Revenue & Tax - Senate

Going to present S. the four eighty four. Yeah. I mystery man and really just a quick update on four eighty four I'm not sure that we're going to be able to get to the revenue impact with the FAA in regards to the mobile workforce that's the folks that are working from out of state in state for limited number of days for probably not clicking on anyway but again that's something that's what's driving this revenue impact what I'm going to do is do an amendment to that bill that will just get us back to the basics which is that whole theory that there's corporation in Arkansas and some is working out of state that Arkansas should collect income taxes on individual that's only been in place since two Novembers ago of revenue impact should be meant in my opinion relatively small or none it's all have that bill amended back in Oakley we can hear it on Wednesday as engrossed so it's pass over today. Senator Rapert. All only question and it may be it's so what would change are you gonna get a new number on. You got a clue about what we're going to be I just visited with D. F. A. about that I wanted I'm gonna say on both of these cases. I don't have to I don't have a clue is probably not the right way to say it but those those are not even that number that you have there is not a hard and fast numbers just estimate it's really hard to understand in my opinion where it comes from but anyway will there. Yes will be a new found as a financial impact statement and it should be negligible amount or thank you we'll see what if a says. No problem. So okay. Senator Johnson SP three thirty six. Senator Johnson do you have an amendment. Okay. Members if you would look at your amendment. Thank you Mr chairman mark Johnson senate district fifteen of. This is the bill for the sales and use tax exemption for coins currency bullion what the amendment does. Is it clarifies that only collector currency that was or is legal tender at one time it was legal tender or it's still legal tender it's not just a piece of paper just means what we're doing is is narrowing the scope of the collectible things to actual former money paper money in this case and make sure it's not applied to of art objects cabbage patch dolls for anything like that so we're we're narrowing Rapert. Okay I have a motion Is out sex second. By Senator Dismang all in favor say aye opposed no. All right thank you. I think we've heard your bill what is other than the amendment is there anything else you'd like to add just wanna say to you Mr chairman I appreciate the work that the F. and a dozen trying to analyze these things but when you've pretty well had economic activity in this arena slowed almost to a stop then anything that would stimulate this economic activity I believe would probably have at least a neutral if not a positive revenue impact and that's the case of of of coin shows in sales to people who invested in gold and silver in bullion as. A savings vehicle including in their retirement accounts so I believe this will be a good thing for tourism a good thing for the state of Arkansas and and I think our over the long run I think it will actually contribute greatly both to the economy and to our revenue so I was censured Preciado move on Senator Teague. Senator just I'm just curious how this helps of tourism in the economy. Well we used to have more coin shows and they come in hot springs and have a great space the convention center and rent hotel rooms and do that because they're people that are really into this and because of our our sales tax they now go to states neighboring us that don't have the show so it's a we know that affects things in any part of the economy but in this particular it affects it very very much because you're dealing with that and that's one thing that is is is very much on on a March sold on March. Thank you Mr would you become a police. Thank you Mr chair members of the committee Paul Goehring department of finance administration IDFA president the fiscal impact on this bill when it was running committee earlier in the session the FY twenty two proximity sales tax loss is about seven hundred and sixty six thousand dollars for the full fiscal year our estimate is one point one million dollars we did touch upon briefly when the this bill was presented earlier this year that the revenue impact did increase from our estimate from the substantially similar bill that was introduced in two thousand nineteen the main reason for that is that the General Assembly passed internet sales tax so now that we are. Capturing more of this revenue because the market place to solicitors and online sellers of these of these items have an obligation to collect sales tax if they meet the threshold of two hundred transactions annually or a hundred thousand in sales annually be happy to answer any questions or other questions from. Mr. Saying thank you thank you Sir. Or other questions Senator Johnson. What's the will of the committee motion do pass as amended. Say. I have a motion and a second as amended. Discussion on the motion. Seeing none. All in favor say aye. Opposed. Motion passes thank you. Senator Garner. What you are what are you Mr chairman chairman members committee thank you so much for allowing me to speak on this bill just a few minutes. One of our top missions as a state when it comes to taxation has to be the reduction of our income taxes zero. This is not only one the most critical things we can do to spur economic development. It puts us in a park competitive position with states around someone not states right now have no income tax. And fortunately or unfortunately to the State touches Tennessee and Texas whatever you're in south Arkansas are you trying to recruit people from the all fields in the oil industry from Houston and Dallas they have a natural competitive advantage against if we can go across the board on how this would do it I understand reduce this is zero will be a significant hit to the budget. And I'll admit some day if you pass this bill today. Probably pretty severe strain on our budget moving forward and be able to operate the next year government. But we don't run bill sometimes we know what they're going to pass or fail we run bills we get the idea stored. Look what happened Mississippi Mississippi is dedicated themselves to or no income tax. But they put in a phased approach year by year to reduce that amount to zero this is what Arkansas should be doing. We're in a unique position this session because we have hundreds of millions of dollars in surplus due to federal funding due to other recognized economic realities last time I heard around five hundred fifty million maybe more or less. What is stated that putting that to a long term reserve fund which is a terrible idea. We put that toward a fund that will go directly to reduce our income tax for the next ten years almost like a saving account we could tax in touch to reduce our budget. On top of that what we do put in what I call the one one one point. Every session we dedicate ourselves to reduce our income tax by one point. By reducing state government by one percent overall in getting rid of tax exemption across the board at one percent that would bring in hundreds of millions of dollars over the next ten years to put us to that zero percent income tax if we started today to move toward that plan within my lifetime this become reality. It's a discussion we need to start having in Arkansas is a serious issue and is the number one tax forty we should have a state without take any questions. Or other questions. Senator Johnson. Thank you Mr chairman. And I agree just about everything you said Senator Garner but we need him talk talk about three billion dollars it it it does kinda because want to choke up. Many years ago senator samples predecessor Senator Canada. Was obsessed I think