Revenue & Tax - Senate

Members thank sleeps police. The Senate Revenue and Tax Committee will not come to order members if you see we've got a long agenda please silence your phones. Senator Teague. All right thank you. What feelings. Okay the first on the agenda will be House Bill fourteen forty three representive Bentley. Centers Stubblefield you run that. Thank you seat down there. Members this is house bill fourteen forty three. The resident. Since. Welcome. You present your bill Mr chairman I could call up of Diane from the land commissioner's office okay if you. If you would staging you can take off your mask. If you would state your name for the record. Hi I'm Diane Rogers and general counsel for the Arkansas land commissioner's office welcome good morning Senator Stubblefield referred senate bill. Click on this bill it is house bill fourteen forty three it has this section one is taken out and because it is outdated and the services are provided online and have been for some time at section two. Actually this is exactly is a statue reads now it is amended to take out additional language that there is actually no change to the statute whatsoever I'm in section three at we define owner act to make it consistent with other sections of the code where it's not as clearly defined so we brought other definitions into that and we define what a redeemer is. And section for just make those two things consistent. Or other questions from the land commission Senator Hickey. Yes ma'am of on page two for some reason is wrong. What you guys you put out the notice. Whenever you put out the notice you said that anybody that's an owner. It's got to be listed on there is that correct. Yes and that that's been that way okay we just to find the owner. I will under all it looks like to me owned sixteen it says every owner of the property the phone by joint tenants. and again I don't guess I care but if you all know you're going to run into multiple pieces of property that are undivided and have a joint heirs that may be a forty fifty sixty people you're gonna put everybody on that notice it's already required in another section of the code and this just makes it consistent because I actually believed that that was already requirement the way it stands now the thank you for. Are there other questions. For. Seeing none. What will the committee. I have a motion to pass to center Caldwell second from center Johnson discussion on the motion Senate. Thank you Mr chairman I don't believe this impacts of spot to positively negatively is either way but it is deal with tax on properties I I work for a company that buys and sells tax legal properties released has in the past and so just disclosure and I'll stand from voting. The discussions. What's will of committee. And we have a motion to do pass all in favor say aye opposed no congratulations your bill is passed thank you. Senate bill five four five Senator Garner. Senator Garner. Thank you chairman this bill came out to our reality we have to face in Arkansas. One is we lose millions of dollars a year to illegal immigration and the failure to pay their taxes that are owed to the people of Arkansas. The second is that we face a growing problem in Arkansas that will be generation generation the an issue force which is the drug trade for Mexico. Flooding our state with such hard drugs methamphetamine and fit in all there's taken lives of our cans every single day. This idea came out of the trump administration as a way to make Mexico pay for the border wall to increase security and to make sure the United States in Arkansas is safe. Other states have done this Oklahoma being the main one what this bill does. Rates a five dollar transfer fee now let's be clear. I will play the game where I called a fee would actually is a tax this is a tax. This will increase government revenue this will be. Impact many different people. But what makes this unique is. These taxes are being paid him or find a new way to collect it. As illegal aliens in Arkansas transfer money back to their home countries putting out millions if not more dollars back to their home countries. This great a bottler fee. For individuals only to transfer wire fees. Out of the state shall the country this will not impact in the United States this will not impact businesses that transfer and I'll be a five dollar fee up to five hundred dollars and in a one percent add on top of that. As important is that we get those revenue back to the state of Arkansas what is more important is what this money will go to. It will serve three primary functions. It will first create a grant funds for our brave first responders and law enforcement so they can enforce immigration laws that are currently on the books to make sure that Arkansas is safe in our business is working a fair and equitable way. This will be available to any law enforcement agency assuming they set up a comprehensive plan to enforce immigration law. Second. This will go to the leader training academy. This will go so they can train people on how to identify a legal drug cartels and keep us safe from fentanyl and heroin and methamphetamine is flawed in our state. And finally this will go to the Arkansas state police Iraq we all know is our state agency for being on the ground to usually interact and to stop these bad actors. I don't know the fiscal impact of this I have not received it from the FNA maybe they have it today. But in Oklahoma this remits over ten to fifteen million dollars a year that going to these funds. This is a common sense way to collect the tax revenue that we are losing it will help fund our brave law enforcement across the state to keep us and other or Kansan save as we enter this critical need between drug trafficking and to make sure we enforce our immigration laws on the books with that Mister chairman I'll take any questions. Further questions for the senator. Seeing none we have actually have four people speak against the bill and McCollum up to the time of Josh will Karass. And the from my are. Read. Thank you. Thank you at the morning Mister chair if it pleases the chair I'll I'll address first opening. I would like to give some instructions Alex of course or. We welcome you to make your testimony there if you. Please try not to repeat each other if you have different things to say we welcome you here we want you here but to save time for this committee yeah I don't know if you look at our agenda we have a full agenda today and so now if you would give her names for the record and I will recognize used one on one to speak so whichever one of you wants to stay consist dart out. Ma'am ladies first. Thank you so much Mister chair Mister vice chairman and members of the of this is Steven Committee my name is me to your right I'm the founder and executive director of an organization called Arkansas United and we run immigrant resource centers across Arkansas and also advocate on behalf of immigrants in this state we are here today to speak against Senator garner's bill SB five four five first and foremost I addressing directly the senator's comments I we believe that this is a solution that's shopping for a problem that does not exist I in Arkansas and and instead I want to really focus and with this being the tax and revenue committee at the grave risk based on the lessons learned from Oklahoma if Arkansas was to pass this tax we are joined today at in our conversation by various business associations who have given us permission to reference them by name they have sends a you Mister chair I emails and and I believe the other members as well as I you'll have emails I as well as phone calls from these various groups first and foremost is the money services business association comprised of more than eighty company is a across the United States I I want to say we are where we are an immigrant advocacy group and immigrants I would indeed be affected by this tax we are not the only ones and military personnel also use money orders and remittances especially when they're abroad to send money to their families and their families to send to the members of the military serving abroad I and they are gravely concerned about the financial impact at to them in their community I also there would be a negative impact the business itself the types of businesses that use money orders and and wire transfers include retailers grocers. At gas stations and the mom and pop retailers and something that I senator garner did not mention that also came out of the Oklahoma experience but each of these businesses would have to create a point of sale to distinguish between transactions that are going abroad versus what's locally which adds an undue burden to so many of these businesses especially the small businesses I know we care about here in Arkansas increase bureaucracy and an onerous work they also have to put expenses signage shop in their businesses I'd to be able to reflect this we're also concerned based on the Oklahoma experience of the negative impact to consumers according to the FDIC one quarter of households use non financial institutions and again whether it's a military or others that use international dealers and merchants and loads and re loads of mobile wallets that would be affected by this bill also we're as much as law enforcement has been brought up a law enforcement themselves actually would be negatively impacted by this bill right now they're currently anti laundering money laundering programs in place and if we were to put taxes on these transfers and money orders we would be forcing many of these groups to go underground that makes it harder to monitor the actual transactions in actually could lend itself even deeper to the very drug trade and others that senator garner I has referenced in this bill and there are already existing anti money laundering prevention is in place due to the bank secrecy act and registration that already happens with fights and in the Arkansas securities department that the robots compliance of that unfortunately SP five four five would make less efficient and less transparent the electronic transaction association which is the national trade organization representing over five hundred companies that facilitate over twenty