoners a chance to reboot their lives and with that I'd entertain any questions representative brown you're recognized. Thank you Mr chair representative Lundstrum I like the idea and I believe that might have been a co sponsor last time but you made a statement that I would appreciate a little more elaboration on just wanna know what your meaning you said something about but even if the employee leaves at eleven months and some days the employer doesn't get a credit however during that period of time I think you said the city and county will be receiving. Something is yes you just explain that every time we have a paycheck somebody goes the gas station the grocery store we're paying property we're paying income to our skews me not that we're paying local taxes so every time that paycheck gets cast the taxes are paid so that money is going to flow through that community so we're going to get the benefit the cost of the state every time we do it impact statements a static impact statement the cost is six million dollars it's not dynamic can accounting so that money isn't accounted for as it flows through the state so that check is going to that money's going to flow through the community over and over and over again and it's going to flow through the state over and over and over again. Thank you. Thank representative representative McGrew you're recognized. Thank you chairman of. Representative I get a question but also let me say that I worked in drug and alcohol and I'd in my companies would employ those and it was a blessing when you gave everyone an opportunity couldn't get a job elsewhere and they turned around is a blessing for their family and they're being very appreciative to me it's been a good thing so I think this is a good thing consented to have employer to do that my question is that if someone is a convicted felon and. But for whatever reason they go to the county jail him into state prison when the relation there they still available for the funds if they're coming from county jail and not from prison no it for for to to start this program it must be the state penitentiary you can't get your uncle Bubba out from that county jail at the local jail from being in the joint hang on Friday night and then get a tax credit the next week so it must be somebody who served in the penitentiary to start for this for this program right now it's only going to be a thousand and they must be from the state penitentiary now if the program is successful and we can expand it that's great but we want to first make sure that we can walk before we run and we want to make sure that from the state penitentiary to start just to add I'm still taking co sponsor so if anybody would like to be a co sponsor you're welcome to join. Thank you represented members just before we go any further out there's several people signed up to questions don't you would don't hit your button until you're recognized because we get too many buttons pushed at one time it shuts everybody down so just want to get to you push a button please and representative ray you're recognized. Thank you Mr chairman representative Lundstrum I'm curious are there any other states that are doing something similar to this or that are a model in this area of using the tax code to incentivize employment for former prisoners I'm curious could could you tell me how you develop this idea there are a lot of states to do a variety of different programs is is all over the map. It's it's that popery of programs summer successful summer not the more successful ones have jobs okay I have and I have met with several businesses that that that employee former inmates and and that they make a concerted effort to do that have you are there particular industries that you think would be more likely to take advantage of this kind of program or or for different types of employers yes trades mostly and mechanics a good example I have been hired formally incarcerated I can tell you it's difficult but once you. Go over that hump at the expense. It's worth it but it is difficult on board we have a furniture for manufacture furnishing training and one of our penitentiaries and this would be a great segue first some of our furniture companies mechanics as well welding there's opportunities it's just a matter of. It's expensive it's hard for business and they don't look good on paper. And a lot of those reality a lot of those industries that you just mentioned are industries that we talk about quite a bit is being in high demand yes can't find enough qualified labor for yes the last thing I want to ask about as I was reading to the bill I. Government oftentimes is very bad at demonstrating the success of the program with the it's very bad at keeping track of data and metrics yes I wonder if because you're dealing with such a small sample size a maximum of a thousand people that if that's a small enough number of people that it would be feasible for some government entity to really try and track the individual outcomes of each person not just on their employment but to see if there are other effects downstream in different areas of their life I'm thinkin if you if you pass a pilot program. You know at some point we we would need to try to. Discern whether it's been effective or not yes and having some of that data and collecting and tracking some of the data may be helpful have you given thought to adding that into the bill actually with it being a department of workforce services they have a section that does have some help for formerly incarcerated and that's where we're gonna put this and I'm hoping with a thousand people it is going to be traffic tractable and that is the goal and I'm hoping with a thousand it's something that we can get a good handle on because I'd like to have is where you come out of prison that there is a list of business is ready to go I see a long term future for this in a good run way for this but with a thousand we can really have a good start. Thank you representative representative Cavenaugh you're recognized. Thank you Mr chair a representative Lundstrum not allowing the employer to get the credit if someone leaves at eleven months. Fifteen days do you think that that's gonna make employers look at that and say if we've done our part. And the bill the person in the program believes at no fault of our own. They go to the incentivized people to want to be part