Revenue & Tax - Senate

And Tax Committee to order for the special session. Senator this went on to ask you if you have any comments censure certain table I'm fixing to call you upon SP one if you would. Yes Sir thank you of members I think all of you all had a chance review this we floated this out for a while now and really I think went through a lot of the details so I'm going to be a fairly brief in the overview I just wanna talk a little bit about the tax plans foundations and I think what the ultimate outcome will be if implemented so as far as the foundations are or what I think the core components the bill it's fairness simplification and competitiveness the median income tax will total over another nearly a quarter of a billion dollars in one fully implemented it'll be roughly a half a billion dollars I regarding fairness every single income tax payer in the State of Arkansas will benefit from this tax bill if you pay income taxes the bill will combine the low and middle tables it will lower the top rate to five point five percent in the year twenty twenty two ultimately reaching four point nine percent and that's five point three percent will be the the final for the corporate taxpayers and then it automatically adjusts the standard deduction to match inflation and it provides a non refundable sixty dollar tax credit and up in my head of you. We're good yes an egg nonrefundable sixty dollar tax credit for those making roughly twenty three thousand six hundred dollars with a significant focus on working families I believe that planned strikes a fair balance between working our Kansans and also job creators into the circle back simplification currently Arkansas has the most complicated tax structure in the country we have three tax tables this is again is going to bring us back down to two there's some additional benefits that are be derived from doing that there are individuals that have really received little to no benefit from our prior tax cuts this will allow those individuals to share in those tax cuts that the it where they've been left out previously additionally every pair that makes about thirty nine thousand seven hundred dollars will benefit from any future tax cuts on the top rate that will also close the gap between the two remaining tables which will again help with simple fire code as we move forward as far as being competitive when we consider the mix of various taxes so that sales tax property tax and income tax it's clear that were falling behind our neighbors as far as being competitive with our tax structure and with an immediate commitment to drop the top rate to five point five percent in again that commensurate commitment to reach four point nine percent over the next three years we will be closing that gap in as far as again fairness every individual that pays just wanna make sure this is understood income tax in the state of Arkansas will benefit from this tax bill as I mentioned earlier this bill contains several provisions that are related to making sure that these cuts are carried out responsibly on the state level at first it is very simple one but it remains long term reserve fund to the catastrophic reserve fund that allow future legislators to understand the significance of that fun in the fact that is truly there for just a merging sees it also act as sets a floor for that catastrophic reserve fund in the name. Fund of twenty percent of the prior year spend in the State of general revenue and then also there are multiple triggers inside the bill that if there is any time that we have to tap into that catastrophic reserve fund that the tax cuts will cease at that point we'll have to reconvene and make sure that we can afford to move forward I beginning in twenty twenty three corporate rates will trail the individual income tax rates and be reduced to five point seven percent five point five percent to twenty twenty four and five point three percent to twenty twenty five the Bill clear finds that the coronavirus food assistance program will remain non taxable in the state of Arkansas there's concerns that there may be a name change and so I just a paragraph in the bill for that and then additionally it just elective pass through income tax election it allows that also to trail with the top rate so that we we provide that benefit to those payers I if you can I'll just go through the bill real quickly that way if we come to questions we can kind of know where to go and so again it be a little bit of a rehash but if you go to page two on your bill here this is where we begin the renaming of the catastrophic was or to to to catastrophic catastrophic reserve fund from the long term reserve fund and we just discussed that twenty percent for for that fund at the next several pages in fact into you get to Page six deals with the renaming of the fund Page six is where you actually start seeing the changes in our tax code as they relate to the tables and that's going to carry on through the bill again I've I think I've covered those that's the combining of the two tables and also the adjustment to the the tables in the top rate moving forward inside each one of these you'll be able to see that there is a because we do still have two tables will need to be cliff adjustments that's carried out to the next pages and also the trigger language for it essentially stating that if there is a withdrawal from the catastrophic. Sir fund whether because of emergency or because the will legislation that the tax cuts will cease at that point if you go to page fourteen Fourteen and again I'll just keep moving through that's the twenty twenty for tax cuts but in when we get to Page sixteen in the middle on on line eighteen you can see an example of where on or after July first twenty twenty two before January first twenty twenty four if there any funds transferred from the catastrophic for reserve fund then again these will cease we can move to skip the rest the triggers Page nineteen section six is where we start discussing the changes to the corporate tax rate and again just to recap that's going to be beginning in the year twenty twenty three I drop the top rate to five point seven percent twenty twenty four to five point five percent and ultimately settling then in twenty twenty five to five point three percent it on page twenty one is where we get discussed section seven that relates to foreign corporations those corporations that are operating inside state of Arkansas but we're organized outside the State of Arkansas again they will also benefit from the tax cuts that we have here Page twenty three section eight deals with the corona virus food assistance program as we discussed previously Section nine deals with the inflationary adjustment for the standard deduction moving to page twenty four Is outlines the sixty dollar credit you can see in this table here that that sixty dollar credit starts phasing out of twenty three thousand six hundred dollars phases out for every hundred dollars of additional income by five dollars until it's fully phased out at twenty four thousand seven hundred and one dollars. At the very bottom of page twenty four section eleven details out the pass through adjustment again that's just to that the top rate or the taxation rate for the past three election of legal the top marginal tax income tax rate as we discussed previously and the and the of line are section I'm sorry Page twenty five section twelve is where we discuss further the triggers and then we get into the emergency costs I with that appreciating questions are the questions. Senator Rapert. Thank you Mr chairman Mr chairman also wonders say the proper time I have an amendment actually SB one but I want to just proceed with questions but all right at the proper time just wanna make sure of thank you wear that and the Senate is made obviously I support a bill co sponsor happily co sponsored the bill thank you for all the work on it I've got a few questions just to clarify and on the trigger part of this