Agriculture, Forestry & Economic Development - Senate

Yes thank you Mr chairman thank you ladies and gentleman the committee time time out this second all right instances laid on the table we need a motion to take it off they were you're motion second all in favor say aye are your proof now you're recognized centers to thank you so much The medical marijuana oversight bill. Was amended at the request of. The AG's office because of the uniqueness of. The constitutional amendment. I am not thoroughly convinced that they understand that all committees or advisory. so. In order to be the good person that I am I agree to change oversight to advisory. And then I had to visit with some members to let them know at the end of the day every committee of the change of the council is Advisory. We can review we can make recommendations but unless they are passed by this body in regular session it doesn't make any difference but I do think it is important. That this legislative body have eyes on the medical marijuana industry. And if we see things that we think I'm toward we can report it we can act on it and make legislative changes to it that's why one of the bill and I'm happy to take any questions okay and we do have someone here from the attorney general's office of anyone had questions Attorney General. Any questions check back. You're recognized. Yep. If you would please her introduce yourself for the record you're recognized. Good morning Mister chair thank you my name is Brian bill and I'm the deputy chief of staff for the attorney general's office. You're welcome you're recognized thank you the. If. Well the Legislative. Council have. Any teeth at all with the merit medical marijuana board or is this just. To watch and see what they're doing. What. Can you explain what you mean my teeth because I think I know where he's going what the medical marijuana board will be able to do is to make recommendations to the medical marijuana oversight committee as well as to the legislative body we never we're gonna be able to do more than to review anyway that's all we do whether it's the lottery scholarship Committee all we do is review and let me give you one primary example we on review the legislative review committee of council. Chose not to review. One of the individual entities that was supposed to provide services the way as we said we didn't like it and we voted not to review it but the governor has the authority to go ahead and have them anyway. That's what I'm saying none of these committees whether it be review personnel or any of the others has the ultimate authority to change what is it executive but we can shed a light on it and I think sometimes we do that then we come back and we make the legislative changes that need to be made presses the highway over pole caught we oversight committee all they could do was file a report they couldn't change the law before we came down here we made some changes in the law that affected perfect thank you any other questions from committee. No one signed up to speak for against this. Would you like close for your bill. I would appreciate it thank you please committee recommend to pass second all in favor say aye All opposed thank you congratulations. Thank you all so much and I appreciate the AG's office boards input thank you all. Page. Looking at Senate bill four eighteen for the Senator Dismang. All I'm sorry. Go ahead which bill are you. This is house concurrent resolution ten fourteen ten fourteen. H. C. R. ten fourteen. You would shake thing for record. You're recognized thank you Mr chairman of the members of the committee I appreciate your time here and I got a fit busy schedule this is a house concurrent resolution basically you can find everything you need to know in this three page concurrent resolution in the description to emphasize the value of water fell waterfowl habitat in Arkansas to the economy recreation heritage and quality of life in the state and to support efforts that boost this critical part of the state's economy this is basically referencing our duck hunters in this state and the impact on our economy find it to be a very good concurrent and timely resolution. And with that I'd be open to answer any questions Mister chairman okay. Committee members have questions. Welcome. This is everything to do with the request to double light or increased license fees great question no it does not This Is directly to celebrate duck hunting but I know the reason I ask that is because I know that game and fish's entering into a partnership with those on limited to driver replacement for structured as C. the ducks unlimited engagement this public private partnership is here they're talking about replacing outdated infrastructure which same cells between getting FOR it is essentially doubling of license fees for all state but I want to write reiterate this is a concurrent resolution celebrating duck hunters this isn't the bill that's doing that you have a chance with that vote understand I just wanna make sure that we're not Setting up the bill no thank you. Any other members any other questions. Sturch. Thank you Mr Senate page I wanted to ask you and this is a more of an Arkansas history teacher questioning on the yeah. First paragraph Page one line twenty nine. I'm not really sure how the I think it'd be a French word with the Longueuil river is that not a tributary state I ask about where that was I didn't really offended by that if you know where you have made a dent permit laying your river yeah yeah do you know where that is discharged in the same cell Craighead County runs through Poinsett County through cross cancer St Francis County into Lee County it runs into the St Francis river but we always talk about where the five river St and there's more than five listed there but I couldn't find that one so I appreciate your and I've