it be fair to say that Mr chairman with getting rid of the ground not gonna say that I would he want to get rid the grocery tax very very much and it took a long time. And I. I would think that we your your direction is good obviously we're not a position to do that and twenty twenty one but I applaud you for bringing this and I'm I'm wondering if if you have a similar plan of the phase in such as we ended up doing on the grocery tax ultimately after senator candidate was sure soon as does a pass which you know I hope it does What I said we got ISP we put a serious thought as to what this what's making you look under governor Hutchinson how much we've grown the budget of state of Arkansas under his right right it's a roughly a billion plus depend we're going do next to or say aye if instead of growing government the last six years we put every dollar that to reduce income tax right now we could be sitting at the close of zero percent across the board if we solely focused on this important issue and made it a priority for the next ten years we could have it in the state of Arkansas it would be such a financial and otherwise bring to us that it would I think out seat any kind of by the ideas we could have with money moving forward thank you Sir thank you Mr Senator Rapert. Thank you Mr chairman. Senator Garner obviously it to our guest feedback in the last few comments of senator Johnson I know that we've talked about this the concept of it I would love to see the the legislature to actually spend time on what it would take to put those in place and I had forgotten to only mention because I wasn't around when Senator Canada we're was here for this but I know that when we did the grocery tax elimination finally and I will carry that in the Senate and it was put on the trigger system in it had different triggers that would occur in frankly after we pass that I think people forgotten or some members elected wasn't here when it was the triggers were put in place and then obviously just a couple years ago we hit that trigger and now sixty five more million dollars a year stay in Arkansas families pockets because of that eliminating everything that the eighth of a cent that's there that we can't touch because the constitution but again obviously as you know we're not going to get this one crossed the finish line in its current state but I absolutely think if you don't plan to do it you're never going to do it. And so I would love to see more people consider getting behind an idea of how you could put in a plan and it would take a lot of time because that transition is the whole key how do you transition to what's next so I appreciate you bring in the fall and and definitely support concept because I believe it would make this one the most competitive states in the country thank you This is about the revenue impact Senator Ingram you have a question for Mr. Of carrying out do you know just a rough figure of top you hear what exemptions how much any exemptions annually the state gives. From from allowed on income tax returns don't know just are are exemptions Senator Garner mentioned I thought something that made a lot of sense was you could do dollar for dollar income tax reduction of verses exemptions that we allow so roughly we're talking about a billion and a half dollars here so roughly what are we annually give any any exemptions total we we do have a document that we prepared as a part of going into the two thousand nineteen session that identified the individual income tax corporate income tax as well as the sales tax and use tax exemptions I'd be happy to email you that document that had they were revenue impact so we put together for a number of different exemptions under the it but I mean I don't have that document here with me in your mind would offset who uses that a billion and a half of the year it could possibly offset there are there certainly are some very sizeable exemptions that are available my only most of those exemptions are are in the in the sales tax area you know the exemptions on for example prescription drugs that that's of that's was a large revenue impact the the exemption for manufacturing machinery equipment large number there but I I do I just don't have in front of me right now what those dollar figures are but I'd be happy to email you that document thank you sure. Or there is a question for Mr. Seeing none thank you. Senator Johnson. Of thank you Mr chairman Mister is a follow up on Senator Ingram is comment of. We we talk about exemptions we sometimes have eggs you know credits and exemptions on income tax which certainly add up to a lot of money but if you don't have an income tax that's they become moot this case of. I look at where our tax. Rates have grown in time I just been looking at I'm going to go back when when governor Clinton became governor our sales tax rate was three percent and we did not have a local sales tax at all and are fully couple will because I worked in governor Watson ministration we first. Came up he came up the idea of helping local government through local option sales tax. But through the years that. To use got want governor what's terms that opened up a whole box of Pandora's and I will I wonder if. One way we could possibly reach that the goal that outlined in this bill would be to not to do away with with local sales taxes but to put some constraints on it where people are looking at eleven twelve percent overall rates and may I'm not saying a lot of good done with that there is but there's also cases where they go for what I call the Friels the the Way pools and things like that that communities want but they're certainly not community needs and you think there's sufficient. Revenue out there in where we could go out to work like our neighboring states have a have a cleaner sales tax system that could offset enough to where we could reach a goal either over a period of time or I don't think all once bills with a lot in the a going back to zero tax income tax rate. I will certainly the income taxes they they go to general revenues and the local sales taxes they go those go to the to cities and counties to pay for the the and improvements infrastructure programs they would like to provide some of those are temporary nature some of those are are permanent in nature but I'm sorry what I wish I had a better answer is are two different funding streams. so I'm I'm sorry but I probably I don't S. and wished him well this has D. F. and identity studies in that general area I'm not asking to be this no snow senator I'm not aware of any studies that we've done to at be able to eliminate the in individual income tax by. Changing structure in other taxes that we administer we obviously need to purchase gonna contemplate this we're gonna need to take a look at it and I'm not monitoring you today I'm simply saying that we collectively probably need to take a look. Thank you Mr thank you Mr thank you. You have a question for Mr. Repairman it it seems to me. That the sales tax went from three percent to where we're at now the state level because the people who have communicated very clearly that they'd rather pay sales tax. Copy tax for other taxes so I don't think it's as simple as just doing away with it because if you do away with the. Specially local taxes you're going to make property taxes go up you go to a lot of issues besides doing away with sales tax Bob here because our local counties and cities depend. Desperately on a the sales tax revenue so I just don't think if you know it's not a simple issue and I applaud that is I don't know that anything there but we have you know a rally of dismiss my district we see a lot of people moved here from Texas and and so sales tax is not the only income tax is not the only issue and I think we've got in room three two or something like that we would be in much