is there been any kind of feedback from DF in a about the probability or not that we actually hit the triggers I know that's a crystal ball it's so obviously a lot of work has gone into the bill we want to take in this direction so my question is. Were we forced to put insurers. I know but that was a I think it's something that you know in general there's plans because with the public that they want to make sure we can find ourselves in the Kansas style situation if you're a tax repair and a taxpayer predictability is critical and insert one thing we took that a little bit further so we actually had an independent review of both this bill in kind of our economic condition and you know that align pretty well with what the FAA's forecast was which is you know essentially there's going to be growth for quite some time in the state's economy we are able to afford this and we weren't able to afford this then I don't think you'd see before you today all right of Mr chairman got a couple more here to follow up in the finished the corporate tax cut portion of this yes I've had people contact me in obviously I'm supportive sponsor on the bill but the. Discussion points for the push back is do you realize there really only a handful of actual corporations that are going to benefit here now this is a good question for you because obviously I've got businesses S. corporations but they're taxed at the individual's right correct corporations operations as corporations are not corporations that's right and so what about the the caviar the push back to us to say well if you wanted to cut taxes for individuals cut taxes for individuals I would agree with that by number I mean there are a number of corporations that operate in the State of Arkansas to clone legacy corporations these record rations that were formed before the time of this courts and before the time of LSE's now there can be election made by C. core but that's quite a process to transition into an S. Corp status or an LLC status so number of these entities have never you know taking that on inter and try to make that change there are plenty of family farms in the state of Arkansas they're still established and set up a seek works here in the statement and I know that we like to you know corporation some folks wanna call dirty word right I mean or you know we're we're against corporations will the fact is one person can only see a corporation here in the state of Arkansas and oftentimes one person does own a corporation in the state of Arkansas these are likely small businesses now we're talking about the the size of the impact if they can you know allocate out you know what maybe they can you know the size of the player in who's going to benefit but I would argue that we've got a large number of people is still operate Secord State of Arkansas that would have a benefit from what we're doing okay and and Hey we're already Americans we love business and corporations part of business you know multiple but that so the corporate income tax portion of that what is the total impact of that again in my mission that here on I don't have your summary that you gave us which looked better than. What I'm looking at here so so the corporate reduction again was going to be ultimately would reach in your twenty six fifty seven million dollars would be the total production for the corporate income tax that's an annual basis that's an annual basis right I've asked and I didn't ask you but I'd ask the FNA about tax credits but you may know the answer as you probably already looked into it so who do we have a list or if you seen the list of who all that we have already passed tax credits for here in the legislature and our current code Weatherby manufacturers these are some things that we voted for we've support military retirees it's center there's a large list let's listed everyone if you're just going to be quite Frank about a credit every single player in the state of Arkansas has a credit that they are automatically given on an income tax return and so every or cans and receive his credit I think there is to my knowledge maybe they're it and maybe I'm wrong but I I don't believe there's a refundable credit established in the state of Arkansas there's some that are sellable and other and the other means but I'm not sure that any of that are fully refundable in excess which you paying taxes is much like a earned income tax credit is what a refund refundable tax credit. Well I mean if you look. In a sense it can be earned income taxes very specific on what it is giving the credit to and that's earned income so if you read this bill this is on your total income I would contend that you know that sixty dollar credit is actually going to benefit retirees with fixed incomes probably more so than any other population mainly because once you achieve the minimum wage would be above and in most situations the the threshold needed to reach the credit and so I think that's who's going to benefit you know from that six or that's a part of the population that will benefit from that credit but again that's not earned income that's all income that's passive income as dividends that's interest that could be whatever goes into their you know passive activity fixed income status which is different from an earned income which has to be the next on W. two tax income or actual you know earned income and so again that's this in no way is earned income and at the same time it is not refundable so essentially if you have forty dollars worth of tax the state of Arkansas you would only be able to take sixty to you know forty dollars of the credit okay. do you have an a is preparing that list for me I don't know if I get it yeah there's political talk contribution credits there are various water you know incentive type program to tie back to credits we have historic rehabilitation tax credits gather a number of different credit since we've incentivized in the state so you you answer me sufficient to say there's a large number of credits that we have out there for any number of things so again I support the bill say more comments on the amendment to that point thank you Sir. Senate take. Thank you Mr chairman. Senate is made when I look on. The green sheet the impact statement. And there are five years worth of revenue impact shares about one point eight trillion cumulative of billion cumulative as of is that right I haven't total but I'll take your word for that well my calculator wouldn't cooperate so it but it could or may but as a whole bunch of bank money it is and you're confident that revenues are going to continue to flow and will be able to to for that lost revenue I mean any forecasting that you see out there and I'm not seeing contrary would indicate that you know the economy is going to continue to move a portion that's gonna be related back to inflation law need to be mindful of that growth related to inflation but but yes I mean at this point from what I see and and and I'm no expert but I just reading of bills that we will have a period of growth that will be able to sustain these tax cuts the end at twenty. Twenty two. I can see a support a hundred thirty five million. But in twenty twenty six five hundred means a whole different number I understand. I appreciate it thank you thank you Mr chairman. Are there other questions. I have a motion for the amendment Mr chairman. Let your motion motion is a member should have a copy of the amendment so my motion is that we would add the amendment that you have before you Senate bill one. Thank you. Page. Mr chairman this this is supposed to be an exact replica of Senate bill nine which was on the floor today which was a simple link the addition of law enforcement tax credit three thousand dollars which was discussed at length on the floor it also knowing that that was the possibility of of having that be opposed we had that is Senate bill eight which was in addition and and I've talked to Senator Dismang I had asked more than once that we try to add this