two trillion. Alers in payments in twenty nineteen worldwide alone they're also concerned that section six of senator garner said bill would also have an effect on the growing number of unbanked and underbanked populations in Arkansas who also rely on money transmissions like those I've reflected in the senator's bill and also I'd confer occur that law enforcement efforts on money transmission is subject to extensive regulatory framework that's undergarments bill would hurt instead of benefiting and finally the trade associations and the Arkansas grocers and retail merchants associations are also in opposition of this bill and have sent letters and emails to you all I do want to say that the very basis of this conversation in regards to immigrants we are contributors to the economy here in Arkansas and twenty eighteen a law and immigrant households paid more than one billion dollars in taxes that was seven hundred million in federal taxes and almost four hundred million in state and local taxes and we contribute as consumers three point one billion dollars in spending power in Arkansas every year these are all ways where we can possibly continue to help the economy and contradicting US senator garner spell instead hurt the economy and finally I just want to say that these kind of bills I'm a law enforcement out because of that senator garner is reflecting does create and foster an unwelcoming environments I'd that also hurts the economy in Arkansas and public safety for all our Kansans to your point sat at to not be duplicitous Mr chair my colleagues will speak more about the two eighty seven G. program that that nearest and the impact that those have had in their community I will say that this is a a program I organization has worked closely on for over a decade and we did see at an increase as a result in in deportation separation of families but more important the lost in trust of communities that has been her. to recurring a grant funded incentive programs only result in more Rochelle FOR World filing and that is something that makes all Arkansas less safe because that makes our immigrants less willing or domestic violence victims less willing to report crimes individual community last willing to report on games and that is again something that affects all our Kansans and finally I want to say we had a chance to speak to the Arkansas sheriff's association and they are actually neutral on this bill I and instead you all I'm sure have received calls I we have and count on several chiefs and sheriffs who have worked hard to undo you that damage that two eighty seventy did in this state and they have left to all messages about their concerns with this bill also from that community trust standpoint thank you Mr chair. Thank you ma'am. You would introduce yourself yes Sir thank you Mister chair Mister vice chair and all the members of the committee my name is Josh long price and I'm the president and co founder of the Asian American Pacific Islander caucus which is an organization that I helped found in two thousand sixteen to advocate for the rights and representation of Asian American communities across the state of which according to recent data there's about fifty five thousand plus Asian Americans in the state of Arkansas so again what my colleague mentioned speak against S. B. five four five because we believe that this will create unforeseen consequences that would negatively impact our Asian American Pacific Islander communities a first of all when addressed everyone here and say that I want to thank you all for being so supportive I'm in light of all the recent hate crimes against Asian Americans have been happening both on the national level as well as in Arkansas with the unfortunate incident in hot springs and I believe that this bill would not only be bad for the Asian American community but it is contradictory to the support that you've given to the Asian community a lot of these hate crimes just a little bit of personal information my mother is from the Philippines she was recruited to this country in nineteen seventy five as a registered nurse to work in rural Arkansas communities I was born in Nashville Arkansas and I grew up in Pike County we're disburse the county seat and What a group in the light Sir so you know where that is you know where that is yes Sir that being said you know remittance is a very important part of of Asian culture it's a part of Indian culture of my mom State scrimp and save to send money back to the Philippines you can senate two younger sisters college and at that time working as a nurse in the seventies and eighties she sending back a thousand dollars a month and two hundred dollars that was taken in taxes so a lot of that money is already been taken out in taxes this is just adding an extra tax on top of it it just doesn't make sense nobody likes another tax and this is just another tax being put on another tax. another thing I want to talk about really briefly is that Asian Asian American Pacific Islander to be affected by this it it kind of falls outside the scope of the bill because Asia is not a border country right Asia is across the Pacific Ocean so Asian Americans are coming over here by both by plane and are coming over here legally because they're caught crossing so many different checks checkpoints to get here so again you're in your impacting now action unity that came over here legally and came over here to do work and help the people of Arkansas like my mom did as a registered nurse another another point I want to touch on briefly is I actually used to work for a remittance company based out of Arkansas called limo exchange I was actually one of the the partners in this company and that company went through the venture centers if I ask so the raider they received a grant from the ETC for two thousand dollars to relocate from George in Arkansas and at that time brought me on as a one of the partners they are ready charging fees for remittances they were charging a five percent fee and then some of that of course was paid back to the state taxes so to add another tax on top of that again it's just another tax on top of another tax. Anna finally I know with that Maria talked about this a little bit I'm not going to to to burden issue but this does put an undue tax burden on our businesses you know a lot of Arkansas businesses have interests overseas in Asia in South America and Central America in Europe and they transfer money all day every day back and forth and to add another tax on top of that it's just bad for the business community and I have a couple stats just quick stats Asian American visitors coming to Arkansas spent three hundred thirty one million dollars last year in this state so again putting attacks like this another tax burden is creating a welcoming atmosphere for Asian Americans to come to this state and spend a third of a trillion dollars every year and Asian students that are living in the state and may be sending money back to their their home countries just like my mom did they spend eighty eight million dollars in the state every year so that's being taxed as well so again enclosing I think this is just another tax on top of another tax it's unnecessary and it's gonna put undue strain on the business community and undue strain on the Asian American community thank you very much thank you. Members of the questions for witnesses. Seeing none thank you for being here. the next to the Speaker against this will be signing good to read as. If you will. Welcome to the committee as you've heard my instructions for the other witnesses if you can be brief and not repeat we would appreciate that will welcome you here if you look Sturch name for the record and president please well do I totally understand I'm city council members elect brief as well but I'm here on my own an representing myself but along with my colleagues so good morning committee members thank you so much for taking the time to listen to what I have to say to oppose five four five and wired you to not supported as well my name is Tony entity of this I'm Hispanic woman business owner and entrepreneur that operates in Fayetteville Arkansas. however I'm originally from Jacksonville Arkansas and I grew up there and it's good to be back and in central Arkansas I was born in Bryan Texas the home of Texas and a and M. but don't hold that against me because my dad is an eight and the I am a razorback and he was the first to attend college of his seven siblings and is now a retired meteorologist from the National Weather Service in resides in Springdale. His third post was at the North Little Rock airport in the eighties And so we were living there and I went to high school at north Pulaski high school and sure would became razor back in the nineties and for graduate school was able to attend York city school New York City and then a study abroad in Europe. However my heart never left Arkansas. And I ultimately fell in love with Phil bill. Over the past for thirty years I've run many businesses including a nonprofit design school for adults. We offered or certificate program in graphic design that I license with the Arkansas State Board of private career education. Today I'm a branding and graphic design consultant for nonprofits and sells also for a company called salsa for change and I teach at the northwest Arkansas community college also serve the people in Fayetteville as a city council member. As a small business owner I would definitely not support adding additional taxes or fees and I know this kind of repeats what we've said but my customers and I already paid that fair share of city county state and federal taxes and fees adding that five dollar flat fee and a dollar transaction fee for sending money over five hundred dollars for any personal or business matter that are my customers might conduct outside of the US is not supportive of individuals or small businesses. Bill five four five and necessarily burdens a very specific industry of Arkansas. Businesses that offer electronic transfers it impacts of very large variety of our Kansans it not only impacts immigrants but veterans all legal citizens like our Marshallese neighbors in Northwest Arkansas military families in our