better shape than the than the states that have no income tax because of or property tax being slow so that's just my point about it but. Thank you for your question the non question whatever I think one of my friends told me he is a property tax and his car was four dollars or something. Our state. Thank you didn't I didn't know you had in France but of that hurt you not in the are there are there other questions Mr here saying thank you. What's with the committee date clothes Mr you're you can close if you like thank you I Mark Road or and my good friend Senator Teague. I had an excellent point so simple sample Senator Johnson Senator Ingram Senator Rapert you know what that's called discussion on an issue that we need to be having that's exactly why bill like this is important because of not it just be us thinking it rather than saying it out loud in trying to reach that go chairman I understand the reality of this bill I'm going to withdraw the bill not to put anybody in a bad position for this because I understand three billion dollars a large budget and on the floor Dale moved to an ice people we can do a further study on it so thank you for indulging me to have the conversation and this will not be the last time I bring it up thank you thank you. Thank you saying that. Senator Johnson you have Senate bill six oh five. Yes. It members if you have a look due to gender it's Reverend alone. And so if we can keep or comments in those suggestions to. You have an amendment. St Louis about. Tell us about your committee. Thank you Mr chairman mark Johnson Senate district fifteen of this bill is about broadband service in the amendment to Puts in some limitations that for example you can't of. You can't mix these benefits if you got to Money through care sector whatever you don't get the tax exemption and it also defines an eligible area and this is Census targeted toward rule it's for counties with a population of twenty thousand or less based on the most recent decennial census if if we ever get that census information of course I know we're still waiting on it but certainly by the time this this biz bill really implemented it would be that but I move the adoption of the amendment. the questions on Amendment. Seeing none. J. E. Mike's motion to. You have a second second second have a motion second any. Discussion on the motion saying none all in favor say aye hi posed NO center your motion is. To amend your bill is passed will you present your bill Mr chairman I will go and present this there was witness I thought they were gonna be here for at least one of the service providers and I'll be glad to allow them to present their testimony in writing or something later but if you if you prefer I will go ahead and and present the bill know if you're going to present a clear place present because we're running out of time okay we'll just do it in a. Thank you Mr chairman of there we have a lot of bills this session aimed at broadband and I think they're all good there's doesn't seem to be a comprehensive broadband bill but I I have a very unique and mostly rural district we have areas that are truly broadband deserts of western Perry County is Senator Rapert I usually we talk about Hollis over in western Perry County is being the poster child for not having cell service or broadband service and we. We need this in our state and I think the pandemic pointed out to us even more reasons why we needed as school children needed to be able to do their classes online and without broadband service it just made the whole thing very difficult What the bill would simply do would exist it would exempt from the sales tax. The equipment costs and as we just did with the amendment not costs that were paid for by care sector some other grant like that it would be that when they pay out of their company funds for the equipment and they would be exempt from the sales tax on that equipment to me this is very similar to how we treat manufacturing equipment this we put they put this in place install it then consumers are that are delivered a service and that service is taxable and allows them to to participate in the economy that the the economy Lowson to buy stuff online that uh then we collect sales tax on that so while I realize it does start with the two million dollar of revenue loss we have to look at the long term benefits a long term benefit is if people are going to be clicking and buying on their computer and their phone in these areas that haven't had a chance to do that before and it will expand the cyber economy to the rural areas the state as well as the other less tangible benefits of of making sure that the schools can it children can go to class remotely when when and if the situation requires that so I think it's a it's part of a puzzle to help serve our citizens with broadband access but it's not to the last and only way we do that but I think it's it's certainly a. Of a thing to do that I will say that after I've had support from I haven't talked all the carriers but AT and T. and T. mobile have reached out to me and said that they they support in principle the concept and they would see it as something that would. Create new incentives for them to go out and survey areas that they feel might not be profitable in the short run to serve without some kind of help so this is where we do it in the way that the it's it's set up they don't get a penny unless they've actually gone out and made the investment in those areas. Other questions from senator Johnson. C. ng Mr. In fairness to Mr gearing Mr chairman I think that the Legislative impact from D. F. and they did not take the amendment into consideration where we we capped at twenty thousand County population is that correct your that's correct. Thank you Mr chair Paul gearing with DFA DFA issued a fiscal impact statement for Senate bill six zero five for the first fiscal year we are estimating the revenue impact would be a two million dollar reduction to state sales tax revenue that's based upon nine months of collections the full fiscal year impact for FY twenty three would be two point six million we utilize some data that was available through the FCC to based upon. The amount of infrastructure that would be necessary to deploy high speed internet within the United States we scale that information down to the state of Arkansas and we estimated that if this exemption were to be put into place that would be approximately forty million dollars an eligible expenditures and and of that fourteen per year of that that the sales tax would be. two point six million in a full year we would estimate that it would take approximately eight years to deploy the entirety of the investment to to bring broadband to the rural areas. Mister do you have a any idea of how much money is coming in with the new. American rescue act for broadband I know it's tremendous amount do you have any idea I'd be happy to get that information from our folks over in accounting and budget they're working on that issue okay. Are the questions for Mr. Seeing thank you thank you. Thank you Sir. Johnson your clothes for you yes Sir. This bill is. when I see revenue impact always have to look at okay that's definitely the up front cost what's the downstream benefit I I sincerely believe that that opening up E. commerce in the rural areas of the state the savings it'll come to to parents that don't drive there I heard you Senator Irvin was talking about you can't get the parking lot of the McDonald's in Mountain View because people are driving in there so their kids can access the wifi and do their homework Gates this is a B. infrastructure issue of our generation in the nineteenth century we built real road to build our state and in the early twentieth century it was rule electrification that built our state in the late twentieth century highways built