to the bill I talking governor Hutchinson about adding it to the bill you all have heard we have nearly fifty co sponsors in the legislature that or in in for sue this as well and I'm not opposed at all what we're doing I just wanna see is do something for law enforcement while we were actually doing is for everyone else so that's my motion Mr chairman. The question. Senator Rapert what's the impact on this I don't twenty five point two million the FNA is here we actually had sent around I don't know if that made everybody's information but is twenty five point two million we actually discuss this it had testimony in here this spring and we did not vote the bill and Mr chairman I I deferred to your leadership at that time and I didn't want to vote something where we didn't know the information before the end of the fiscal year we came out and of course now I even have the federal rules and it's my conviction. In the conviction many others that we can make room. For this this tax cut for law enforcement officers this is why I'm using honestly ever parliamentary maneuver I can to try to get it added to the bill because I gave my word as have co sponsors nineteen to keep my word and this is why I'm pursuing every option and I. So. Is it for twenty five million a first year is the go up do we know no it will. The estimate. It shouldn't because it is a three thousand dollar full stop tax credit right so with the three thousand dollar tax credit that's right it is refundable I have members that are co sponsors senator T. because it's refundable. The real trouble is those rank and file rookie law enforcement officers that are being paid an average of twenty eight thousand dollars or less. In there literally having people have trouble to recruit people to the table they also and I can quote this because it was public sure if we run units bashing County additivity the came back to him and said as much as I want to state I have to quit I can make more working in a fast food restaurant then I can serving in this position. I don't want to go on you know the points gentleman these people are out here service every day run into the dangers it's twenty five million dollars out of a huge tax cut bill that I'm for and I'm saying we should make a priority out of that law enforcement officer rank and file there's no reason we can't I also want to make note that the bills that were filed on the floor Mr chairman they were not busting open the session that was they were rule germane then there was a vote they worked. This amendment is not bust open session it doesn't change anything it's the will of this body and eighteen members in the Senate can do anything we want to do we know that. So I'm asking again. That we think about the fact that the governor's task force said we should do a tax credit. And then we deferred till we let that go we talked it out and we're at this point and I don't have a good excuse when we're passing a half a billion dollar tax cut to say we can't afford twenty five. Senator this way it is still much yes I'm sorry trying to race run over with Janet right not the first time it's happened issue okay I'm so my Of somebody in the hall told me that we had some deal to do it DO something in the fiscal session you may know anything about it. I could I will speak to that and I will tell you in a sense we're going to ask the question you're going to get the answer. There was a meeting called without the prime Senate sponsor for the prime house sponsor of this bill. Never any discussion with me one way whatsoever and it was simply to defer it was another attempt to get them to deferred just like they've been asked to defer every other time. Every other time. And so I'll be honest with you there's a lot of people out there that don't trust. The promise to the for once again. Because it hasn't been ordered from the first. Honor. To differ in the session. There's no reason whatsoever fact we could already be done with this if we really wanted to pass a law enforcement officer tax credit. Thank you Mr chairman sorry I didn't mean to open up there in Senator Dismang in in what I'm gonna **** chairman so we kind of went back and forth when answering questions speak for the bill you know we introduce the early amendment in and at what point would you like me to make my comments regard to this amendment I mean I really don't have questions for Senator Rapert but I think there's a lot that needs to be explained about the amendment let me go to center handicapped thank you cannot come back you Senator Hickey. Michael and maybe a day of I guess first of all more of if it's okay Mister chairman and senator Rapert we you just said this is identical to what you tried on the floor and the will of the body of the Senate. Was it this was not germane and now you're bringing it to the committee. To actually try to get it put all it seems like it's almost a little bit disrespectful to the will of the body of the Senate whenever we literally did that within the last two hours. Well there's no saying if you can't make or see the last little feel the heat right senator so the idea is is that there's a lot of people out here that are discussing this and there's been a lot of backroom discussions without the sponsors of the bill a lot of promises and that is something that's disrespectful to the prime sponsor of the bill as well as in the House here in the Senate now yes there was a vote taken but I'll be honest with you Senator there's a lot of people that told me that they didn't want to vote for a resolution to open up the session. I thank quite frankly there's little confusion today on whether they were going to open up the session or not because the bills that were voted on today had nothing to do with extending the session had nothing to do with opening up the session it had to do with handling a law enforcement officer tax credit full stop. And so it was a vote now the looming of the lieutenant governor which had basis behind it said it was germane we just decided out of the blue that it's not and now we got a bill that's on the floor that we're going to be dealing with Senate most all of us want to and guess what he rule it's not germane. And you're gonna have to turn around and vote that it is germane. So we've got an issue here this body can do whatever the heck we ever wanted to do when we've got the political will to do it there was a promise to these law enforcement officer I don't I know Mr ministration I don't I don't need this comment like this or us here and I'd like to answer center to each question I mean I don't have anything to hide yes there was a meeting in my office between law enforcement that was sheriffs achieved maybe some people that were there for the counties and yes you were not invited that is one hundred percent only did not want to invite you on the school thought after the way it is because what has transpired over this is your rite you tried to bring this credit within the last session there's a lot of members down here myself the space is included do not think that the credit is good tax policy there is all type of walls with the thank you for going to develop this legislation which and I don't believe that it's anyone with the sheriff's office fall or the chiefs but there was never a discussion had well with myself in regards to this there was never a discussion with the House that they were in the room also I don't want to speak for the governor here but I also don't think he's been included so the thing was is there was no agreement that we were going to do ever anything. By a certain time but what we say it is that we will try to figure out a way to possibly get a wage raise instead of a credit and try to put some other safeguards in so that the cities and the counties that we can make sure that they were not going to try to supplant instead of supplement just multiple type things that we need to consider instead of just some haphazard thing that's being thrown out here but quite frankly as political