international faculty and students to name some of those people. The Bill claims that it will fund programs procedures and policies aimed at solving immigration issues at a state level when in fact it's very ineffective inefficient solution what training and equipment which SP five forty five purports to find in Arkansas will stop illegal immigration. An electronic check a tract transfer tax is not going to make Arkansas safer but in instead it will create more divide. This bill is a political move to appease a short sighted group of people when we could be finding ways to helping others during these very trying times. My final point is that this bill is racist it's egregious and it profiles the core segment of hard working people in Arkansas they contribute enormously enormously to our communities and our economy here are some numbers reported by the American immigration council about Arkansas in twenty eighteen immigrant led households in Arkansas paid seven hundred and six million in federal taxes three hundred ninety eight three hundred ninety million in state and local taxes and documented immigrants in Arkansas paid an estimated eighty six million in federal and sixty nine million in state and local taxes in almost thirteen thousand immigrant business owners accounted for eight percent of all self employed Arkansas residents and generated two hundred and eighty three million in business income. I urge you to support small businesses informed immigration strategies and a welcoming Arkansas community and vote no on Senate bill five four five. Thank you so much for listening. Further questions for the witness. Seeing thank you ma'am we appreciate you coming special driving from the town yes thank you our next witness is procuring from the ethnic. Thank you Mr chair Paul guarantee of thank. Yes thank you Mr chair members of the committee DFA did provide a fiscal impact statement for Senate bill five four five and as discussed in the prior testimony this bill would create a new tax on electronic money transfers of five dollars per transfer as well as a one percent tax on the amount of the transfer that exceeds five hundred dollars. In reading the bill we were unsure on the one percent tax if there was a transfer that was in excess of five hundred dollars if that one percent would apply to the entire amount of the electronic transfer or just the amount that exceeded five hundred dollars so with that uncertainty we did provide a range and our fiscal impact statement. If the first five hundred dollars was excluded from the one percent fees for full fiscal year we estimated that the in FY twenty three eight hundred forty thousand dollars in of this tax would be collected. And if the one percent fee applied to the entirety of any transfer that exceeded five hundred dollars we estimated that the fiscal impact state fiscal impact for FY two thousand twenty three four full year of collections would be one point two million dollars. I would be happy to answer questions about the fiscal impact statement or other questions for Mr gear. The Bill pass. We use. There was one issued this morning it may not it may not have been uploaded to the dealer website K. I know that we've had multiple bills that have been sent over that have not due to a glitch in in the spam filter I believe it be a lot but this one has would be happy to provide a copy to the committee let me see if I've got one on my phone Yes. Your. All. Mr hearing if you would sure Great certainly the the bill it would become effective on the anticipated to be September the first of two thousand twenty one for the this new tax. So we made a calculation for FY twenty two based upon nine months of collection of the tax that six hundred and thirty thousand dollars would be collected for this new tax if the. One percent fee only apply to the amount of the money order that was greater than five hundred dollars. If the. I'm the one percent fee applied to the full amount of money order that was in excess of five hundred dollars the about that we would collect would be anticipated to be nine or twenty one thousand in FY twenty two. Senator Johnson is that correct that says are you yes Sir up missed hearing that's in twenty two but that's a partial year right because of the the missed one quarter do you have an estimate for twenty three in your sometimes I'll do that as well yes for a full year of twenty three was a hundred forty thousand if the one percent tax on the applied to the amount of the money where that was in excess of five hundred dollars if a money order that has a face value of larger than five hundred dollars if the one percent applied to the full amount of the meant money order with no exclusion of the first five hundred our estimate for FY twenty three was one point two million. Thank you Mr thank you Mr. Are there other questions Mr. Seeing thank you Sir thank you Mr. Senator Garner would you like to close for your bill. Mr is going to get a figure for the F. and I haven't received one is on the website so I could actually find out what this would be at which we can get them and more judicious fashion so we could actually have better debate about this I thank you for both sides of this and you know my position on one thing I will push strongly back against this call in this races. We talk about these tax policies all the time and how to grab money that we could be missed. We talk about the realities of illegal immigration and what it does to our economy in many different ways to talk about the drug cartels and what they do that isn't based on a skin color or race or anything else that's based on the hard fact reality of what we face in Arkansas I'm sick of this game or if you push back against people dine because drugs coming from Mexico or you push back because of legal immigration from south of the border or other places it to present our economy you somehow haven't hatred for a certain to correct type of people that is fundamentally false is a tactic to end debate to call you a name and try to stop you from having a real debate about the issues I understand this body may vote that down. But do not. I understand that this isn't coming from some hatred of the heart is coming from a great deep care this state in finding a solution that can help our law enforcement this body may respectfully disagree that's part of it I understand that I don't think you're we don't immigration or don't care for people if you vote against this but we have to stop allowing that kind of nonsense to infect our debate when it comes to real issues dealing with immigration our economy and how we handle things with that Mr on close. Thank you. We've heard of. From the center. What is the will of the committee. There is. Is this subject to our rule on not voting on anything affects revenue. Only because it's an increase okay then I would move to pass I have a motion do pass. Is there a second. Is there a second. Seeing on Senator. Moving along. Senator Bledsoe you have SP three thirty seven. And we have handouts members. Our. Sorry Senator Bledsoe all right thank you thank you Mr chair if you would have your yes it is I would choose. Thank you thank you Mr chairman name is Gary Blackburn and I mayor in Garfield Arkansas okay thank you senator Bledsoe all right and I do want to say that I have representative gala McKenzie and also representative Josh bar right here with me today and they have an interest in this as well so are they here to testify yes from present yes okay all right. All right thank you Mr chair and members of the committee this bill Senate bill three thirty seven hopes to restore the cigarette reduced tax as it once prior to ACT five eighty of two thousand nineteen and of course that is for the border zone areas in other words ACT five eighty remove the reduced rates for sales of cigarettes and border cities in my bill Senate bill three thirty seven reinstates the border city tax rates for the sale of cigarettes in the border zones. I have with me today the mayor of Garfield who would like to speak on this important issue to his town and he also has heard from the other mayors that have been impacted by this particular issue so I'm turning it over to me blackcurrant. Thank you senator. Garfield is located on highway sixty two. About fifteen miles. North and east of Rogers. Our city damage runs up and touches the city limits of selectmen Missouri. I'm giving you a hand out color coded hand about the cigarettes yesterday in the I will buy a pack of men Garfield about a pack of men selectman. And I'm here to speak in support of the the senator's bill that will reinstate. The what I would compare the term I'd use parity with Missouri for Arkansas borders cities on excise tax. Prior to. Two thousand and nineteen when the law was changed. Garfield was a a destination city for people to stop by cigarettes on their way to Eureka Springs or to the lake. I. I have one particular store owner that work with me real closely since two thousand nineteen and he is provided me printouts from his wholesaler nine I gave copies of those print outs to the municipal league and I hope they for them to you this compares an act to nine month periods January from January first two thousand nineteen two. January thirty first two thousand nineteen January first of twenty twenty to September thirty first of twenty twenty bottom line is he bought supply and demand a hundred thousand dollars Les S. tobacco products to sell in his store during after this law changed in two thousand nineteen. I have similar printouts for his other products I can't. Draw an exact correlation between that but I believe the league provided you with an excel spreadsheet that I put up consolidating this information for you on and it shows that what two things happen two things happen essentially. The state because the excise tax. Change the state. For every pack of cigarettes is sold in Missouri versus. Our fellow Arkansas the state loses a dollar in excise tax. Plus they lose the six and a half percent sales tax plus the county loses a one percent sales tax and the city loses assent behalf. I move to Garfield in nineteen eighty I was postmaster there for eleven years I have been mayor now for seven years I was on the