our state in the twenty first century the information superhighway the internet broadband will be the the the infrastructure Nate that helps build our state this is a step in the direction certainly not the only one but I think we can make a big step by providing incentives for these companies to go into the lesser served areas of the state and this is I think it's a good tool and a great start getting in that direction so I'm closing Preciado good vote I move do pass as. Okay. Mr chairman I got a question on that and that I don't know whether the second have the discussion or not that are we in a position now where you're going to begin allowing votes on everything with the impacts now or not. We're going to allow ones that. It a favorable vote. Okay all right all eyes will be clear to make sure whether members want an actual up or down vote or not some of these thank you. Members I would like to make a motion to suspend the rules to hear house bill eleven sixty. Second I have a motion. And the second. All in favor say aye aye opposed no. Okay who's going to present. Represented by. I think I'll present with him down there okay. And of the staff is starting to pass out the revenue impact. The Bill. It It is there passed on that right now. And the revenue impact. Yes. And there will be an amendment right. Senate. Thank you. Senator you want to present your. Sure thank you Mr chairman members this amendment act courses we know we've we all been working on this issue and talking with representative Payton for several weeks now Cup or actually several months now and this amendment is simply doing away with anything after seventy five hundred choice simply putting it to seventy five hundred only. And what we would ask is for the committee to adopt the amendment today representative Payton have some comments I think on the bill but he's not going to push a vote on the whole bill today. And so we would just like to have the amendment in place for further consideration future. I don't guess I quite understand do away with it all over and above seven hundred that's that's exactly right it's too it's going from four thousand seventy five hundred is zero and then stopping it's not pushing it further to ten. Okay. And what is the original bill to. It didn't have another tron should come and I have if represent they can be happy session don't mind I just wanna make sure I understand. Sentifi. Thank you Mr thank you senator Hickey so the governor as you know in November. Proposed a balanced budget with thirteen million dollars worth of room for used car sales tax relief so the first step of of my bill that takes it from four thousand to seventy five hundred on the exemption is a twelve point seven million dollars fiscal impact so that's within the governor's balanced budget the second step that was set to kick in two years down the road took it from seventy five hundred to ten thousand so that that raises the fiscal impact of twenty eight million down the road so by adopting this amendment and taking the second step out or come in three hundred thousand dollars below what the governor prepared for the balanced budget to be presented November and we're still bringing the relief to the pool buying a seventy five hundred dollar car it's four hundred eighty seven dollars and fifty cents worth of relief that they can add to their down payment and obtain more favorable financing which in the long run would say the customer a lot of money on interest rate and even the fact that the dealer has to charge higher margin because of fees that are charged by the subprime lenders so the four hundred eighty seven dollars and fifty cents is that this achieves at seventy five hundred dollars is helping hardworking salt of the earth our Kansans it had trouble with their cash flow in our mind a used car what happens when you're buying a used car and the reason the used car market skyrockets during tax refund season is because people just don't have the cash flow and our budget to make the down payment get their insurance in place and still be able to make the first month's payment get the car registered and so my proposal stops is seventy five hundred it's twelve point seven fiscal impact and I think it would really help not just those Arkansans but the employers that are looking for dependable employees thank god I have dependable transportation to get back and forth to work on time. Senator Hickey comments as we're discussion and of course you and I've talked about this representative Payton and I I disagree with with some of what you say you and I both know that the way that I see this is what it does is it creates a target for those specific car or cars that that creates a market in there so that for the dealers what that does is that runs the price of those cars up for those individuals right under seventy five hundred as you may have known I was in banking for twenty five years and I watch that happen I know that we try to think that the or try to sell it that it's for the for the consumer but actually I I personally think that this hurts the consumer to do this I don't really like you know. You know the way the governor's plan is at least at smooths the cliffs across there so that that goes a lot further. You know I was okay with us doing the three and a half percent across the board from where we are now and then in the future you know maybe try to do the three and a half as the market dictates to continue upwards but I just see this that the higher that we raise this number the bigger that clear it's going to get and the more the consumers are gonna get hurt so again I know you and I have talked about that since we're going to present it I think I need to state that publicly also thank you Sir thank you and I and I appreciate what you're saying can we amend the governor's plan to three and a half because it's at three percent now so I'd like to see that extra half of for going past it but basically if I misspoke I apologize I'm sorry if it's a three whatever whatever that's been presented on the right. The problem is the supply of vehicles in the price range we're talking about these vehicles have been driven you for years they point St changed hands several times we've collected sales tax on for four times by the time you get down into the seventy five hundred dollar range there's just no supply so there's not opportunity really for dealers to gallons the margin when a customer is in a favorable financing position. Where the dealer gets to gallons the margin is when you have a customer that can't get finance don't have enough down payment you have to turn to the subprime lending situations that's when the dealer. if the case they can get the customer finance somewhere they can do whatever they want on margin and in the car business a lot of a lot of dealers referred to that is get me on because the customers saying what can you get me financed on and that's where the opportunity comes in to make the biggest margins is when you have those people they cannot obtain a favorable financing position I appreciate your your argument on this and and your position and and I hope to you and I can be friends and get along to a lot of things we just disagree on this point sure this in about our friendship is just about good policy for the state not and personally I don't think it's good policy thank you Sir thank you. Senator this question thank chairman and on the other bill I'm assuming you would rather be at three then three and a half right meant three is lower than three and a half source tax rates I think that that's what you mean three if that's what ends up happening I'm and I'll just. Minute just some comments Justin respond just respond to them. You know as I reach out to my local car dealers just ask kind of what they thought and trying to directors to straight up you know here's