K. and I will then the I'm you I listen to what you said on me and I'm it's been disrespectful to the Senate which are bringing this back in here after the Senate is just done that so so with that I will just finish up in the we'll just take it from there. Mr chairman my response to that first of all we can disagree we're in discussion at this point in waiting patiently Senator Rapert of conducting a response we get that out of the way in and not lose track without a political speech yeah well. It's all political appear and so we try and try not to be I found out and people agree with you that thank you passionate when they disagreed they thank you Eric and so I get your I guess what you're what you're saying. Bottom line is this was in a report of the governor's task force in writing. It's been well publicized it's been supported in town it is this wonderful result of months of work by thirty people here in this state we're forty ninth. In pay in the whole country. And someone terms of this yes I met with the governor face to face you can bring him in testify if you'd like to governor Hutchinson met with representative slate you have resolutions that have been passed by just about all maybe all of the major counties in the state probably have passed resolutions in your districts in support of this we have cities passing resolutions we have counties passed resolutions you've probably got more than fifty people one pass it by now here just since this morning this is nothing that came up out of the blue this was discussed right here it was testimony given right here in not one of you mention anything about it being bad policy when we discussed it I would be just said on that now you may have thought it but if you think it's bad policy the bottom line is if you don't like tax credits Senator Hickey then I guess you can get rid of all of them that we've got on the books now. Senator Johnson. I was on. Right. Thank you Mr chairman. Of. Senator Rapert I. Agree with you that the Senate did not vote to not hear amendments in this committee what we voted on was another bill and whether it was germane now realize that result might come out exactly the same but procedure does matter and I believe that it's important that we do this I'm I'm very concerned that. And I'm appalls furnace side I want to thank Senator Dismang Senator Hickey and everyone else that work so hard on this bill. But in Preciado in your hard work I didn't. You know handle my proxy on how I thought the final tax bill would be I hope that the whole idea that we're having a committee meeting right now. And that we're deliberating would be to make the bill better or to cover things that we think may be hit failed to properly cover. if we were going to be forced into a situation where to for something to be consistent with the governor's call. That we just had to take it the way it was was filed and I as far as I'm concerned we are we shouldn't have any committee meetings the bill should have been introduced and immediately referred to the calendar but that's not how we normally operate we get to deliberate we get to talk about it and I just believe that this is an issue this time is come. I appreciate Senator Rapert bringing The Amendment but most importantly it's important that the Senate and this committee have input as to what the final format and I can close by thanking you both the tremendous job you did especially on the tax rate portions of this bill. Thank you. So a couple things to your point. There was input given as you all know I despise co sponsors because if there needs to be a change I feel like it's my responsibility that each one of those individual that sponsor of that bill that put their name on it should have the chance to take it off they don't like was been added. I went through this bill line by line more than I could ever trust me one ever wanted to to make sure that there weren't any flaws that we have covered all bases. And then I presented it to the members. You all look at it you ask me questions I responded I give you all the information I could possibly put in there and you said you know what I want to be a sponsor of that you didn't say I want to be a sponsor of this a change bill. He said I want to be a sponsor of this bill and the twenty five other members that are on this side of the sponsor of this bill not a change bill and I would disagree that this is a different circumstance we're in a special session. This was all given to you well ahead of time and again you agree to be sponsors to the bill as these others minute did as it was written. This is a hostile Amendment. I can remember more than one well speech in which there is a hostile Mehmet presented to the member's bill that Senator Rapert went to the well. Enter an absolute fit that we were going to do that someone else's bill without the permission. The first I knew about this amendment is when I sit down right there in Senator Rapert told me that he was gonna put a hostile Amendment I wouldn't term it that way on the bill. Again a bill that's been co sponsored not just by Senate members but house members we're going to change something that everyone agreed to including you to. No you don't get a chance to respond I had to listen to it for a while. And I'll say this I've had lots of conversations with law enforcement myself. And I'll tell you what they're tired of. They're tired of being paraded up on the stage and told that we're backing the blue man standing in front of them. They're tired of that of this social media and going out that the symbol for a back the blue is half of what it is for the campaign. When I talk to law enforcement what they said was they recognize the flaws this doesn't deal with retirement they don't get credit for the retirement on this three thousand dollars they'd like that there other states that you know I stipends in other in other areas that they want to explore actually when you talk to them. So I believe there are options I don't believe this is good policy and I believe retired trying to touch bad policy to a bill that has been very thoroughly vetted. So I appreciate the time I appreciate the back and forth and whatever it may be. But these other members didn't agree to this this is disrespectful to the process regardless of how we want to phrase it. Comment out the. The Fiscal impact to use is twenty five million dollars but as a read the bill the people you don't have listed here would would be members of the Arkansas game fishing game wardens would would qualify the people will or in parks and tourism that are the wardens would qualify as law enforcement officers we we we brought that in the bill it last session where they could the care their farms off the off the parking in the law enforcement officer throughout the state you've got department correctional officer shot I'm gonna question where the not our fiscal impact statement is is correct the other thing would be and on page to a paragraph II of federal law enforcement entity one world would would we be given tax credits that help for that going goad who who are we going to give tax credits to but the biggest problem I have with this amendment is that we are beginning and earned income tax credit we're going to give people money that tax money back that they did not pay in and we did see that bill and this past session the other thing is if we do it this way and we do that earned income tax credit and we're given say two thousand dollars back to police officer on taxes you didn't pay this is going courage to cities and counties not paid regular salaries and it's just bad tax policy is plain and simple but really the next things will happen once we just long for the fire Fokker will come in and want the same thing the two critical command on same thing members of the R. naught the creature known to man and one same thing I think we need to have a good clean policy tax policy how we can lower taxes for everyone we see people coming out trying to take our income taxes zero