city council prior to that. I know. The people Garfield talked to him every day I'm out on the street talk to me every day and so I ask him this question now I've been asking this question since two thousand nineteen if you're a smoker are were you buying your cigarettes now. And when they when a smoker buys a carton of cigarettes they're gonna drive for miles to Missouri to selectman to by that because it saves them anywhere from depending on what brand they by thirteen to twenty dollars. So that's money that not only the city again Garfield not only the owner of the village market is losing but the state of Arkansas is lose and so the point I'm making is it's not like these cigarettes are being sold somewhere else in Arkansas it's four miles from the this gentleman store to the first door insulating the Missouri and that's where. Smokers go to buy their cigarettes it would death it would be really helpful for the city Garfield for this the owner of the village market and we just have three retail outlets in Garfield or small city at dollar general one of the convenience store it'll help them all our the city I'll close that the the city of Garfield are turned back state turnback for sales tax for the month of February of this year was down. Nearly seven thousand dollars compared to the same period last year same period last year so you and they are just real numbers that you can verify and I gave you the print out from the wholesaler I'm I'm not shooting from the hip on any of this this is real financial impact on the city and the state. Members other questions from witness. Senator Dismang. I'd just one thing maybe it's for the Municipal League to but what is the I mean my curiosity would be what what is the trend on the purchase of tobacco products products statewide because I think there's been some decline in if there has been declined and you know it's not to get apples to apples if need be factored into this I mean I have some reservations about you know treating one area of the state very differently as far as taxation as as opposed to another especially for tobacco products but again if is there any additional information that we could see what actual trim line was for. Other areas in the state that may not have this you know border type issue. Senator I don't I don't have that information that may do you have a name may have then the privilege forms. Reason. Senator Johnson you have a question. Is it. That. We're. Last. That sixty year. Right thanks everyone. The. Actually. No longer operate at mile high. And I said. This also Laurie about. That the backpacks use. There for that. The the. Arkansas side as we should do room that. We have already that said. I just I have a problem of. read the syntax. Yeah. Hi everyone for your. Well city but to create situations. Right to say aye I'm very. If you have what percentage of your municipal. But if you take the hundred thousand dollars. That he didn't by on you can buy those cigarettes in that nine month period. And you do the the mass of course he's a big loser. The sales tax on that is one half percent. No it is not our entire it's not our entire at the base of revenue center but what I I'm told by the vendor it's the market basket affect this killing him because that customer that would have stopped and bought that carton of cigarettes but is now going to sleep in the back well he would bodies gassing or feel too and in perhaps the matter where the home of the Jan I scream come in because he mad about asking come when he was in here and so yes yes I can give you report it shows that his sales on those tap items are down also. And so it it affects the market basket in addition to the task the the the cigarette sales. Yeah. Are you are. Questions that reviews are. How much is back or S.. Back in sales tax or the fact that you see. What percentage of your this call is all it would be a S.. At if if we use February I and I I don't like to shoot into CoV and not be a bill be able to substantiate what I'm telling you so we use February of twenty this year compared to February of last year. Sales tax receipts total sales tax receipts are down a third seven thousand dollars that's sales tax and that's for that's where our income from cigarettes comes from I mean it so we're we get that money comes from sales tax revenue so what what percentage of our total budget is of sales tax money we get money from from three we have straight ninety we get sales tax money and then we have a water fun but it's a. Substantial will not I guess we'll notices what you wanna know I wish I could give you that exact number. And you also have risen by yeah. Correct. He or. Asked. One percent tax. Walker sent faxes C.. I'm not a. Yes yes yes yes Sir yes you read that poem at sales tax that. On that. Yes Sir I'm just trying to get a feel for you know. One. I have one. Forty percent. I was trying to get you all you're worried that you're exactly right and I and I would be less than I just can't honestly tell you what that market basket number is because we really don't know you know without you know stop and question every customer that walks in that store appearance Ladyman you know if you to stop in Garfield would you bought that pop there would you bought your gas there I'm just saying or toll receipts right now in February are down compared the same period last year And your partner are. Yes it and I understand your situation my mother she that she smoked from the time she could by and she died at the age of fifty in spring bill hospital from from cancer so I I appreciate you understand your feelings in that respect. I want to continue living Garfield I'll continue to do the business of the village market and I I wanna be able tell the owner of the village market I did everything I could to help the. Keep his business open because city right that borders is gateway you didn't have any retail and. In the end I don't know how this is going to work out for the owner of this particular store it's really impacted him. Where I do understand and appreciate everything you're saying in your especially your candor of. We have to and I this is instructed to all of us on this committee because we recognized not just this small issue so back attacks but we're in competition for neighboring states in so many ways for jobs for industry for a lot of things and I know that Senator Hickey looks across the line and it taxes and see some economic things going on there which I believe in large part because they don't have an income tax and we do but again I appreciate your candor and I I have unfortunately I don't think I'm sports bill because that's I'm I'm not sure like Senator Dismang we should have different rules for different parts of the state but but thank you for for coming and testifying would create European. Thank you Mr thank you Mr chairman I would like to say thank you for allowing me to be here today when this when this changed in two thousand sixteen I wouldn't of not nineteen I would afforded the same opportunity but I will say this is an example of good government this is the way it ought to be done we ought to be able to have this dialogue and I'm very thankful that I was B. I'm able to be here today and and participate in it. Thank you are there other questions of the witness. Thank you saying Mister chair could the representative called managed. we're who will speak first representing again McKenzie or representative Brad okay you would. And I will give you the same instructions have been given everyone else you can make it just as brief as you can without repeating we would appreciate it very much thank you Sir name for the record thank you Mr chair Joshua Bryant representative district ninety six Garfield sits in inside my district and in a. Receive your time just to consolidate a few points maybe not made is is the the border city tax exemptions or obviously something the previous general assemblies felt necessary to to pass over time and it it will take the time I know what I mean consider vote today and is going to be a overall generate new impacts and in final decisions of in this session but if you were to to pull up and look across the borders of the three areas this affects courting the DF in a which is the state of Missouri the state of Tennessee in the state of Louisiana you'll see the small towns that that set off the border that went through. You know likely painstaking efforts to get annexation up to touch those neighboring states I know Garfield's done I know P. ridge does it you see a big mass you see just a little spine that goes up to touch Garfield as it moves over Springs does it so been county then all across those parts of the state. They fell to such an impact to their their ability to survive as as unincorporated areas or even incorporate areas but the they made those efforts to get there and so then the second point I would like to maybe make is it according to the FAA you see where that that money that generated we remove that sales tax goes into services that maybe leitores prevention or cessation research appointment we just extended in the House just extended the sales tax we're not sales tax but the medical marijuana tax another few years so the debate I would have is is if we're looking for a funding source maybe it's time to to give that released back to the cities they do have a financial impact because they do go by that beer at the neighboring states they do go by their fuel Indian that that the FAA our aspen simply they cannot separate that because of how the information received but I know you're gonna make the extra four miles in and paid cheaper cigarettes just miles will go in paper cheaper beer cheaper and it is a competition which I believe is why the assembly over the over the years and decades corrected the border city exemption in which in one strike we ended so with that I'll take any questions are the questions from representing. Saying thank you for representing McKenzie please. Representive you've heard my instructions if you will please state your name for the record thank you Mr chairman Taylor mackenzie representative in district ninety two I represent sulphur springs they are another border city of course a little small town they