the two things that are out there will you know how do you receive these I mean. None of them were in favor of the cliff I have an agency that is a benefit to them benefit to the consumer really anyone else that they felt like they graduated in or or setting that additional level and there was I mean what they said was beneficial to the consumer. for that to be in place so I'm just trying to understand so but you know you're in that business and so you have a background there to kind of what what what are what are they saying or seeing that is different from what your seeing because again that was appointed or me trying to get them in one direction or another I just laid out essentially the two different not knowing anything about amending this down to seventy five hundred but they they seem diem fate be in favor of smoothing the cliffs that exist right now not expanding them on up but I really appreciate the fact that you rate reached out to some dealers and so on to auto auctions the one in B. B. as attended regularly by over three hundred dollars a week the one in Jonesborough by over a hundred dollars a week and you know I'm on the floor there in the auto auctions and talking to dealers we had almost identical bill two years ago that passed the house with one dissenting vote and was in this committee two years ago and failed for two years I've been having these discussions with dealers by the hundreds you know week after week I have not run into dealers that. The had the position the the express now I got to qualify that with the point that any dealer would appreciate any relief in this area so you know if if we explain the the plan to reduce the rate from six and a half to three and a half I'm sure you know I'm in favor of it I thank every dealer I talked to would be in favor of it if if Work I'm. Nobody wants a cliff but I mean the the the three and a half the three percent cut creates a three hundred dollar cliff at ten thousand dollars you know there's a lot of cliffs in our tax code you know if if you have a tax credit and you don't follow the rules it's a cliff you miss it you miss that one rule if you sell a vehicle you have forty five days to take that value and apply it towards your purchase price of another vehicle and save that tax on day forty six you've got a cliff and that could be two thousand dollars I mean when you're talking about selling a thirty thousand dollar vehicle and going and buying a new vehicle if you miss that forty fifth day that's a that's a giant cliff so I'm out well I appreciate what you're saying what I'm explaining on the financing is what is my vote my motivation to for for one bill over the other but but in and where they presented like I said if we just sign up side by side you feel confident that dealers would say they'd rather have the seventy five hundred dollars zero sales tax for their consumer as opposed to the three percent that would you know go on up to ten thousand. Thanks again that's what I kind of presented so I think it's I think a ten thousand would would create and I'm trying to be as honest as I can hear. Ten thousand sounds so much better than seventy five hundred. When I presented my bill in the House Committee offered the same amendment we're out we're offering here now and the House Committee soundly rejected it because ten thousand sounds better than seventy five hundred and right now my bill is drafted to get us to ten thousand two years down the road. So so yes there's gonna be some dealers that would prefer the ten thousand if they don't have a. Your understanding of the of what it does in the finance world and considering the fact that the seventy five hundred dollars and down it is is a segment of the market that so hard to supply right now. There's Mannheim market reports which band home is the largest chain of auto auctions nationwide there were there market reports are reflecting and I think you may have seen and talk business twenty six percent increase in used car values wholesale values in the first quarter this year so the other four thousand exemption that we currently enjoy if you figure to any inflation in the market you're already should be at seventy five hundred. So you know I prefer that we get to the ten thousand mark. And And I like I said I mean when when the governor presented his bill in November I texted him right there committee instead I really appreciate it I'd love to work with with you I never got the opportunity to have those discussions but but I would love to. Worked on that with a. Mr chairman back on the and I'm I will seconding it but I would deferred and has discussion but what I what I think today and because I'm not certain that that anybody's point they really wanna make a vote on this this moment is that out of respect for the process and that he should continue to try to work toward something here I know that there's another bill it's competing on this I want to be able to G. lease adopt the amendment so that is bill is sitting in the position that he's he's done what he can and then as we move forward in the process just play out one way or another you know as you know I've talked with several members but we made an attempt to try to make some amendments to is bill that would be more comfortable for everybody BLR said that there's a problem with that because the title and so that would that was the reason that we couldn't make further amendments based upon the fact that there was a problem in the style of the title and so that's where we're at so when he mentioned to me this amendment hopefully the committee can at least stop the amendment that way is bill is sitting there in a good position whether we vote on it or not at least it's there and can be for further discussion maybe Wednesday on the bill and I. I understand that you when you sit down that you propose that and I agree to it and so Senator Hickey you have a question yes if you don't if you don't mind of course I don't give any false pretenses on on any of this thing especially with what we've been but if it's okay I'd like to I would like to ask I understood you to say that you have not discussed any of this with the governor that that was your comment a minute ago not so the discussed it recently with the governor but during the point from November until I filed on January twelfth this bill there was no discussions with the governor and basically it was another six weeks after that before I finally was able to be in discussions with the governors about but we have had multiple discussions about this behind the scene and it was my understanding that that you had discussions with the governors I just wanna make sure we got some clarity on that at this point yes I have okay thank you thank you. Some are there other questions. Seeing none. Senator Rapert you're making motion to adopt a member actually during a major section I sector it Senator Ingram in the second yeah Zeringue discussion on the motion saying none all in favor say aye opposed no. So noted. So your amendment is adopted and you will be back to present your bill at a later date is that correct thank you Mr thank you thank you committee. Okay. House bill ten twenty three. Representing Lowery. you go. Mr chairman I just wanna mention to you that I've got to go chair a quick state agencies Committee if if I'm needed I wish somebody please tell me if we do come to a vote on something but I'll be back shortly. It in no state agency's rules meeting at this particular our we usually don't we had a huge issue on the constitutional amendment for Senator Davis as J. R. ten or excuse me S. C. R. ten and we've got to clean it up thank you okay all right thank. Representing Lowery thank you Mr chairman thank you members this is a relatively simple build though it's something I've been working on for a couple of years of several years ago