I think this is the best tax policy we can have in not trying to pick winners and. Thank you Mr. Senator Rapert I will allow you to close right if the if the chairman wanted to allow D. F. and they can speak to those questions Senator call those are good questions we were advised during the spring that you could not route you could not exclude federal full time law enforcement officers we were told you had to include them in the state and the FNA could respond to that the because they're the ones that pointed out to us that we had to do it the full time law enforcement officer actually is described in the in the bill starting their own page one it talks about the law enforcement agency and you did have some people in there of course a law enforcement entity of the state of Arkansas including without limitation there were some that were concerned like the airport Caldwell and so they they had asked that we want to make sure it's so including without limitation it did describe them but what I've been advised by DF in a and this is a result of the impact statement that this includes all full time law enforcement officers and had to include we couldn't exclude the federal is what they told me in terms of closing for the bill at seem like Senator with man of questions Mister chairman I'm ready close whenever you want me to. So we're talking about giving credits also the federal law enforcement this isn't just municipalities and and and our account so it's I think it's a total of a little over seven thousand if I'm not mistaken but yes they told us that we could not exclude them what we have to give them a stipend if we went a different route if we if we were to increase paired is not supplementals Senate is for that's a different that's a different in that I mean our state folks are actual many folks in our county folks would actually be able to get a greater benefit with the same amount of dollars for that being that play out right would actually a refundable tax credit. Is more to them. Permit tax basis and it would be if you gave them three thousand on saying if we if we don't have to pay a tax credit a refundable tax credit to federal law enforcement officers then that's more money that is being divided out fewer times which means more money for our instate folks not saying these guys are out of state but I mean I thought the focus was this is news to me right now it's gonna be this your colleagues to send that bill. It's gonna be news your colleagues that that the city and county folks weren't getting the bang I mean we're we're having you're diluting it down is that correct would look at that you're diluting down with the total dollar amount would be distillates X. number of dollars that we're increasing the number of people including now it's going to be available to each one is that correct I'm witty finished yes you would be correct that you had to include so that's not diluting it down the bottom line is that Arkansas and I will close if you want you Mr chairman. in closing. This is a matter of political will. It's twenty five million dollars. We're talking about fifty million dollars to US steel. Talking about half a billion dollars for all of us and I'm happy with all that. And I know you may think it's awful it's not meant to be hostile because the like everything you do in the bill. I just think there are be room for twenty five million and it is the first time that I've ever seen in a long time. The parliamentary maneuvers are considered disrespectful this body if you don't like and change the Senate rules but until that such time we all have the ability to use parliamentary maneuvers any time that we won't you know what I can stand here and sit here and so can many others feeling good about the fact Senator was going center there was a play on the bill that we. Are standing up to our word it's in the governor's tax force ready recommendation to do a tax credit. In it calls for the state to do our part in the cities and counties to do their part. This is real simple all of us are getting a chance to say we think we can squeeze out twenty five million dollars to help law enforcement that's all I'm asking if you don't like it that's fine that's respect that's respectable but it's not I don't think you're disrespectful because you disagree with. So I object to that connotation with that without him closer chairman I'd ask for motion and a second for that. I have a motion from Senator Rapert. Senator. Yes yes what's the matter I'm a minor. The he did my question. And I have a second from center Johnson. In discussion and motions. Sang none all in favor say aye I. posed NO. Senator. Welcome. Yeah call the roll. Senator Teague. Senator Rapert yes. Senate Colwell NO. Senator Ingram. Senator Ingram is there always a okay Senate eighty. Senate Johnson. Senate is main. The. Okay. The motion fails. There were two no votes. To the Committee. Forty eight four nine votes to yeah votes in one of a. A motion filed. All right Senator you ready closing your bill. With respect to other folks the room I'm not sure if we have people sign we did a lot of we have got off track yes for their. On the physical impact okay we have one here on on this but would you come up please. Thank you appreciate your brevity. Well. I think over time starts at twelve oh one. Mr if you would Sturch nine. Right and of. Thank you Mr shares today is the about the fiscal impact on SP one thank you Mr chair members of the committee Paul hearing DFA. Senator Teague. Thank you Mr chairman so can we have four five one point eight billion over five years. Thank you senator Teague I certainly as a given Hutchinson took office in two thousand fifteen his goal was certainly to bring tax relief to individual income taxpayers state of Arkansas not really answer it I understand of so in the cornerstone of of providing income tax relief is deprived measure of relief that can be absorbed by growth in the economy as well as management of the budget and making sure that state services are met certainly with regard to the revenue impact of Senate bill one as with we are very confident that this the ready tax cuts that provide controlled incremental reductions to the top rate for individual income tax as well for corporate and providing the relief through the sixty dollar tax credit and the other provisions of the bills certainly can be absorbed through the growth of our economy in the tax collections as well as the future needs of the budget. Hello. Thank you Mr chairman your thank you you're welcome members we have of a nation people to speak for against this before you start I little limited time since we've got other committee meetings that we've got to attend and so I'm gonna give each one of the people two minutes. Per side to take and and make your points in the first one because of Aly Thomson of. For a no. You terming. Miss Tomlinson as I stated we're gonna give you two minutes if you would stretcher your name and who you're representing here and then we'll start to time. Thank you Mr chairman Alan Tomlinson I'm from Conway and I am with the Arkansas alliance for disability advocacy okay time starts now thank you so thank you all committee members I'm actually here just to share a little bit of information on this not necessarily and no I just want to remind you how this is going to impact people in Arkansas so first and foremost I am a mother of two children and one of my children is fifteen he has and chronic health conditions and intellectual and developmental disabilities so I really want to remind you that this is actually disability policy so I don't think that we think of it like that when we come into this room is her talking about cuts but every piece of policy and every piece of legislation that we work on is actually going to impact people with disabilities that we need to remember that so any type of cuts that we are going to make is going to the impact services for individuals in Arkansas that and Nita Services to lab so right now we actually