had a mom and pop open up during this little window after the border tax exemption was removed in twenty nineteen the mama pop opened and closed they just couldn't make it I wanted to I'd look to do in a convenience store years ago but I didn't because I didn't want to sell tobacco and I knew that's what you do if you gonna make it and so this little town of so first trying to grow the right there on the border and they're struggling they now have a dollar general that's a big thing for sulfur it's it's the biggest thing is happening as far as any kind of retail store coming in and they're going to sell tobacco they're gonna try. But look up look at what they've got what they're dealing with right across the border Missouri much cheaper and as they mention those folks are going to go over there and they're gonna buy everything there were waving goodbye as they crossed the border taking that taking their shopping over there I'm employees across the board from Missouri to work for me. Thank you there by the by the tobacco products in Missouri Astell and it makes sense so um this little town is trying to grow and been county been counties growing but little sulfur is really being held back by this border tax exemption that that was removed that we believed in up until twenty nineteen so I appreciate your consideration and help the children Give this some thought so this town can grow and contribute to the state. Are there questions from representative Matt can't sing and thank you. Of. Jett Mr Kirch. We have the Former senator Jack Richard with municipally it's. Speaking for an. Mr hearing if you would as soon as Mr critter distance you will come for please state your name for the record and you've heard my instructions please. Thank you Mr chairman Jack critter Arkansas municipal league and I will be very brief this handout that. You all had again this represents one retail store and if you look down there the reduction from last year to this year after the implementation of the. Not twenty nineteen is seventy five hundred dollars to that one small store. it. You know in which is actually just thirty four percent reduction and if you can imagine any business that where there sales plummeted thirty four percent one year they have a hard time surviving. And also to put that in perspective the the other hand out to the mayor distributed. The dollar thirty one cents a pack difference. By driving five four miles up the road that's thirteen dollars a carton if you know the average smoker two cartons a week just twenty six Bucks if he and his wife both are smokers us fifty two Bucks a week two hundred eight dollars a month twenty four hundred dollars a year so anyone will drive for miles for twenty four hundred dollars a year and I guess my final point would be you know this is a fairness issue if if if Senator Bledsoe is presenting this bill this rate brand new exemption that had never been in place it would be unreasonable but the fact that it was it was a place for years and knows the business is built there model on that of when two years ago when it was passes centrally for the rug out from under those businesses and their suffering and as a result the towns where they're located or suffering for that reason we would ask you to consider. support of senator Bledsoe bill I think you all very much for your time. Further questions from scripture. Senator Hickey it just just question is does the bill does it do anything different anything different than what it was before or is it exactly the same was it put back in exactly the same or was or anything added or subtracted or you know tech my understanding Senator Hickey is that it would it would reverse For those you know the border tax exemption part of the that was put in the the the bill is passed two years ago so. It would just change that part of you know that was your member I'm of you can correct me on it but that was in the U. M. S. bill and that was a section of that bill that repealed the border tax exemption I think it affects maybe seven pounds Hello and so long the Missouri border because really those other states the prices so close. in comparison Arkansas that those states is not a factor but with Missouri has a huge difference and that's where the impact is okay I may ask Senator Bledsoe appropriate time if if she knows if it's the exact if it is the exact same language that we originally had or not so it if I may I think I think we put that with the league our legal staff put that together in Senator Hickey that that's what a duty it just repealed the language that was the repeal the repeal yes. For lack of a better word thank you Sir. Thank you Mr chairman members of. Thank you senator Johnson of. Secretary don't do any. Real hate say deep dive research I'm not expecting you know to spend days on on economic analysis but did you all look at any. Nearby communities I was kind of looking at the map and I don't know how far this is defined I probably shouldn't say that question for percent Bledsoe but if for example this is his little flock invoke a at the end even closer in in in on on the sulfur spring side of gravity to cater to they all get this exemption to how how far in does it go and I I can't help but compare this and I'm I don't get Senator Hickey is tension if I say this all I'll just say it blurted out of. We. Currently we have an income tax exemption for people in the city of texture can. But if you live in the unincorporated part Miller County you don't get that exemption so I'm just saying if if you take it as far as so for springs or a a Garfield then the people details just. More inside the state than that it's like what course I'm I'm for tree here for the same I think we ought to do with the income tax I agree for lieutenant governor that that should be our north star but I'm just trying to there's a sort of a court we draw the bar here geographically and have you all looked at how these others are affected I know you might drive for miles but people drive twelve miles to say twenty five hundred dollars you yes Sir that's a great question and and we did look at that it applies to I think it's seven small towns mostly ex that you have Bellavista a pea ridge gateway gar fill a sulphur springs by the way that mayor was coming but he couldn't make it today but it it affects it it's hard to determine the best the only way you can really see the impact is going to these individuals these are tobacco stores or retailers that that separate their tobacco sales and so. I guess that that would be my answer but but for the most part it's those seven towns and in particular the smaller towns it is the one effects because of their size disproportionately thank thanks for your answer thank you senator. Senator co of. Thank you senator I want. The motion the statement in the record that I think be true is it no Missouri's cigarette taxes based on constitutional amendment and it will not change and will always be uncompetitive so just a lot of people don't know that but I think it was done by initiated act people voted that tax a low tax and so will always have that issue again like Senator Hickey I don't think that we we have a sense of fairness out here people the staff assure business model and put in place and then we changed our tax rate to that hurts them as much as it does by the same token like Senator Johnson the we very by a day and only sixty second birthday because okay I have a brother in the hospital right now COPD so it It ways both ways I have no idea how vote but again it is unfair business model for us to allow these people to go in to business Spender life savings and the and then pull the rug out from under. Thank you Mr. Thank you Senator Ingram you have a question. Yes The. When this bill is in and I'll get into with D. F. and a but. Of I know we're all focused on Missouri but I've got to border communities request myths Mary and it will have a negative this this bill will have a negative impact on our retail. The key to that is of we stripped out and maybe this is a way and I that we could make this. Work for all of us but the key part of the legislation was that we stripped out the minimum markup we allowed a greater markup in because Tennessee Tennessee's at sixty two sixty two cents we're dollar fifteen but because it the minimum markup was greater it allowed our stores to be competitive with Tennessee and I'm going to guess this three million dollar hit that the budget would take the vast majority of that revenue that's being generated is coming from of from very West Memphis area with the casino with the other stores but of. You know my folks are going to be heard if this is repealed because that minimum markup. Respond that Mr mayor I think the question was directed toward you Senator Ingram I think that portion is not changed and I could be wrong but I think when I was maybe I misspoke to Senator Hickey The the minimum what six and a half to seven and a half for whatever was present I think that was left in there it was just the border tax I could be wrong on that what you said two different things here because first you said that you and repeal the hold Act well and and and now you're saying it doesn't repeal I'll so I'm just standing is that the minimum markup was it is not being affected but that may be a day of the night that's something we need to find out of course UAMS takes a hit on this it is well with this it you know I've waited not prolong anything but when I hear about you know understand mark's mother that smokes along my brother was in a in a bar in Montana sit with the sheriff one day and he was smoking a cigarette and a woman looked over and said you know that'll kill you and a look back at her and said will my mother. Live to be ninety five years old and the woman looked at him and said well did she smoke and he looked back said no she just mind our own damn business. Thank you for the levity of. Are there other questions of the witness saying none thank you thank you Mister Committee. We will now As gearing for the ninety come up. This bill does have a fiscal impact so. If you would stagename for record thank you Mr chair members of the committee Paul hearing DFA. If they did issue a fiscal impact statement