my local charter school animal mail was presented with the something that they were not ready for they're getting ready to have a fund raising event and department of finance administration indicated to them that they would not this was the PTO they would not be able to have that fund raiser until they had registered with the state and and Paid some up front fees in the process of looking into this we found that it wasn't just an issue where there was an exemption for public school districts as we thought which would have cut out charter schools really all PTOs we're not being exempt from from sales tax on their fund raisers it has minimal fiscal impact that it has significant impact I believe for our local school districts PTOs in PTA As and similar organizations DO cookie sales and different types of organize fund raisers and attempt to be able to mitigate or decrease the amount of money that the school districts have to pay out and the charter schools have to pay back pay out in terms of providing supplies for their students and so I was very very pleased when I presented this to the House Revenue and Tax Committee I believe the vote was unanimous appreciate chairmanship at signing on as a as a co sponsor this bill and I The stand open for any questions I know DFA does have a minimal fiscal impact but even at that that the their answer to questions were that they really did not have data that tells them how much they've been collecting in the past so we really don't know if it is that significant issue probably is revenue neutral because many times these fund raisers if for instance a cookie sale they have to buy the cook the supplies for the cookies they're not tax exempt on that what they want is the tax exempt on the actual sales so that they can give more to their local school. Senator Dismang through the motion do pass. Senator Johnson Hester question thank you Mr representative Lowery so you're saying that if let's say I have a booth at a fair at the moment I'll high school charter high school. Then I'm gonna sell lemonade and cookies while I go grocery not by. Whatever it's taxes still remaining on those groceries I buy that I'm paying taxes and making the step and selling it so the my labors volunteered the ingredients tax was already paid on it at least the reduced grocery tax and so what we doing here is eliminating the double taxation is that correct that is correct okay thank you thank you president thank you Mr. Senator did you have a question or Senator Ingram. representative Larry would you explain how the four states livestock show got balled up and all of this. I didn't know that they did because it says in the language it says the special event shall not include and then it's it's. It talks about the fourth place last option. Sure does a sign him let me see if I can. Second that age that is actually that's and that's a current that gets involved I I really I think that that was as special Kerr about exemption that was given to them but not extended to public schools but that is in current legislation is not part of the the change. Okay. Senator Hickey did you have a question okay. Senate this morning would you start your motion again please. I have a motion do pass second Senator Hickey green discussion on the motion saying none all in favor say aye opposed no graduations thank you very much thank you Committee. House Bill sixteen eighty four representative might very you have waited a long time. All. If. If both of you would take and state your name for the record. Julie Mayberry state representative district twenty seven. Great Wallace chief deputy treasurer for treasure million thank you and he's going to present the bill both of us all start out let him carry it carry it all the way just to give you some background information in twenty fourteen the able act. Excuse me was signed into law federal law able stands for achieving better life experience act in twenty fifteen we passed enabling legislation here in the state of Arkansas to allow people with disabilities to participate in this federally recognized program it is a tax free savings account for people with disabilities that allows them to maintain their eligibility for services such as Medicaid but still allow them to have a savings account so that they can provide for their own needs each session we have tweaked this a little bit trying to get it closer to the five twenty nine savings account the educational savings account that you're probably more familiar with and so that's kind of what we're doing today and also cleaning up some language all that great Wallace kind of explain a little bit more what this specific bill does so specifically looking at the the bill before you Page one is the clean up language and that was just inadvertently put in during the original drafting so we're cleaning that up. Page two is new language that would allow the parity that represent Mayberry was talking about between the five twenty nine education plans and able plans and this is a five thousand dollar it's the carry forward right now you can deduct up to five thousand contribution this will carry it forward for four years there is a limit on that now because federal law only limits of fifteen thousand dollar contribution the reason we went to four was not only the parity but to anticipate any changes that the federal government might make and that allowable contribution annually and then on page three this section allows for state employees to payroll deduct into their able account so that's what the bill does just some facts for you to consider as you're reviewing it. Right now we have as of March sixteenth which is the most current data that I have for the program there's one point eight million dollars in assets under management there's approximately seven hundred eight counts an average account size of two thousand five hundred and eighty eight dollars a hundred and thirteen of those seven hundred accounts do have over five thousand in them currently and then the average contribution size is five hundred and eighty dollars. To be glad to answer any questions. Centering on your question. He is this similar to you mentioned five twenty nine. Of. Representative Warren had a a piece of legislation to it's sort of similar to this the had some object objections when it got to the Senate I mean it is was his was represent Warren's legislation to create you for for Senator sample what was the name of that again before that. I believe that I I believe you're talking about the retirement yes yeah I know this is something completely different completely different I understand that the objection that he had about it was that the objections that we heard of that his plan was that there were entities that did this and they it was taken away from private business so this is the we'll be managed differently than what and this when you said five twenty nine right this is a completely different program in the sense that it's a savings account for individuals with disabilities that was created and federal law similar to the five twenty nine education accounts during the same tax code so that's why you have that treatment and that's why the five twenty nine gets reference with Abel is because technically under IRS code it's five twenty nine eight so that's where it but it is something completely different than what representive warns bill was doing okay thank you Senator Ingram the name of that was ever or cans and return. Senator Johnson your question thank you Mr chairman and I just want to expand and clarify on Senator Ingram is question this is is really the bill is addressing the the tax treatment of these types of plans and not someone that that said some of operation and I think the bill centering referring to correct me if I'm wrong Mr chairman was it was about something that is separate and at