been hunting dinners and from twelve years old okay thank you I never lived in South Craighead county I worked in great care of and and Greene County but I never lived in South thank you Mr. Any other questions. No one signed up to speak for against this resolution pleasure of the Committee. I move do pass second all in favor say aye All opposed regulation bill passed thank you committee and Mister chairman. All right sure Garner. House bill seventeen fifty five. I'm going out of order dates of these folks have other the meeting they need to go to so that's the reason behind that. Sir Garfield stakes name for the record you're recognized state senator Trent garner just twenty seven this is a bill dealing with tax excess minute how property should be valued that is coming from the men and women who are on the ground who actually do this for a living this is the or producers in south and southwest Arkansas Blue Cross there every single day and produce jobs produce resources produce revenue for south and south the east and west Arkansas what this bill does is four main issues defines production equipment as pipeline and other equipment of an old well from the bottom of the casing to the include the sale value of the tank battery and assesses a one dollar per foot feet that's currently being done to find new we discover property so does not apply to your your variant. Estimates are eliminates the three year moving average this is because point contention with these guys provides that in calculating the work interest assets value that will a couple well a uniform expense allowance per barrel or produce shall be applied without regard to the average daily production of the oil well what this does it modernize our current well productions it brings in a twenty first century it creates a understanding a system of fairness for these guys they know from the your your value what they owe and these guys are more than happy to pay with their their fair share is back to the counties are back to the assessors but with this it gives of may eight understanding how work from year to year and that's a very critical aspect from wanted to looking at the long term future of all production of south Arkansas and as you may know there's been many variants have changed at the last ten years that make it a very dynamic and unstable market so we think we can do to help these people out is going along with that I'll take any questions. Questions from the committee. I do have several people signed up. To the. Eaker for and against this bill judge of got more for we'll start to with that James Lang Lang. Langly few would introduce yourself for the record you're recognized for. My name is James Langley approach back of Arkansas. I wear two hats in south Arkansas I'm an old producer of internal filters for fifty years I'm also before Dillard's Marco Arkansas and I've been to forty or forty eight years. Has it all for dujour in south Arkansas. I'm seeing both good times and bad but one of the things that we're here to discuss today is The New to discover aspect of the taxes to. Nearly discovered came on the scene for all producers in about two thousand sixteen and I compared to older than audible bills itself what I know almost binders room and bought a car one time another when you look at what the manufacturer recommends you do in the glove compartment okay you to death. So most of us when we have our car service we change all would change filter. Which a comparison with gold on a roll. After about three years we see the gas mileage discount from twenty one gallons miles per gallon Dow worked as seventeen or eighteen cars not running as good as kind of bumpy shall we take the car back to the shop and we work. We put new tires on it will put your brakes on it. We upgrade the computer and lo and behold the. Gas mileage goes back to twenty one miles per gallon it drives good again but it's still an eighteen model car. All wells a lot like that what we put in you will own. We established production and the first year usually we should a specific song reporter well alone and to owner of the local were petition for on. I know well start out first year make separate barrels per call we've got new equipment we got and you pop in the hole we got you Rajin you too but. Yes your wish to that point not being as efficient as it was the first year of our production falls to six barrels maybe in court all down it goes on down to four to three we produce that well as long as we can without spending a great deal of money but the time finally comes when is not economical. We re worked well and the production comes back to the initial fixed rate barrels. The difference between the two boroughs we were making before we re worked out well. And that eight pearl she's been classified as UT production. New to discover production. New discovered production is when we leave a specific zone. And we serve a plugin re perforate another's on or we go out and build you whale. This is recognized by the old gas commission will commissioner today. And it is that is kept up with the record or file we any time we leave a specific so I want to go or another so this bill clarifies muny production as when you would leave one to only go to unusual. Are there any questions. The question is committee. She no question which language thank you for coming thank you so much for your and in the interest of full disclosure I have bought a Ford vehicle for Mr Langley. Thank you. The. Okay to speak against the bill we have Russellville. Would you would you would you come to the table please. You would Sir please introduce yourself for the record you're recognized yes Sir my name's Russell hill on the assessor in Washington County and I'm representing the Arkansas sisters Association. What we're concerned about is setting a standard in a precedence that could