of this pilot program potentially but we had to have a hard cut off date for an anniversary and be able to say at the end of the first year at the end of the second year at the end of the third year so that we can have some simple metrics and businesses are used to that and we had to be able to say this is the anniversary date. So. I mean it it some point if you said well if we did eleven months then what it what it was ten months I mean we had to have some you're in business you know you gotta you gotta deal with the numbers and the wrong numbers yeah I it's just sometimes when you're getting a credit that's not really something happens it's your fault I mean you're in a program it's no fault of your own and you've joined it and then something happens and you don't get the credit it will leaves a bad taste in employers are out as you go on that's just one of my concerns the other and I like the concept the other thing is if I a of former offender is in the program and they fail to meet the requirements they lose their job are they able to get back in the program. That's part of the pilot program I think they can get back in the program but we're going to cap it at a thousand. It's it's one of those things if if if it's not due to their own and its students issues will have to just a valuation. And who will make that decision probably department for core services. Okay I have about that but okay thank you. Thank represent Cavenaugh represent of metal and then you're recognized. Thank you Mr chairman I actually is similar questions to representative Cavenaugh did you look at actually pro rating that tax credit to the employer over after you know three months or six months so that they are encouraged to continue to reach out to these offenders even if the fenders are staying in that in the job we did that but that the complication start to add up so we just looked at let's keep it simple to start and then once we get through the program and see what the with the complications I will work that out rules so just got to see that's what the pilot program is that's why would anyone do it for ten thousand to it with a thousand first and work out the Kinks perfect thank you. Representative baby you're recognized. Represent Lundstrum out I really appreciate this bill and and the intent I've got a couple questions at the very beginning of year of of the bill that site several statistics reaching out to DO see work for services maybe some statistical information on how many Arkansas employers are actually employing former incarcerated and and tracking they should have some of that statistics for something that would be helpful but I I guess my one question is I like the bill but I kind of would want the reverse order of the tax credit that you have you know start off at a thousand dollars and work up to that three thousand the third year and in my reason for that is then you can expand your universe from a thousand individuals you could you could go on up to three thousand for the same cost I echo off of of representative Cavenaugh concerns that that part time R. six months if they stay there six months and you lose on the credit I think you would have more business is willing to sign up if if this were based on a six month period in a semiannual reporting that those employees for their also have concerns that the way the bill is written wears a forty hour requirement that that's forty hours every week for that twelve month period and you know sometimes that may not be what what's going to be taking place so I I think we might need it might need to be a little more complicated than what it is I know you want to keep it simple but I'd like you to speak to to those issues and and your concerns there though the reason for the three thousand was because the insurance costs for on boarding that employee if you have to get for example automobile insurance if they're driving a company vehicle there's going to be a cost they do not look good on paper to an insurance company as you can imagine and that is the cost of the company out fitting that employee educating that employed just onboarding alone is going to cost that employs. You're and they're going to need some type of tax credit so I'm I'm open to suggestions I'm open to any business that wants to take a look at it and and give me their feedback but I think it would be better for the business to give a much higher or healthy or tax credit on the front end follows. I did it and I guess my counter argument on that would be at our current state tax rated at what five point four on that three thousand dollars. If you apply the tax rate this is a tax credit Carretto dollars so the dollar for dollar benefit back on on that on an expense would be what like fifteen thousand dollars okay if you apply that way which I I'm going to search their product paid fifteen thousand dollars a year for insurance for one employee to drive a car so I'd I would I would ask consideration maybe look at that and expand that universe beyond a thousand because you're gonna have folks drop out in any may also incentivize more businesses to sign up for the program okay I'm open to suggestion thank you thank representative representative will you're recognized. Thank you Mr chairman represent one from I like your bill thank you I think it's a the way it's written and the the areas that you have covered I think it's a has a tremendous out reach to an area and In from from the retail standpoint this should open up a lot of opportunities for people to be employed shouldn't. I would hope so I think we have an opportunity in Arkansas teens lives good with one more question it will the Will the Division workforce services provide them with the opportunities or list or or how how would. How will this information be put out to the businesses that may have an interest in this and then to those who are coming out the thousand how would they know about identifying one of these employers what we're working on right now there's a companion bill for fines fees and restitution as their mustering out of prison to help them as they muster out to understand what they're fines fees and restitution is going to be and then also in that process help them understand there's you can log on to partner of work for services and here's where you can go to help them find jobs and these are employers that are willing to hire so that's a