least some of us deemed it to be competitive with with private companies that sold very similar products and so I at this is just about the tax treatment of this my chest five twenty nine years of favorable tax treatment the savings for college or or for the tuition thanks I'm I'm I getting that right you're exactly right you're exactly right senator and it's one of these that again estate has to sponsor able programs for them to be in place by the federal by federal law that's what it is very different thank you I am honored to be co sponsor with my friend representative Mayberry and I think this is an excellent bill thank you thank you thank you Mr. Are there other questions. Senator Senator Dismang beach to center or. I have a motion do pass as the centering I move that Senator Dismang second by Senator Ingram further discussion on the motion. Seeing none was all in favor say aye opposed no congratulations your bill press. Senator dealer you here for. H. the thirteen fourteen. House bill thirteen fourteen. Secretary of state of record and you can present. House bill thirteen fourteen. Thank you Mr chair Senator Ricky Hill district twenty nine. Your own H. B. thirteen fourteen. Great. In short is a modernization of the water conservation and development incentives act back in nineteen ninety five. This bill will increase the value of tax credits to farmers and landowners across Arkansas this will allow them to have a tax credit available to them for land leveling expense development of surface water reservoirs Taylor recovery systems and surface water convergence water flow meters navigation automates sessions this systems this text tax credit program directly addresses a serious known resource issue that we have in the state of Arkansas our offers the over dependence of groundwater this will help us alleviate that issue and hopefully put us to where we can recover the water that we've been using throughout the the year and continue to re use that water into reservoirs or for a restaurant. Four major issue this bill covers tax credits roughly increased thirty three percent. The representative the eligible credit is increased for surface water conversion and land leveling the credits may be claimed for fifteen years that's up in two years. In the provision is related to credit is claimed in a given year double from ten million to twenty million. The five major benefits of this legislation if it leads to a greater use of the service water marshes groundwater. Because there's ground water supplies for farms allows us to have a good clean drinking water supplies for the people the state of Arkansas sustained production of crops such as rice. AH much needed economic activity in the delta grace job because the land leveling populating the technology in the parts of the dirt work this did all throughout the state. It improved land values in Arkansas okay we'll have a continuous supply of water for farmers throughout the state. With that I'll take any questions Sir. Centering ring you have questions. Isn't retroactive and I haven't found a partner in the bill we're extending on use of water conservation credits to fifteen years is that retroactive or is I don't want to go forward basis the that is going to be actually partially retroactive because of the COVID nineteen. Partially radioactive okay I'd like to Andrew about go by record you can kind of defined a little more in detail about if you manage share the screamer please come up H. the question. Personally retroactive that that. That's unique for local council firms in the Nokia. If you would state your name for the record. A good morning there to grab our with the agricultural council of Arkansas did you hear the question I did and I guess in short I do not believe that there is any retroactivity it directly in this bill and this proposed bill on another matter already approved related to this tax credit program there was retroactivity included in that on the the amount of time in which a project has to be completed it was extended from three years to five years in another bill and then it did have language DO not codified language that said this is to be applied to projects going back to. Five years so to twenty seventeen. No other bill it was run through what about three weeks ago yes in an initially this bill did have language on that point but because it came out another bill we. When we did our amendment to reduce the cost on the house side we also pull that language on retroactivity. Senator Teague you have a question who uses these tax credits are you Salem help me. The farmers or landowners ones using on the ceiling but the money and they go gets tax credit say it again they're gonna spend the money gets tax credit that is correct okay all right thank. Senator Johnson. Thank you Mr chairman. Senator Hill if you said the farmers is limited to farmers or agriculture someone had another reason for. Conserving a great the surface water I have a neighbor has a pond with a hook up for a the fire department to hook up to so P. as CAD house catches on fire we don't have water in our part of the county the fire truck could hook up to the fitting there and pop straight out of his pond and would. Is it limited to farmers or is this something that someone that wanted to do something like what my neighbor did would would be able to take advantage of the credit this is limited farmers and landowners wealthy Elaine or so on I don't think so by Malandrino market help clarify that. It's intended for agricultural uses its this is program is operated now that department under the natural resources commission. And they set the rules and regulations in accordance with the statute and and to my knowledge I don't believe it's gone anybody other than ag on page three online Five five and six it it talks about Reduction groundwater use by substitution surface water for water use for industrial commercial agricultural or recreational purposes and then it goes on the side for agriculture and recreational projects now my hello I guess recreational would be stocked fish in fish out of it but I think what we're we're going with this one is if they go the NRCS office and get approval then yeah they could get a tax credit for that but they might have that approval up front okay so it's not a happy man go do it go claim the credit they have to go to process that is in the but it it if well I mean farming is a relative thing if I planned budget spruces in my backyard and say I've got a Christmas tree farm I guess but it but it could potentially be for someone that's not a full time for it thank you approval and there is a related component to the statute that that does tie and industry and I know that there are some industrial complexes down south Arkansas the abuses they've got similar aquifer issues down there. Okay thank you Mr Clark thank you senator. Court or other other questions. I by Senator Dismang. So do pass. Seconda Senator Hickey. Comments on the motion seeing none all in favor say aye opposed no graduations your first. House bill thirteen fourteen. Senator Dismang you're presenting fourteen sixty nine. Thank you Mr chairman this bill actually just allows bill artists set up and have the information needed to provide to consult it so we can do some of our own I guess look into our revenue impacts you know there's been quite a bit discussion between the if the legislature about revenue impact for quite awhile now again This Is allows B. of DFA to obtain information for our chart the BLR to obtain information DFA for the purposes of contracting with a consultant to help us have a second set of eyes on those review impacts. Senator Johnson. Thank you Mr chairman Senator Dismang you know had discussions this is long overdue I do have a question about the details it mentions BLR specifically authorizes their eyes to be on