have and four thousand eight hundred individuals that are seeking community and home based services and we still have three thousand class that are on the Arkansas labor list and they have been there for years. I think that our Kansans deserve to live a life of independence a life of dignity and a life full of quality and I think that every single person in this room can really agree with that so making cuts are going to hurt an impact of services in a negative way so I hope that when we leave here today we can all really say that we have championed for individuals with disabilities that are in Arkansas thank you. What you're for. She asked beg. In the. She did however she did do I have any more time left no okay. But no your time is up. Of. Ashley Simmons. Miss Simmons before a. Miss Simmons before I salute you your you said that the info this is to speak for or against this bill. You're sharing information is this for you're speaking for the bill or against the bill that's what we're hearing right now what we're hearing testimony for or against. Against or sit down. Give us your name who you're speaking for and then I will start to turn with you I gave a little belated to don't you know that I want to hear about against the bill okay all right so many name my name is Ashley Simmons I'm the project coordinator for community of champions with the Arkansas alliance for disability advocacy incurring your time starts now sept I have two little boys ages six and nine who are disabled our Kansans under the governor's proposed tax plan our cans into make under twenty two thousand dollars a year which means twenty percent of the state would see no benefit at all one in three Arkansans are disabled and thirty percent are living under the poverty level I understand this is education you have and I'm acting as a reminder to you please understand you're representing all our Kansans with your actions not just a chosen few. People with disabilities have a right to look up it to the Arkansas legislator and see a body of people who not only have their best interests at heart but a body of people who actively support them with every policy the vote on please take it from a mother who truly understands the benefit the benefit of having services available in our state that allows us to access medical care both of my sons quality of life have depended on the reality of a family with an education making seventy thousand a year taking care of two medically fragile children with disabilities and living in a state with lower tax revenue mend the services offered were few and far between resulting in us losing our home and having to uproot our lives so I know first hand that the reduction in tax revenue means less money for our state budget and that means less support for the people who need it most thank you thank you. Senator Johnson. Ma'am thank you for your testimony thank you realize there's nothing in this bill that would cut any services to any disabled person. I from what I've read absolutely I understand that there's nothing that outlines it however having lived experience from another state well I just wanna clarify that this is back cutting tax I understand income tax now. We the General Assembly asks use that collectively my reprioritize things and certainly the issues you brought up or things that I support funding and I can think of things out there that we fund today that maybe I would. Lower their funding and raise the funding for the things you you you mentioned but I have led the other witness to go before made by point of order and Mr chairman I respect this lady too and I think she makes valid points they're just not relevant to the bill before us so I ask that we keep all of our comments on the bill and not on some greater good which while it is a good is not relevant to the discussion we're having today but I do appreciate you taking the time to come speak to this thank you Mr thank you. Senator Clark. Okay. Well you are then you're then next first on my list because you were for so we will proceed to Richard Wilson you speak against the bill. Mr Huddleston you've heard at my instructions give your name who you're speaking for you will have two minutes. After that okay Richard Wilson executive director Arkansas advocates for children families started to all right we ought we oppose of the tax cut a package of for several reasons one we believe that the cost of the package I'm is gonna be a lot more than what you have in a is estimating according to a study by the institute on taxation and economic policy they estimate the cost of the plan will be six hundred million five hundred million which is fully implement second we also oppose the plan because we think it unnecessarily favors the wealthy according to the same analysis of why I tell the top one percent of taxpayers those making more than five hundred thousand dollars annually I would receive about thirty percent of the benefits of the total tax cut the average or cancel the top one percent would see their taxes go down by about ten thousand dollars annually in contrast the lowest twenty percent of taxpayers those making less than twenty two thousand what that would receive lesson of what that would receive only one percent of the total benefits of the tax cut package the bottom twenty percent would see an average tax cut of less than twenty dollars in the other state corporate shareholders and are also on the big winner I'm under this plan again according to ITEP the corporate income tax cut which alternative which ultimately gets passed along to shareholders would mostly be captured by out of state corporate shareholders they estimate that about eighty one percent of the benefits from the corporate tax cuts are actually going to flow out of state to out of state corporate shareholders they think that's about the in their estimate about sixty million dollars that would be leaving out the Arkansas economy and then finally we we disagree that I mean that you're gonna take six hundred million dollars out of the revenue stream that's that is money that could get spent on the state budget for things that support children. In families and so we don't agree with the argument that of that of that of that of that of that that's not your term as a all right thank you thank you. Michael Thorton. And. Please. You pass is that correct okay it's hard for us to hear from their. The. A. B. Hughes all. The issues you didn't recognize for I recognize you you didn't start with your speak for or against this bill I need to know that right now. You're speaking for. Thank you he per my instructions please give your name who you're representing and I'll start a time clock. A pusher but make sure that. To read lots of Abby's yourself call from Hot Spring County currently a resident in Pulaski County I'm here on behalf of the Winthrop Rockefeller Foundation and the Arkansas asset funders network. Thank you so much and I'd like to share a letter that the winds of Arkansas or foundation board of directors wrote to governor Hutchinson which applies to this body as members of the Winthrop Rockefeller Foundation board of directors we are writing to urge you to keep hard working our Kansans top of mind as you convene lawmakers we are grateful for your prudent leadership of our state budget that has resulted in nearly one billion dollars of surplus. Yet we know nearly half a million our cans and household still can't make ends meet hardworking our Kansans have real needs and tax credit like the low income tax credit that's part of Senate bill one is a real solution credit such as these are targeted tax relief that paid hard earned money back into the hands of working Arkansas taxpayers last year the Winthrop Rockefeller Foundation in inter G. released a report on Alice in Arkansas that shows that forty six percent of households in Arkansas are Alice asset limited income constrained yet employee. Alice our Kansans are the hardest working residents and can be found in every town every city