process and we're hoping to increase that process as they muster out here's your help here's where you can go. Thank you thank you Mr thank you representative representative Warren you're recognized. Thank you Mr chair I have been somewhat familiar the I don't know if it's been in your area but Paul Chapman did a program of project hope I know it's been and Fort Smith the we try to get it going but there was a lack of funding and for the garland county program but I thought I'd been real successful in I guess it Sebastian County Fort Smith. are they not tracking some of the success that they have had with putting them back into the workforce I think they are a little bit familiar with them but not. Not in depth well I'll just say thank you for this bill because I think we need it getting back into work position give them a chance to. It productive so thank you. You're welcome thank representative representative brown you're recognized. Thanks chair representative Lundstrum I have one other question and it kind of all ties in together with these other questions if you have this thousand people. Is this. Let's say somebody sort of blocks out of programmer drops out the program after two or three months can someone else step up and take their place or is is that just one year thousand gone no will have to have someone step up and take their place thank you. Representative right you're recognized. Yes Sir thank you thank you Mr chairman you know representative robin I can't help but remember a story that happened back in Poinsett County back about ten years ago. Had a gun he was in for drug charges. And I talked to him for a little bit about it and he told me to John or for all I was wrong the wife and I were involved in this and we got a divorce over this and you know and all I could tell this guy can do just about anything. And he stayed there for about three years serving his term out there and you know the county. And this guy one of my hand electricians making a hundred twenty thousand dollars a year so. What I like the concept of this thank you thank. Thank you Mr thank representative representative ray you're recognized. Thank you Mr chairman. representative Lester I know typically when people use the term pilot program it is something that set up for a defined period of time it I was just skimming the bill and I didn't see where it sunsets are comes to an end is there any point where we're going to. Analyze the success of the pilot program and then decide whether to continue it or discontinue it or can you can you speak to that. My vision is that we are going to know within the first year whether this is going to Walker right now I think we're gonna see issues that we're gonna need to come back and address within the next two years I mean it's a pilot program we're going to have to nest on this and watch it I intend to I think it's important that this thing grow properly and If it's not successful kill it and I wanted to be incredibly successful so it's going to have to be something that the legislature is going to have to watch just like any program I don't want to program to be. To get out of control I think it's important to be monitoring every single program we do. Right thank you for that representative baby you're recognized again just a quick question and and I do I like the bill I think some discussions we've had today what will strengthen this worry to where it will pass both chambers one question that I would ask is under under your bill the definition of a qualifying former offender it I'm kind of a numbers guy so I'd like to know what that what that potential for this program would be in the state have how many folks that meet this definition that are out looking for employment in the state so. And someone should be able to provide you with that information based on that that definition we spit out about ten thousand of qualified former offenders every year year and that's a problem well also. Some of that ten thousand repeat offenders or yes out CVS your double counts some and and I would also think that someone from the Attorney General's office would probably be very have a vested interest in in this bill and and working with you on it Saudi not cursing communication there with with Griffin's office I think it's a great bill thank you and and I look forward to. being able to vote on this and and and work on it with you so thank you you're welcome thank you representative Beatty representative Michael and and you're recognized thank you chairman thank you representative Lundstrum I do love this bill as well I think it's great to give an opportunity to people who had an offense to make sure that we are helping them get back on the right track so I thank you for bringing this bill back I have a question about your measures of success in the bill it says that you will have no more than a thousand at one time as a pilot program and it represented brown clarified that you're continually adding people if they drop out you're adding people but when you look at a pilot program you look at measures of success if you have a rolling thousand it's really it's much more difficult to define success so do you have a definition of success for the pilot program and I mean I guess that's my best question for you well if they go back to prison it's a fail but you have unless I understand for an individual before the program itself do you have a this is what we will consider successive we have five percent or ten percent or that's what makes the ruling thousand more difficult to find a quantifiable measures do you have a feel for that or is that to the department that it's sitting under I think the most important thing is I look at it obviously my hope is that fifty percent of them would stay out of prison that that's and I know that's a really high number. and. I've I've been told that if twenty five to thirty percent static prison that that's really optimistic so I think when we sit down with the rules and actually come up get further along in the program we'll have a better feel for that and and probably a more honest number to go with it I'd like to be more optimistic. But. At six thirty percent is probably a good number. Thank you. Representative Cavenaugh you're recognized. Thank you Mr chair I'm going to touch on the reporting requirements so we can see how successful that the program is I didn't really see