if they should either in general or on specific issues up retain an outside consultant to do that would allow that information of course cap still kept confidential to be shared with someone who isn't on a contract basis would be a law yeah but it allows for that is in the bill in and none of this information and selling it isn't going to be given from BLR to answer from the effect of the L. R. minutes gonna be identifiable minute all be reduced is industry specific or situation specific not individual or company's president and we've done this before so you know we had our tax study and and part of that process is hiring consultants we utilize that consultant during that session to do some dynamic scoring but again in in members need to understand this is not going to change with DFA puts on the screen she to start as far as revenue impacts they're going to still be their own independent group would allow us to have a discussion and in some cases I think provide some insight that may not otherwise be there if a and so you may see some altering of revenue impacts but in no way this is tied their hands okay thank you senator thank you represent Mr are there other questions. Seeing none. I have a motion by Senator Dismang do pass Sekhemre centre Johnson sure in discussion on the motion. Seeing none all in favor say aye. Congratulations. You have passed your bill. And your your present fifteen thirteen fifteen thirteen yes Mister chairman and so what this bill does it require allows for a tax credit be to create a to be created for someone or individuals working cold cases that requires at least a thousand hours of investigating one or more co cases to be eligible to receive the full credit the credit caps out at thirty five hundred dollars it does allow for pro Ratta for individuals that are working less than a thousand hours on the cold case this is for retired law enforcement the second apart also allows Individual that works on behalf of the division of state police is a volunteer to investigate to receive the credit and also anyone working on a temporary full time basis for the division of state police to also receive the credit. I the revenue impact about twenty five thousand dollars generated you. Or other questions. Seeing none. Motion passed Senator Dismang as make a motion do pass Sekhemre Senator Hickey questions are there any discussion on the motion saying none all in favor say aye. Posebno graduations. You're going present fifteen fifty five yes Sir I think most of us are familiar with this program currently has a cap of four million dollars was set to sunset in I lost my notes there was citizen said in your. Okay anyway this is extend this increases that capped a million dollars so essentially doubles it and then also increases the or puts the sunset date out okay was twenty seven twenty seven lease it out to twenty thirty seven that's the bulk of what the bill does again. Yes yeah I was twenty seven moved that out to twenty thirty seven in doubles like I said the amount of credits allowed there's a lot of revitalization happening in our small communities and and it's really lead to a lot of tourism in those areas when I think what we see is folks enjoy being seeing and experiencing you know those types of atmospheres that really that can only be presented in those areas and that's also draw from Little Rock in revitalization efforts downtown other areas with that be happy to take any questions. the questions for the senator. Seeing none. The motion to enter this mind and do pass second thank you yep sciquest Senator Johnson during discussion on the motion. Seeing none all in favor say aye. Lows NO. Senator you're running fifteen ninety six yes Sir I'll do my best to explain this one if I need any help I think it Misbach is here to help clarify what this bills is but it does after the amendments fairly simple it just adds to the definition of our article of commerce an item that's to be placed in the market for resale printing out of the place in the market for resale that is for the purposes of the sales tax exemption related to purchasing manufacturing machinery equipment We have to take any questions or clarification of mistreatment. Senator Johnson. Thank you Mister senator dismay I didn't realize we didn't treat printing is manufacturing I remember years ago I a representative entity that was a printer and I we have the six codes ever used at that time they were definitely consider manufacturing for the well for whatever law we were working on that time in that is something that came along and someone some quarters of my rule that they weren't manufacturing and we need to go back and fix it that's my understanding in all printing was some printing has exemption some didn't so and again someone can clarify this for me but if you're if you don't whoever but if you're printing thing tell me I'm wrong but if you're printing you know for ho sales for resale then I think that qualified but if you're printing for a specific client and that did not qualify we've actually had because some of the rulings some of these printing companies leave the state of Arkansas because of you know our position on that so hopefully this helps restore the balance and maintain the folks that we have here I have been you can mistake sending us a problem. Thank you Mr chair thank you senator Dismang. At their Johnson there is a distinction we have in our current law with regards to a printer if a printer is printing an article of commerce that is going to be put on the sale to the general public they can qualify as a manufacturer and have the ability to take advantage of these exemptions for their inputs. And also by the the purchase of their machinery equipment what's the issue that comes up is if you have a printer that is a specialty printer or a job printer that's going to sprint a specific item for a customer and it's not gonna be placed on on the sale to the general public it does not qualify as an article of commerce and this bill specifically changes that it treats that spots especially printer and would be a printer of an article of commerce and and be able to take advantage of the exemption we do have is a Supreme Court case back in the middle nineties it's the merits you case the Supreme Court made that distinction and that's what TFA has been following since that time on the distinction between the job printers and the regular printers that create oracle commerce so if I have a company after in a book it goes it sold Amazon or Barnes and noble or whatever that I'm manufactured within five as if the euro walk in orders personal stationery to be printed fifty six it clarifies the the difference there this this bill would would treat those two types of printers the same for the exemption purposes. Hi thank you Mr thank you senator is one of your other questions you can imagine as a printer that's doing both which would not be unheard of I mean how do you handle that sales tax out of the allocate on the essay for the exemption really complicated situation that arose or has risen so senator we we've we've even we have at least acknowledge evidence of losing some industry perhaps it's almost like coin dealers is. Fair enough thank you Sir thank you revenue impact maybe a little bit more significantly yes Sir we have had some folks that have left and some other folks that may be looking to leave well with the jobs that I know we're in a printing plant that can be a significant thing I know there's rule was a big one in Jonesborough we have one at the port industrial park I know employs a lot of people so this is not an insignificant industry thank you thank you Mr. Are there other questions. I have a motion do pass. Sekhemre Senator Johnson some discussion on the motion. Seeing none all in favor say aye opposed no. Members that takes care business we or adjourn.