on Senate bill three thirty seven and the we based our fiscal impact statement on the most recent year of data that we had a full amount of data which was from two thousand eighteen when the border zone Rates were currently in effect. The the bill and to Senator Ingram is question I think also Senator Hickey is question previously this bill specifically addresses the border zone that was repealed in ACT five eighty. So the the other cost of doing business that's not impacted that does this bill does not change that aspect of the two thousand nineteen ACT. The bill does not have a an effective date within the bill but we anticipated that for revenue impact purposes and effective date of October one of two thousand twenty one. Which would reduce in eight months of reduced tax collection. In FY twenty two we are estimating that there would be approximately two million dollars lost to cigarette taxes resulting from a border zone being put back into place of that the general revenue component is one point nine seven million. Now when the cigarette tax is added to the the cost of the cigarette also sales taxes levied on the full cost of the item. There is also a sales tax impact in FY twenty two of hundred thirty six thousand in state sales taxes and at the. I that component of if general revenue is ninety one thousand four hundred. And also to the city and county local sales taxes forty five thousand dollars FOR FY two thousand twenty three the full year first full year fiscal impact for senate bill three thirty seven we are estimating a three point one million dollar loss resulting from reinstituting the border zones of which two point nine five million is general revenue. At the loss to state sales taxes are two hundred five thousand dollars for full fiscal year. Of which a generating is a hundred fifteen thousand and also seventy thousand dollar loss in city and county sales taxes there are a number of questions that we heard in by the committee in the in the earlier presentation of the bill AS two collections we also have our manager of our. Miscellanies tax section Todd cockerel we also have a member of our staff of tobacco control I'm here to testify to if we have any of those technical questions but I'd be happy to answer any questions about the fiscal impact statement. Senator Teague your question Mr all on that first page. Of course start there is B. three thirty seven the first time. It says currently grew by the board is already implemented under SP three three seven will be twenty cents and seventeen cents and for the city's and for Missouri sixty five cents to sixty two cents in parentheses. What is all that. One dollar and eleven cents or a dollar a currency. that we did we did so those of the the current tax rates in Missouri Tennessee as well as Louisiana are provided in the fiscal impact which are the seventeen cents per pack in Missouri sixty two in Tennessee sixty two cents in Tennessee and Louisiana is a dollar eight what one thing he said the the the procedures the law that is the that is the the the per pack rate of cigarette taxes that would be collected in the State of Arkansas by business that qualifies for the border zone program instead of collecting the current dollar fifteen per pack but it's just twenty cents an inference the seventies of that that's that's the type of work typographical error my apologies will fix that trying to figure out how you got there thank you I'm sorry thank you. Are there other Senator Hickey. Yes Mister you're gonna you're speaking to the fiscal impact statement but do you know the questions asked earlier or you all looked at in detail to you do you know if it's identical to what we repealed this being put back in if you look at it that close we we did take a very close look and what you might have noticed in the two thousand nineteen legislation was that there was a three cent differential that was built into the law two thousand nineteen and previously that due to drafting and looks like it was not included so instead of there being a three cent differential for example instead of the border zone. in Missouri collecting twenty cents per pack they would only be collecting the seventeen sent a quick point tax per pack in Arkansas so I don't know if that was intentional in drafting but that's what we did see that it's not a word for word exact undoing of the root of the borders on repeal in two thousand and nineteen. So if if I understand you correctly under the old law there was just a a number that was put in it was just saying it was going to be twenty percent or twenty cents at that What what you have in in our law enforced the cigarette taxes you have a number of different levies that apply as this bill sets out and that amending to put back the borders on but there's also a separate provision of Arkansas law that was not re enacted of the borders on program so instead of the twenty cents per pack we will be collecting on a Missouri Committee borders owned a convenience store the three cent differential is not included but we did not see in our fiscal impact that it would have the a measurable effect that we could see on the on the revenue impact at three six differential yes it's certainly something but it's not I understand the material at this point okay Sir thank you Sir. Are there other questions for Mr. Thank you thank you Mr. Senator Bledsoe would you like to close for your bill yes thank you so much a Mister chair and members of the committee thank you for your indulgence today and your graciousness in listening to all of this this is very important to my area in fact I represented Garfield when I was in the house in nineteen ninety nine and I really fell in love with the people there with the area and the became acquainted with the surrounding area in the small towns of close to the border and I would say. Not that this is anything new to you small town America done. And so I think we need to be very aware of what we do and of course cigarette tax to me I don't smoke never smoked I don't have a story about. someone. You know who has lung cancer or anything like that and I would not be in favor of this had it not been for realizing that sometimes small small towns don't have an alternative you can do you can sell marijuana. You know medical marijuana you can gamble bring in the casino are you can have a cigarette tax and so I'm just throwing that out for consideration that to we need to help our small town so the bedrock not just of Arkansas but in the a America and again they are done but I do thank you for your indulgence and. I would appreciate a good vote. Senator Bledsoe you are aware of a policy that we yes do not vote on bills that have fiscal impacts and so we will take your bill under consideration to property damage thank you for thanks any questions. Senator Hickey. Are you going to present of Senate bill five ninety three. If not we can read law all right. Thank you just so. If you would it looks like there's a lot of political leaving and so. Senator go ahead thank you Mr chair members what this is is as you probably already know the governor in his executive order had extended the tax filing deadline what this does is we were just going to go ahead and put this in the legislation so that we would have been on the books in case that the emergency were to go away so so we have a backup plan as merely all this does since the you have a motion of Arkansas. I have a motion and a second. Okay. If it's quick I'll be quick Senate sample Senator Hickey on C. corporations you've got it at April fifteenth still. If a so C. corporations still gonna have to file. A month earlier than the stockholders in the they get it have whatever the form is I forget for individuals that are the owners of the C. corporation that so the CPA would have to provide to do the corporate return followed by the fifteenth which is a information return on escort because they're they're not the taxes paid by the individuals stockholder so I'm just asking why it It here it seems like or put a slight burden on our our CPA's to to do one return at one time and one set in me doing this I was just wondering what the executive order is but I believe that that would also mirror I hope federal law firms that is not senator Elliots if you would indulge Senator Dismang will explain that yeah I mean all Senator Hickey said it right it's just nearing the change that was made on the federal level push those returns out by one month at the deadline for you know ten sixty five are a partnership returns and corpse and that sort of thing did not change but which is also fine because they're generating K. ones creating K. ones at the utilized for the individual returned but again press marked urgent the CPA yeah we've got another bill for that a second those okay I do okay thank you thank you senator yes Sir. We say. We're gonna be closer the motion the second injuring discussion on the motion saying none all in favor say aye opposed no. Cindrich. members if you will allow me to indulge made if they can keep my slate on Senate bill five eighty two the FNA has provided us with a change. On their. With the. Various other physical impact there. Mr if you would he would come forward and explained. If you explained it to me I would prefer you explain it to the committee. Thank you Mr chair members of the committee all Gary with the thank. When Senate bill five twenty eight when DFA it initially issued this fiscal impact statement we provided a number for days additional programming costs and ongoing maintenance after the bill is initially presented committee we did go back and having to do another conversation with our deputy director and comptroller polity in as well as our administrator for our tax system the air system we made a determination that this changes contemplated and Senate bill five twenty eight would be included within our current contracts there would not be an additional appropriation that DFA would be requesting in order to make this particular change so we did revise the fiscal impact statements of that there would be programming required but it's covered by our existing agreement okay. Members of the early questions from Mr caring. Seeing Senator Teague. How do you do