violates our the integrity and the equity in the way that we value All property across the state of Arkansas five making a special consideration to a different group as opposed to everybody else This pushes mental Lynch interest further away from market value which is what we are required by a code twenty six twenty six nineteen oh two to do is to value everything at market value it pushes it to a use value in the constitution the only property allowed to be valued by uses agricultural land assessors goals are to be fair and equitable for all property types this removes the valuation authority from the county assessor's the bill would stated Pacific dollar amount legislation that does not allow for adjustment due to inflation or changes in the future market so these are some things that we're concerned about assessors across the state and and and I I don't have any gas or will in Washington County for us it's more of an integrity in an equity issue protecting all property owners across the state to illustrate that would be let's say this is the dinner table everybody around the dinner table is a property owner everybody is taking in the goods and services that the property taxes make available to them. At the end of the year there's a there's a bill do and everybody's got their parts based on the values the market base their property that they have to pay to help for those goods and services when we begin to open the door and say. In and we start to see people push their self away from the table don't you got me don't you. Well that property owners bill that business owners bill that farmers bill everybody's bill when somebody pushes their self away from the table everybody else's bill is going to get a little bit bigger I wish this was the first committee that I was in defending the market values and people having their values depreciated or special but this is the third committee I've been in today are are this week let well last week and this week at defending the integrity and equity in the market value so I have five children there each year apart and we had to establish a precedence when it comes to by IBM by current I've been I need to come see them at four place I've been buying cars like crazy but if I told one child okay we're going to give you this amount but they were gonna give another one a different amount a different amount I got an equity issue with my own kids and this is kind of what we're city this is what we're afraid we're going to see here is that it starts a precedence with other groups going we don't want to pay market value or we want a special deal so that's our concern on the cester side. Any questions. Committee Sturch. Thank you Mr thank you Sir I I just had a question because I I need some technical information that on we time out market value then are you referring just to the newly discovered piece of this bill are hi I guess can what can you walk me through then what you mean by market value as far as then the or producing okay sure well the job of the assessor is to discover list and value all of the property in the county and so we do discoveries probably the largest part of what we do in the assessor's office we're out there whether it's a new addition on a home or a new home being built or driveway being put in anything that's new we have to go out there and discover it each year and look as it as it status as of January first for that year and then we have to place a value on it now I mentioned earlier Code twenty six twenty six nineteen oh two says it needs to be market value the only the only other consideration of that is Act pastor and timberland and they are valued at a use value which is a dramatic discount from actual market value and so that's our job in so whenever we find New property we discover new property we it's our obligation to record it put it back to the market value one it unless it's at well Acalanes RT discovered so I mean it's there that put a value on it and then and then list to the property owner is and who's responsible for the taxes. So then currently with all producing wells you put a market value on the additional barrels that they any other questions any equipment that is added to that property will be added to it. Thank you Mr. You know the questions but. Thank you thank you Mr one is agon timberland. Exempt from normal property taxonomists structure and only charge use tax. ISIS. This is I don't know it's been there longer than I've that I've been alive but but I I would think that I would well I think that farmers would be able to farm without it if if you were to take that land and put it on the at market value instead a use value people would be able to farm and or people would be able to own large amounts of land you just simply would be able to afford the property taxes on it. When we sold this past year all prices go into the negative. Would it be fair to say the whole produces and. May not be able to make it a we're continuing a. They could now we're not subject I'm not really familiar with that there may be some other people here that can speak better to that and I'm not arguing that at all if I have no skin in the game we would as assessors we don't look at the budget we look at the property and to put a market value on it and to treat everybody the same that's that's us I would be perfectly fine if we want to give them a credit or something other than again I'm here just defending the equity and the integrity of the values and and really hoping that this doesn't turn into because we've I've already talked with that renewable energy we they they were wanting special treatment billboards were wanting special treatment there's a case and in that that's going to go state Supreme Court with that big box retailers wanting special treatment and the end when you start doing that that's going to create a bigger