anything in there it talks about a reporting requirement to ALC or Joint Budget on what is going on with the program and how successful is that is that something that's going to be part of the bill because we're talking about legislation need to follow that but we don't have anything in there telling us how we're going to be able to follow it up I'll be glad to add that I think that's a component that's missing yeah thank you. The representative of a group you're recognized. And talking about the reporting party did you do any research you said you wanted thirty percent and we're talking a thousand if we only get fifty people that participate and are successful in this program but the savings is the state the name becoming contributing taxpayers and not having recidivism and going back in the call for the president seems like to me that it would take a very small percentage excess make this program pay for itself that's correct but I hope would have more than that. All right members any other questions. Well done. No one we don't have anyone signed up to speak for or against the bill at this time I'd like to get Mr Paul Goehring to come to the table and give us DFA's interpretation of the bill and then I've got a question one targets down there. Thank you Mr chair members of the committee Paul Goehring with the FAA all right what you want to go ahead and kind of give us different As position on this and then I'll have a question at the end of that certainly I thank you Mr chair IDFA did provide a fiscal impact statement for house bill thirteen eighty two at this point the department does not have a position asked to the potential legislation we are still early in the session and in terms of formulating what the the the governors attacks proposals that will be supported by the administration we have not yet I had direction on on which bills that we are going to be speaking in support of but certainly and as the bill provides for a up to one thousand participants in the program and then a first year tax credit for the qualified employers of three thousand our revenue impact was Sturch would start in fiscal year two thousand twenty five without a three million dollar general revenue reduction and of course as more individuals enter the program of course the tax credit reduces an ichi each year of participation we based our fiscal impact statement on the calculations of the number of offenders that are release from the department of corrections as well as the number that returned back to being an in custody And so we estimated that they were going to be approximately about based upon those numbers about twenty two hundred individuals that would potentially qualify so we. Based that we would likely see a large uptake of individuals that were interested in participating in the program. so I'd be happy to answer any questions about the fiscal impact statement this time okay Paul thank you for that the one question I did have was on the the legal analysis where you have the if they has discretion to promulgate rules under section two of the bill but section three appears to require rules to be promulgated can you help me understand what you're really you're meant by that are short or how it's confused yes Sir so on page four of the bill and under at that line one IDFA has the discretion to promulgate rules to carry out the. the provisions of the bill yes and so however under section three lower on that page and it says on line thirteen we adopt we're adopting the initial rules required under this act and it made it may cause a level of confusion if any rules were actually required by the legislation. And so we would just that was the concerned that this could possibly be fixed in a later amendment to the bill to just clarify if DFA has a firm requirement to promulgate rules or if they would be purely discretionary okay thank you for that represented what you're recognized. Thank you Mr Mr during on the on your a fiscal impact. what what percent did you use for return the phone call back. Did you base it on the twenty two hundred or the jubilee said on the one thousand cap that. This bill calls for. Okay so what we we did is we had approximately ten thousand seven hundred ninety five inmates that were released And there are approximately two thousand six hundred and twenty seven inmates that did return back into custody and in a year and we use a a fifty five percent of those that were eligible that would be potentially would qualify for the program which which was where we derive that twenty two hundred approximately that would be eligible for and would likely qualify for the program would likely and participate in the program well the first. The first year you have. Olona three thousand dollar credit is that based on one thousand or is it based on. Twenty two hundred or ten thousand one it's based on the thousand cap based on the thousand K. that's right okay thank you there's certainly could be more that could qualify but with a thousand cap that would be the Max amount of individuals that part could participate in the program as well as receive the refundable tax credit which was going to be an Arkansan who resent you're saying that. Roughly twenty five percent of the ten thousand are going to go back. In. Approximately yes because of that but they were of that ten thousand seven ninety five that were released approximately two thousand six hundred twenty seven is about twenty five and the representative will spend you said thirty percent of success rate or return which which one did you no I'm hoping for thirty percent recess success rate okay thirty percent okay so the the percentages of success will. I'm sorry we're good and fun to six to eight percent of those that are going out or is if this is successful you're saying you're right will be thirty percent which would be three hundred I hope so I hope it's higher than that. The so we're going and we're not going back correct thank you thank you Mr thank you Mr thank you resent within. Representative of a group you're recognized. You tell me understand so are you the thank you chairman it are you base your you saying in your dates at all thousand of those will make it through the first year you know knowing and having some experience in that that they're not alone a large percent are not gonna be successful the first year you know instead of a thousand tax credit