that. Thank you. Is there any are there any other questions. Saying nine thank you thank. Are there any discussions on the bill. Seeing none I make a motion do pass. Secco second from center Johnson discussion on the motion saying none all in favor say aye opposed no thank you Senator Dismang you're presenting Senate bill three four twenty. And Mister chairman we've got a couple House members are waiting to present two other bills if it's okay if we could pass over the two bills that I have the four twenty and. Four eighty one and I could pick those up after if we can present to House bills just going to get let them get out of here to stop stop waiting on this okay that's okay and so we could we will start with on which ones first on the agenda is at six seventeen oh five. Seventeen oh five okay. Yes representative Jett. You have a question waited so patiently. At some. Thank you didn't have anything lined up. So members this actually relates to it again I don't have my agenda with me but it it relates to the other bill that sets up the. A commission and so this is more the enabling legislation sets up the process provides authorization I'm I was honestly if you look at your green sheet is going to walk through pretty clear on what this bill does but it authorizes hearings before the commission provides a sunset date for hearings by the office of hearings and appeals allows disclosure of concept confidential tax information to the commission and required requires the commission maintain confidentiality of that information. Codifies existing hearing process is currently handled administrator handle district administratively by the FAA operates authorizes taxpayers DFA to seek judicial relief from a decision of the commission in the bill requires publication the commission decisions on the state's website again that it's tied to House Bill fourteen sixty eight which was heard insurance commerce yesterday but things can get re heard today at towards the end of our counter. Or other questions from sentence might. Senator Hickey is got one until now. Or other question from representative Jett. Seeing no questions In. What your motion. So have a motion from Senator Teague do pass second by Senator Johnson or discussion on the motion. Swing none all in favor say aye opposed no. Congratulations thank you and I for your older welcome Mister Jett in the house of representatives before I have been my boss Mr chairman. We're glad you're here thank you all right and what's the next bill it's a house bill seventeen oh six that's in the works wood fiber. job creation so that the. Yeah I think this is actually Wardlaw yeah yeah I've got a. Thank you Mr chairman of members you know what we we've batted around for a while now kind of this bill in theory of what it should look like there was concern concerns about cost maybe oversight in regards project that in the end of the day we wanted to make sure that we're doing everything we could for south Arkansas to create industry where there's not right now and then also support existing industry and I think that's what this bill accomplishes so it creates an incentive program on the purchase of equipment that's going to be utilized really for what I would call waste product for the bills down there at this point it would allow the thirty percent credit the of the purchase price of qualifying equipment for those projects there had to be fifty million dollars invested in the project in the the credits are capped out of five million dollars each year also again kind of been in part of the discussion in and how you get to the revenue neutral bill at it has to be the application is be made with ADC has demonstrated in that fifty million dollars investment they have to sign an incentive agreement and they would also have to create a least a hundred jobs are paying a minimum of sixty thousand dollars a to be able to just qualify lastly that must also show that positive impact not only to ADC but also DFA with that again I think it's it's a good project for a south Arkansas one that's needed and hopefully one that works for this committee I'll turn it over to represent ward off that's okay of the committee represent Wardlaw thank you Mr Jeff Wardlaw state representative district eight I just wanna echo with Senator Dismang said when we originally filed this bill it was to get the FNA an ADC to the table they came to the table they rewrote the bill and it's written in a way where zero impact to the state budget is written so that those meals have. To be up and run it in taxpayers before they can receive any credits and that's a great thing because we've learned that cannot built we had a lot of folks come in and take our incentives and leave they can't take these leave because they can't even apply form until they're open going so with that I'd be happy to take any questions from committee in this bill has nothing to do with the ninety thousand pound white. How this works nothing nothing I have to clear that up a lot these days. It's common or. Senator Ingram. You know with one industry we had the the redemptions of the tax credits. We're going to be in one year and was really going to hit the budget is there any protection on that in this legislation yes Sir there is a five million dollar cap and they are protections in there for that and that was remembered when this legislation was being drafted and I had the director ADC secretary here and all Secretary later Walter says to stand to show that because they are they did draft legislation to make sure those protections were in place thank you Sir. I think in addition to that I mean there is a project hopefully it's going to be able to move forward in south Arkansas utilizing this program one of the partners or when the owners in that business is at eighty R. S. and if the state of Arkansas has the right to buy those from A. T. R. S. at a twenty percent the twenty percent discount. Eighty percent to twenty percent discount yeah so the what would have been a five million dollar credit would actually be a four million dollar credit for those. Senator Johnson. Thank you Mr chairman of represent Wardlaw is very good bill and thank you I want to help the wood products industry it's very important my district as well of. I especially want to applaud you for the. The manner in which you extend the incentive we've seen some. Big splash announcements in this state that didn't come to fruition and a lot of our staff resources at the A. B. C. and others I consider wasted on that back what seems like another lifetime I was a consultant working on the economic development incentives and in the early eighties Zach what we're doing you get these benefits if you make these investments not up front and then we have to I think the or the users claw back if there is a proper so thank you for the process I think we need to create even more incentives and the fact that you're doing it in a responsible manner that you know you get the benefit when you do what you said you're going to do I'm grateful for you crafting at that point thank you thank you Senator Dismang thank you Mr. Thank you are there other questions. Mr would you give ordered or members is there a need for Mr come forward. Thank you all right. If. Yes please. I have a motion by Senator Teague did pass a second by Senator Ingram. These are just questions or discussion on the motion. Swaying none all in favor say aye opposed no. Thank you thank you Mr chair and thank you Committee. Senator Dismang and you can continue with Senate to a representative Jett or which yes Sir so we're for twenty would be the next one I thing and I'm sorry did bring my packet down with me sir not sure the order twenty four twenty eight so what this bill we kind of alluded to it I just a little bit ago with the Senate Johnson's questions regards to dinner he he's bill that you're the federal date this bill would actually move all state income tax returns deadlines to one month past whatever the federal date is set and so it says persons persons in this you know instances include everyone that's business returns so you're ten sixty five jours Corps and whatever one thing to keep in mind number one a lot of those do not pay remit income taxes to the state of Arkansas because the pass through entities and number two if there is a tax due technically that is do you know at that the year ended those payments should already been made with their finalist mated a tax payment for the year with that there's no change in revenue to the state I don't anticipate it's going to be widely used by most taxpayers particularly those that are W. two pairs however one of things we're seeing right now is that it's it's very difficult with the changes that are coming for software companies fee prepares utilizing even individual you utilize to keep up with those changes on the state level additionally one of more complicated invisible things that a tax preparer can do in my opinion is a multi state returns and those factor all factor into each other depending on what's happening in each individual state and was allowed to be offset and so this would just allow a little bit more time for those more complicated returns repaired repaired collected correctly and and then presented to the state. Senator Teague. This is just a one year now this would be moving all right of the yep one month out. The defense move it forever no they did not this is just this of the State of Arkansas policy so if you're you know used to do that and we rolled it back that would been prior to mine my time the preparation so I'm not sure on that. I don't remember I don't recall why we wrote it back but I think we don't it makes good sense at the time thank you. Senator Johnson. Thanks Senator Ingram to say what I was talking about we get the money a month earlier and it we're on a July year and I think that was part of it but I think that you answered the question I had we're going to track the feds is what this is this is this is not tracked if it will work we'll track that it defends in the sense that will be thirty days delayed from whatever the fed stated let's say it's not every year were not in session and. God forbid we have another pandemic or some other thing that causes