tax bill for everybody else because at the end of the day we've got a bill to pay. So how are you currently assessing. Fite dum dum of below ground. I don't have any and I I I can't answer that question. I didn't since I've been in office we've never had gas or will in there but I would assume that they would have to do it based off there's of that but you could do what's called the cost approach you could take the cost minus depreciation and and determine a bag there's several different approaches to determining property value I think everyone hears it probably everyone this building can appreciate the. Different. Structures that we use different formulas that we come up with that we're not. We don't have a a outlined way of coming up with fair taxes you can have two different assessors in two different years come out look at your property and have. Wildly different. Assessments. What we have to be within a range and we are audited every year and we have to be within a certain range of credit compliance of that the week we get fined steeply for that. My. The reason while while I'm support of the bill just to let you know is is that it does establish a way of assessing something that many assessors have no idea how to assess well I think that the contractors in the assessors in those counties do do that and a lot of contractors not only assisted Arkansas this session Oklahoma where there's a tremendous amount of oil there into instead have do we have anyone to speak on how this us. Roger Baker would you come the table please if you have an answer on that. They only stay. I don't know returned back to nature question does he represent industry yeah but the ending and we're asking something from his sister so I don't know your answer. I have the the question is guidance and. In addition from record I'm robin Baker I'm executive director for the Arkansas independent producers and royalty owners and I would like to try to answer the question. What I'm what I'm asking is currently what is the. The formula or the guidelines use to assess this property and is applied as a standard across. All counties. Well formal very concrete I'm sorry I can't sit here and in related to get has number factors I can tell you is not assessed necessarily cross every county because the same because counties are autonomous I can come up with our own medical assessment ACT does not their battery that's what this is there are some things in here that I would in the four points that we talked about and the fourth point that Talk about what will go in on the formula we try to look at future value. Formula determined by the ACT is used to do that there is one category though in there that the formula usually for two barrels or less. And looking fourteen years ahead for future value in that first year comes up a negative number should just use the formula the agency has a three hundred dollar minimum on anything after taxing like that but for years we've seen that number arbitrarily field and currently and for sometime else been third two hundred fifty dollars so they're not following the formula I don't know that I don't see that as being fair and equitable when when you're not falling for me these in favor of category and is it has to be arbitrary because nobody else has come up with a number there's no formula for so I assume that that's there to help keep collections a. And that in that case on the Newly discovered. These whales like ag land is out there they're out there and they've been or some fifty seven five years and they do not follow an annual cyclical pattern like agriculture would for you have lower prices of harvest and they go up over the next few months typically and and that sort of thing the pattern here is is different it's not annual it's not cyclical but there's no you will spend putdown it's just a a change in maintenance or whatever brings production back up for awhile and that's been assessed as newly discovered. The definitions I've seen law news cover gets into adding something new if you have a house in your bill of a barn behind it that would be newly discovered once it's done if you have a house in Yuri Mollen put a lot of money into it and change in use that would be. Rediscover but just so we produce more this year than we did last year and that's now newly discovered and I believe I'm correct is that what isn't treated that way until about twenty sixteen one the counties in South Arkansas found that they've worked assessing the weather thought they should ACT exam. So did I help you thank you. Any other questions from the committee. Okay. Questions. Thank you come for your tuition bill thank you Mr Speaker. Right to would you come back to tell you if you've signed up to speak for the bill. Yes Sir I think I made most of my comments I would say that the three year moving average does not change collection for the county it changes when they're collected and that is a process that if you have a three year moving average price starts up sharply it kind of mitigates that increase in actually benefits provisional way up and to the detriment maybe counties and and schools but on state prosper on the price curve coming down it benefits to schools in it then would go against the producer and for larger companies that's not necessarily a big issue but for small companies it is and here just a couple years ago processing down so quick that we had Prices are actually twice. So you're moving added prices actually twice what was in the local market so that affects that tax burden increases it on people that are facing low production low cost at that time The I think that was the point I want to make also the casings that's been done this for what is currently have just simply codify that so that would be a change their on that note address the other two subjects Mr thank you okay one thing