there may be only three hundred there may be only a hundred so what did you base it on and also did you did you come up with a figure and probably didn't get my question to be a break even figure how many does it have to be successful to this program paid for itself Seth thank you represented for the first party questioned the revenue impact does assume that the first thousand that have capped as participants would qualify for that three thousand dollar credit but we certainly understand that I one hundred percent success rate is that's very hard to predict it would have to be further down the road that we would see exactly how successful the program would work and then we could evaluate whether or not they've the fiscal impact that we initially released would how active in terms of accuracy but certainly as the program works people will people will leave the program people will then be admitted into the program but of course that I hope I think that that the purpose is to make sure that we provide the fiscal impact statement to legislature it assumes that the participant that the program is going to have. Fully active participation. To provide the the. The highest I'm sorry the and the most terms of fiscal impact being the most conservative so that for budgeting purposes that we can account for the tax credits that would be issued and redeemed on income tax returns. And the second for the second question. I didn't have suspended used to did you figure break even of how many I'm sorry yes Sir yes Sir so no we don't have a a break even analysis it would be a static score based upon the and the tax credits that would be issued in routine by taxpayers it that fiscal impact statement does not account for any other external Factor such as an offender being working and then paying income taxes or or paying sales taxes or otherwise contributing to the economy. Yes Sir. The representative Lynch you're recognized. what. What's the cost avoidance if a person does not return to prison was the cost as per year to house and feed a prisoner. Thirty two thousand dollars a year one thousand feet of prisoner among its thirty two thousand dollars per prisoner to okay in that thirty two thousand is that figured into the fiscal impact no Sir the fiscal impact is only if the amount of tax credits that we would anticipate to be issued in Rudy so we only have to have a hundred successful. When this program completely pay for this that is correct okay that's what I was moment thank you. Representative within you're recognized. Thank you Mr chairman so really the possibility of the well being three billion based on thirty percent will be nine hundred thousands that correct calls to the Revenue. I'm sorry I represent about based on completion rate our success rate of thirty percent the first year then the calls to the state would only be nine hundred thousand right you for your you figure that the maximum course we know going in history tells us that is not going to be true so really what would be caused to the state would be about interest rate would be roughly nine hundred thousand I grab I'm sorry did I understand but if we had a thirty percent of these thousand actually qualify and receive the three thousand credit you are absolutely correct that would be a nine hundred thousand G. R. impact okay I just want to be shown to clarify that yes Sir Mr chairman thank you Mr. That represented car. No okay representative right you're recognized. Thank you thank you Mr chairman you know Paul. Just hours those pressures I know that you've probably went over this one time for but what does it cost a year to the House pressure. The representative has an thirty two thousand thirty purpose there okay thirty two thousand dollar bill you know you're taking money from one place that's costing you money and if this could work it's going produce revenue for for taxes yeah we certainly we certainly understand that if an individual is not in custody at the state's expense and are out contributing to the economy and paying taxes that's that's a that's a positive benefit yes or never day that they're working and they're not in jail that's called the save this money and I have that's that's absolutely correct Sir thank you Sir. Thank you represented by members any other questions. Jean Paul thank you for coming down thanks for all that information thank you Mr chairman thank you Committee. All right representative Lundstrum that's what we have signed up no one else to speak you want to close for your bill yes and in the absence of time I'll make it short representative Beatty I will get with you and talk about the financial issues that you brought up and then representative Cavenaugh I think your comments on coming back to a LC or or valid and I'll make sure you get with you And plug something in so that we have some type of reporting yearly just to check up I think that would be good and and very worthwhile if anybody else has any other comments I'm open to suggestion I think the more eyes in the more wisdom put on this the better I think it'll make it a better bill in the long run so please if you see something say something as they say at the airport this bird flies so I want to know if you have any comments on this is very important to me and I will take any suggestions that you have I think this is important the state of Arkansas we can't possibly House everybody and prisoners are I need these opportunities and I think it's time to reboot and give these opportunities are offer these opportunities they have to grab them it's theirs to grab so with that I will close and ask for a good vote at the proper time. Thank you for that members as you know we're not going to take in a vote on this bill today will come back around little later in session and see what we're out on a lot of these bills I do want to say a sponsor to me this is the way we should be talking about debating and discussing bills and this is how you work through and make sure that legislation it hits the floor is the proper legislation so thank you very much for that you also probably notice you have your committee photo there in front of you representative Beatty said he'd be available to sign those at a later time whenever you're ready. he will be that's all we have we we at right now we plan to meet Tuesday so I'll be sending a text to verify that so thank you very much and we are turned.