and every county in our state Alice workers are Arkansas's essential workforce that keep our state economic engine running yet while they work hard and put their lives on the line they are linked art always sure they can put food on their table. It is time for Arkansas to stand up for Alice and make hard work work for all governor Winthrop Rockefeller was committed to economic prosperity and courageous in his pursuit of systematic change that benefited all our Kansans during your tenure in office that being governor Hutchinson's you have also worked hard to make sure our state is competitive yes. Thank you. Mr. all I wanted this act. Yes. What six. Everyone else you start your tuition costs have. Your. Or Bill Gates against the bill. Interest just sharing agreement. Fredrick Freeman. Represent ourselves. Yes Sir thank you very much. Good afternoon Senators appreciate this opportunity I'm Freddie Freeman shine at Freeman we're here on behalf of the disability community China is a thirty year old young lady who's been on the D. list by number of years the questions just raised how does this bill affect that this bill as mentioned by Mr Rapert has an opportunity to find other things is what it does that's the impact of this season against it we thank and the others in the room thank that happen to to mitigate get rid of the individuals on the on the disability this is a great use of bonds instead of a tax cut. And that's the reason that we're here to speak against a bill. John it was put on the list when she was twenty four years old six years ago she was number thirty five hundred she's calling number fifteen hundred I think as I cans and legislative body members that we can do a lot better than that that's the reason the gas this bill. This is a lot of money half a billion dollars over four years and I'm told it takes about thirty seven million to clear out the DD list. We appreciate a modification of the bill that for clearing up the DD list. I'd entertain any questions if passed. Senator Rapert and we're running thirty seconds isn't so the national question quick. Mr Freeman thank you absolutely appreciate what you say you make a great point we've helpful for what my question is is have you been given any assurances at all if there's any effort being made to completely eradicate the DV list which is something that we want said we wanted to do to hear parentage legislature I've not heard of any efforts of late I've heard promises over the years. To the extent that this the first time I've kind of spoke about it because I'm tired of the promises not being fulfilled we help before Mister chairman but we should probably get this back up on the list again because it's important okay your term thank you. Dr eleven. Dr Evan for us that you I wish you the same question and I've asked everyone else you can't against okay state your name I'm here for my name is Dr seared eleven I'm the CEO of Arkansas support network and the president of the Arkansas waivers your term starts K. I'm excited to hear that commitment from you to Senator Rapert I'm here to to capitalize on what you've heard from the disability community that today and the impact of this bill and I want you to know that what we are facing today in Arkansas is different than what we are facing this time last year the year before the holding community based work force is crumbling out from underneath us to the same types of issues that you raised around law enforcement we are not able to support those folks on the waiting list with the reimbursements that are in place today all right we are are currently struggling to be able to support the folks that are receiving a waiver services and disability services and taking this amount of revenue out of our economy means that we are ensuring that the additional funds that are going to be necessary to stabilize the workforce to support our Kansans with disabilities we're losing that opportunity not only that but we're talking about thousands and thousands of our Kansans that show up every day and work hard and enforced with making decisions about quitting their jobs because the cost of putting gas in their car having insurance for their car and being able to provide daycare for their children is more than what they're being paid to do meaningful work to support our Kansans with disabilities and their communities it is also not only direct support professionals in the disability community we're seeing this with the. After all health we're seeing with adult and aging services we're seeing this was services that we will all need some of us in this room today sooner than other others in the very near future we don't have the resources as providers to be competitive in the New World that the pandemic has created and we would ask that instead of giving wealthy is our king and additional money remains the center services thank you. Of representing rack. Is not here okay. So we're down to. Motion on the bill. Your closed over. And do I have a motion. Most of the past motion to approve Senator Hickey second. In discussion on the motion. All in favor say aye opposed no. Motion passes. Of Katie. Senator Dismang you're running S. the two. Thank you I don't I don't think this bill has any amendments coming. Over. All right. Can members this is it this just strike some language that was not consistent on the appointment process for the new tax commission by striking that lands with brings in line with rest the bill. Or other questions or discussion on the bill. Are you closed I'm closed make a motion. I have a motion to pass Senator Johnson second during discussion on the motion. Seeing none all in favor say aye. Lows NO. Motion passes of. Senator Wallace if you would where you at. Senator Wallace we have about ten minutes thank you get to set out here but. All right. All right here that. Senator well sure here to present SPT ten. Thank you Mr chairman. Calling. I wanna use the word positive cost benefit analysis remember that because I'll probably forget it two three times through this. I work with this bill ADC has worked with many different A. as work with the governor's office this is a really good bill we have the opportunity to bring. A great addition to the state of Arkansas. A capital investment of over three billion dollars. So can agree on. In northeast Arkansas. Hi this is addition to the two point two billion that the US still. We were still is already done total investment of five point two billion dollars that they've invested the state of Arkansas. By the way that the. That would be the second largest economic development package done in the United States this year. Problem with that is it to the state's chase this also. Alabama Mississippi. We're in the driver seat would lead. Provided we can just do a few things that will help out. This development is going to bring. Seven hundred jobs director jobs working for US still. Many women making a hundred and twenty thousand dollars a year. This will bring an additional two hundred jobs. Of the companies that are or vendors of US steel and those folks who make an average of sixty thousand dollars a year. The steel mills came in Arkansas and eighty eight. At the time the minimum wage was about three point three three dollars and thirty cents. Folks will conform. Must've been one of the guys are working for farm labor was making about three dollars and thirty cents an hour. Nothing changed until the steel mills can Mississippi County. Since in. These young folks. Which may be with a year college maybe two maybe none just ability to work hard be drug free show for work every day. For making a hundred thousand plus a year. This turned into new homes new cars. New investments. Families enjoy a good life in a for the country that. was pretty doggone poor for a long time. What's it going to cost us. We've already talked about the fifty million but one toss cost of some tax credits. But it's kinda like. When you grew up on a form of ID to to you've got a prime the pump to go put a