kind of alluded to logo on on prices going to price going down the itself with the state receives a. Of tax revenue awful as is removed from the ground this saves a severance tax service tax yes Sir also the company's of like we're what we're talking about right now our our assessment fees assessment taxes extra on the equipment itself on that site we're not talking about any type of service tax on this assertion all we're talking about is they're raising the tax the assessment only in all wheel. Because maybe put a motor on it or something of that nature and produced a little more yes but they're they're trying to assess the value of that property like any of the real property but the fluctuation comes with with Mike that's primarily okay. Any questions for Mr Baker based on the statement. Okay Bonhomme Richard very much thank you. The next we have jim Phillips. We're still we would to. Station name for the record you're recognized yes my name is Phillips. I am of an independent all operator in the state of Arkansas currently operate north of a hundred whales my family owns the oldest well servicing company in the state fifty seven years I'm third generation I'm currently a sending all in gas commissioner for the state of Arkansas serving my second term. I have been recognized on the other side of the table from the commission as an expert in the state and in the south Arkansas office and Smackover field so I am recognized as an expert. I want to I want to touch a little bit home some of the things that was brought up but one of the process that is used currently used when assessing the value of the production equipment that was one questions that come up. The system that is in place right now is that from the bottom of the casing which is same in it in the ground of the production part of the case and from wherever the wells producing not necessarily where was drill today because as a wells plugged if it's plugged now is a state we spent a lot of money plug in Wales as a commission we have a fun. You know it's it's of this a lot of money and is there plugged out the taxes all go away so as a wells plugged back the lower zones are left that case and is an operable just like wells totally plugged. So it's from the dept of the latest plug back so we set a plug from there. All the way up to the top of the ground however many feet that is first two thousand feet it's a dollar a foot. That money carries on through all the way through the surface Quitman to the sale via one the refiners pick it up so this does two things it takes you know it's a hundred year old oil for you know as we're that's where we're at. so a lot of equipment ageist hold so this takes all the guess work out of and every bit of this information that used in this formula is not guess work it's it's not special interest is not any of that it's all on top of the table and it's clear it's clarified. Every bit of it is a record it the commission so any assessor anywhere trying to look for value can go to the commission pull up the current records it's a mandatory of every producer everything's on top of the table they don't have to send somebody out. Try to get into this unit work this is this work that was as well work what's that what were this is the value of the equipment. This was currently being used and it needs to you know stay in place because is fire. Further County is fair to everybody. I do want to say one thing about the newly discovered. if we from from being a commissioner. You know if somebody goes out. His most likely testified and increases the value of the the production is all these produces by virtue of spending money put a bigger equipment you know speeded up doing whatever it is it's the same old has been there since the dinosaurs created nothing changed it's not noted discovered is right there. Now if you come up to a different song that we hadn't produced less newly discovered but one that wells drilled and perforated nothing changes you know so that the fluctuation in. The last thing I'd like to add is a. The the mission at the commission we have a mission and and the statement is our mission is to protect the correlative rights of the royalty owners the landowners and the state of Arkansas. And but by using this formula and doing the things that we've laid out as a commissioner. I think that this is the simplest most clarified fair way for every side of the table for that to be achieved with bill thank you all. Thank you. Any questions from the committee. If not thank you for coming thank you should just call. All right next we have rob Reynolds. These rules if you would please identify yourself for the record and you're recognized the yes Sir thank you my name's Robert Reynolds I'm a male radio independent oil producer and a you're Michael. I've got a green light here okay and I may not be I'm sorry they're they're trying to actually give me sign language of hearing and of the he's speaking for the bill there there's no one else speak against the bill. I am a Richard professional engineer in the state of Arkansas and that a member of the Arkansas pollution control and ecology Commission. understood Mr hill to the. Criticize part of this bill using a fixed number for the pricing of equipment. That fixed number this written into the bill is it at denticles to the fixed number that is prescribed by the Arkansas the system coordination division and has been for. Several years I have been working in tax assessment matter since nineteen eighty four. And that was where this you've heard me speak about formula started and that working familiarity with that. Mr hill also mentioned market value. I'm not a tax a sister but I do understand what goes on they have three methods of establishing value one is the simplest if somebody gets a building permit Bills home list they to specify the value. The other