little water into the pup to prime the pump to get gallons of water out. That's what we're doing now that's what we did start back in eighty eight we have prime the pump we've done this twice before and it has shown enormous financial benefit to Arkansas especially northeast Arkansas. I've come to you as you do this one more time. These. A leading finishes bill. These tax credits. The average eleven million dollars a year fourteen years. We have the ability to purchase and back at twenty percent discount that comes up to eight point eight million a year. They don't get these tax credits unless. The Bill pass a positive cost analysis this will be done by. AEDC and done by the part of finance. So there's a money back guarantee on that. That's what we're looking at in addition to that you take a look several people to working making a hundred twenty thousand dollars a year now which will probably be a hundred forty thousand dollars or under fifty thousand dollars fourteen years from now. Eighty four thousand eighty four million dollars a year salaries. The two hundred making us sixty thousand that comes up to twelve million that's close enough to hundred million to call it a hundred million. Five percent tax on that income taxes and other five many years it would be coming to the state. Not to mention property tax or sales tax this is a good deal we have done this twice before it's been very successful. We need to run the same play again and with that survive. We'll entry courses are there questions Senator Johnson. Senator Wallace the seven hundred jobs in these individuals will be paying Arkansas income tax something seventy percent of the people who work in the plants now the pay Arkansas income tax so we're we're getting that revenue back in additions or the other is a quality of life things you Manchester hi thank you for bringing this bill senator thank you Mr. Are there other questions. Senator Teague here your motion at. I have a motion and a second do pass is in discussion on the motion. Swing none all in favor say aye those opposed no congratulations thank you. Center there all right here Senator Garner we've got a B. and other committee meetings and ten minutes of a recess will come back after the after of the meetings at the chairman's right here I thought that it was either a the three o'clock time on or after this meeting I believe that's what the state agency I'm co chair that and. It was was that the sentence I'm here senator actually I've told them that we did you earn at three or a phone German of your committee center factor bills in our committee yes so we're gonna hang around so if you could please you just go ahead and analysts or you're here to present S. the A. Levin correct and I'm not special not come back for their second. When you're ready. I'm ready okay last session I filed a bill to eliminate the income tax in Arkansas this is been a stated policy of many members of the policy committee in Arkansas we know that lieutenant governor Tim Griffin led the public debate about this roughly a year or two ago we know that Attorney General Leslie religious talked about doing a constitutional amendment to make that possible in Arkansas we no candidate for governor Sir Huckabee Sanders has also expressed the desire to eliminate income tax is something we have to frankly we're getting our backsides whipped by Texas and Tennessee and the zero percent income tax they have we know that this not only draws economic condition it becomes a recruitment tool for labor and for talent to moved Arkansas this is showing huge benefits across the state that we have not seen and other tax cuts that we have done in my opinion. When I filed a random bills last session I remember looking the committee's faces here nursing is a snickers are some bad looks how dare I bring a tax code that could be done the nay Sayers said It you can't do that is too much money is not possible to cut our income taxes zero in Arkansas. I'm in one of our former colleagues decided shipping on Twitter and say that you can't do it that it's impossible or would you stay with the police so what would you stay on the bill yes Sir I'm explaining the pretext to the bill before get to the initial part of the bill I would rather hear the bill okay we'll I'm trying to illuminate the discussion before and expressed the importance of this bill I think is permitted we bring right now that meet your criteria Mr chairman I would I would prefer that you state the bill came back to my point of the discussion after okay so when I did that there was last and other things like I said from members of this committee. After the date you can't laugh. This bill puts us on the path to zero percent income tax in Arkansas this is a real substantive bill that could do that and in the next ten years of my kids going to the work force they wouldn't pay one PT on their income tax and how would you do that first this bill eliminates almost fifty percent. Of the taxpayers would pay zero percent income tax. I'll say that again nearly nine hundred thousand fifty percent of taxpayers would go from paying income tax two zero the second this bill passed. This bill would take the lower bracket as we already have been moved up to twenty six thousand five hundred dollars now why that's numbers important. The per capita income in Arkansas all do this last senses is twenty six thousand five hundred dollars every single one of them by definition we the average or cans and would go to zero percent income tax. Every other taxpayer. We'll find it the first ten thousand dollars of their money would go to zero as well not only would you cut income tax by fifty percent you would also raise the first ten thousand zero what that means is somebody who makes forty thousand dollars a year their first four months of working they will be working for the government. That earned at themselves. The largest tax break would affect the working middle class as we flatten the rates across the board and lower from five point nine percent to five point five percent that middle tax bracket the top tax bracket would go to the first ten thousand dollars exempt as well the only number they have to worry about is their top rate moving from five point nine to five point seven. This. Would cost more up front but in the five year average from Senator Dismang Eads bill would actually cost less allowing us to focus on reducing income tax and others well what I like about this bills a three pronged approach to put us on that path to make sure we cut taxes zero first it raises this at the bottom. That lower income tax you can continue to raise up to thirty forty fifty thousand dollars to get does zero percent income tax sickly cuts out the middle as it flattens that it reduces that first ten thousand and lastly skims off the top as you move that top rate down as much as possible there's no triggers there's no corporate income tax reduction for foreign companies that incorporate in Delaware and do business in Arkansas there's no welfare rebate given to people Page allow them to keep their own money. This bill puts us on a path that I discussed before the good news zero percent income tax is no longer fantasy is no longer a joke is no longer something we can ignore this would do that if we start today and continue on that path moving forward I times link in my certain enters the work force in ten years he can do those eggs do that with paying zero tax with that I'll take any questions Senator Garner of giving you the intelligence to present your bill. But your bill does not carry a fiscal impact and rules on this committee is we don't hear bills without offense and well be LR has examined this at three seventy FMA gives our fiscal impact and so with that thank you Sir what did the FNA allow a special session was is that data rule applies to special session would have been almost impossible to get that in a time if we do not have a fiscal impact we're not hearing the bill this rule of the committee thank you. What we are.