is what they call comparable sales that's when homes or businesses are buildings are sold it's public record what they sold for and they have comparable sales in in the oil production business we really don't have comparable sales and the permit process doesn't specify the the value. In the the third approach is used to evaluate or producing properties what they call the future income the value of future income it's an economic process and that's what the formula uses. Because there are so few sales there literally no comparable sales or other indications of market value the future income is calculated by the assessors using the formula. And Mr hill also mentioned about evaluation consultants being used. there nine counties and Arkansas that produce sole. I pay taxes in six of them Miller the fate Columbia union Ouachita innovative. And I can tell you that those six counties do not use outside evaluation consultants they do it themselves there's nobody brought in from out of state or out of anywhere to do consulting work with regard to all properties and I don't know about actually Bradley and Calvin because I don't I don't think takes their. Is there any other questions I'll be happy to answer. Beckham. The six counties that you currently pay taxes and. Is it. All over the border pretty much even the way that they're coming up there there are variations different counties have different practices and then in the case of war still County there were problems having to do with staffing that day gave rise especially on the subject of the treatment of newly discovered the word newly discovered has actually a negative connotation it's sort of like somebody mentioned the example of building the Nicks room on your house and not telling the sister about it so they have to find or bill of motor low home behind years and that's a newly discovered because you do report to the sister that that's not the case with all production everything we do a public record every single month we make this statement to the oil and gas commission tell me exactly how much we produced and and is Mister Langly said those things do very primarily for mechanical reasons and economic reasons you can't tune that will look every single day you won't pay. Any other questions which Reynolds. Thank you for country thank you. Okay that's all we have to get signed up to speak for against this bill. Should or would you like closed yes are be very brief you know German earlier mentioned if your senate table with your kids and everybody's gonna have their fair share make sure you to reality as these old guys are playing more than their fair share to that council and what the property value is only thing they're asking is the BSS at a fair level as well that they are paying for the garbage in the garbage can for an upper well they are paying for this future what they're going to eat as far as future dividends back this is a fair and equitable system that will put them online and make sure they know moving forward what they owe how it can be worked I think they've worked a long time on this with that I'd ask for very good vote. Thank you to close your bill welcome. Motion to pass second all in favor say aye. All opposed thank you bill passed. They're displaying your hi Amanda called we're working so you. Search came in. Yes Mister chairman okay we're talking about Senate bill for eighteen. Yes Sir Jonathan Dismang members that there was an amendment on the house side of to this bill if you like the previous version you'll love this one essentially it lowers the amount the committee that the increase could be to twenty percent they currently have that in place for housing that'll include all rentals and also keeps in place than being able to lower the price to fifty percent for those rentals housing and that sort of thing allows for some that dynamic pricing and so in a way you could think of is is gonna allow for fire sales when lodges maybe lowly attended or or that sort of thing with that be happy to take any questions. You want a question. Committee. Picture signed up to speak Would recognize her thank you for coming to the thank you Mr chairman Stacey her secretary of the Arkansas Department parks heritage and tourism and I'm just here to reiterate our support we think this will help us achieve I'm more self sustainable organization and one that is modern and responsive to the market thank you. Any questions measures. They're just regular clothes. Okay look what's the favored me to do pass second all in favor say aye All opposed congratulations. Thank chairman representative. The house bill seventeen seventy four. Penzo if you would introduce yourself record you're recognized for of Clint Penzo representative for district eighty eight. A house bill seventeen seventy four as agreed to language the dispensers actually reached out to me and proposed language that they preferred so we amended the bill and that's what we have before us we had some issues with some dispensaries not making it known to customers or or that they had the pharmacist available for consultation to check for any kind of drug interactions so what this bill does is pretty much state that they have to post signs at the check in station notifying that there are pharmacy billable for consultation they also have to give a card with the contact information to the patients and also put on the website that the pharmacists are available and you know there's some cases of some people that have had the some drug interactions and they were aware that the medical marijuana could cause issues so like I said the dispensaries or okay with this and If you have any questions I'd be happy to answer. Questions from committee. No no one signed up to speak for against looters Committee moved do pass second all in favor say aye. All opposed congratulations thank you Committee.