them to move the dates and we would automatically be moving adjusting to that that's not true the. It actually does a one month later so I think it would track actually at this point so Senator Hickey is bill but not at that point be necessary yes Sir yeah. I just I am I'm I'm anticipating something I hope never happens is that we're having of this thing becomes kind of a reaction to riots going on nationally the I just wanna make sure we're not forced to have to come in and do this for the governor to it by executive order. Regular like heaven for bid were in that situation right thank you senator if you would stage name for. Matthew Bach outside tax counsel for the state chamber of Mister chair members of the committee what this bill does is specific to the extended returns so it's not if you think of a calendar year taxpayers not the April fifteenth deadline it's really an October fifteenth deadline and what it would do would say if you're calendar year and you get that extension for the federal October fifteenth then your Arkansas returning stands to the fifteenth of November so it's one extra month typically for calendar year taxpayers would be in the fall the year. Further questions from a proper. Senate thank you thank. A. Seeing no other questions Senator Dismang your clothes for your bill thing I'm closing this DFA had has any comments on the bill. The impact services in. What was your the committee. I have a motion by Senator Ingram do pass Senator Hickey seconds motion your discussion on the motion. Seeing none all in favor say aye opposed no Gretchen's your nose noted congratulations center. Your bill is fast of. Senate bill forty one four eighty one. Members of forty one is an intent to address the credit has been out there for quite some time I think one of the the numbers that I saw it's been one use one time in the last twenty years so we set up a program that will kind of an incentivized these private all donations or contributions to a road project I mean we've you hear about this and in some areas where there's stress points at a manufacturer that comes in some improvements have to be made this is this allowed instead of a credit for them utilized however because the way it's structured they're not able to actually I think there's a three year limitation on the books right now well if you're a new business in your building roads and you're putting in your capital proves the odds of you generating revenue inside those three years as part of pretty slim and so then it's just not really a factor as far as the decision for an individual to come in and and business to come into the State. Currently that is set at thirty three percent this move it to fifty percent of or thirty three percent of the taxpayer's contributions to instead of providing a credit up to thirty three percent it increases the credit that may be taken against the taxpayer's income tax liability up from fifty percent to the of the taxpayer's income tax liability to a hundred percent increases the carrier for Time limit of any unused credit from three to ten years hopefully this is something that can be used as an economic incentive for folks want to locate in an input in larger businesses here in the state and we we've had it on the books is not utilized there is no revenue impact at this point and be happy to take any questions and Mr box here for clarification thing I messed up. Senator Ingram. I was just trying to quickly think through of would there be any way that a of improvement district could take advantage of this. You could set up to meet you you can set up your own improvement district to do it but I think the question being is in being a utilized credit yes because they're not sellable or anything of that nature so it's you know if they're not throwing off the income. the I think that's where your your hang up would be. Are there other questions. As an example I mean I think we we've the others there some projects in this state that hinge on some road improvements right now or or my understanding they do in John road improvements hopefully this decreases some of that barrier and I think you'll probably visit with different folks if requested trying to get state support for that for some time again in and hopefully this gets is gets them a little bit closer to where they need to be to. Saying no other questions. What's will of the committee. We do pass. The motion do pass. I have a second sex center Johnson is our discussion on the motion. Seeing none all in favor say aye. Opposed no. Congratulations Senator Dismang you post on the bill his or someone ahead of me on thirteen seven is at thirteen seventy four Collins bill I know not gonna run that representative Jett. Is your. Just fourteen sixty eight of. Fourteen at ten forty four white arms I'm sorry in the. Next bill is Collins thirteen seventy four I'll run that for you will hold it back that's okay I think the. Revenue impact on this bill is pretty minimal what it does is it extends the number of events that a nonprofit can have any given year from three to ten I was given an example and some really something that's happened around the state we talk about small towns in trying to revitalize those areas one thing you're saying or it's being held in these areas by non profits to help promote the businesses that may you know compose the downtown area of food trucks come in and that sort of thing so let's just say we we do a some similar right things to that in in Searcy were once a month they'll have an outdoor event the bring in the food trucks of course that's all subject to sales tax but it helps those local food truck vendors sell the products you know folks leave the doors open in their shopping inside the stores and there's you know music playing and that sort of thing so more a fellowship type atmosphere but we obviously do that more than three times a year they do sell cups and T. shirts and that sort of thing help support their nonprofit if they get over three times you're those items within the subject to sales tax and then the detriment to the state another thing I think to keep in mind is we talked a lot about this pandemic and it's been feast or famine depend on what your entity is if you're a you know stand up restaurant it's been a very difficult time and to that same point if you're a nonprofit you've you've had a difficult time and they're trying to play catch up at this point so we're as they may have fallen underneath trying to hold three events a year I would anticipate and I think you'll see a greater than three events being held a year by these nonprofits try to catch up when they're allowed to start trying to have the dance again to get back to where they need to be to facilitate and help those that are the beneficiaries or the nonprofit. So moved from three to ten years I'm sorry three events to ten year. Or other questions Senator Dismang. Cigna Mr. Thank you Mr chair Paul hearing with the FAA of the revenue impact for house bill thirteen seventy four we estimated the revenue impact for the first fiscal year FY twenty two as though the bill would become effective on ten one of twenty one. The I have eight months of reduced tax collection for state sales tax were estimating it to be one hundred four thousand and the approximate local city and county sales tax is approximately thirty four thousand six sixty seven for a full year of collections for FY twenty three the state sales tax loss is estimated to be hundred fifty six thousand and the local city and county sales and use tax loss of fifty two thousand be happy to answer any questions about the fiscal impact center Johnson you have a question for Mr yes Sir thank you Mr our. Miscarrying I've heard Senator Dismang subscription my perfect sense to me but as I read this I'm I've got a few questions about where this might apply where it's an intended Having spent a long time in the advising chair organizations on fundraising and do some. Pretty crazy events to try to raise money I'm I will make sure we're not opening set up that we would regret if up for example I can think of instances where I have been involved in organization puts on a fundraising dinner You you are someone and if you have a a silent auction over here in your people and so some of these things are pretty. Substantial in their value and even in the revenue they brought it up is this. What should they have been taxable all along and we're giving them some exemptions on that or would they be have to follow under this limited number of times per year I'm just I'm trying to think well of instances I have seen where this is applied and for the last may I can't ever remember this ever coming up on something like that the silent auction going along with that thing I think Senator Dismang coming closer to an answer but I mean it what I what I would say is is if if if there's not clarification in place and so you know your organization that you participate with her you know your your favorite charity that again I think they're going to have more than three Lee some of the nonprofit Sino plan on having more the more than three events try to catch up for the lost revenue that they've had I would assume that if you're selling a ticket for a meal you know there's some allocation of that ticket that goes to the meal price and whatever else there may be for that event and they would need to be certain sales chat sales tax charged on that portion of the ticket if they had more than three events a year for the permit potentially that's what it would lead to. For you answer and Senators kind of two years and and Mr here I'll give you a real life example of hi. hip. I don't know via at the client library dinner. And you get a. Invoice from the client library saying this is their cost and it has sales tax on it just like if you were in a restaurant now that's the expense the organization the tickets are two hundred fifty dollars or whatever they are per person and there's no that's not taxable because you're basically buying dinner for your gas and paying the tax on that and then the. Differentially sure at least your gross profit for the event for the for the charity but I'm I'm going to make sure that the ancillary things that involve tangible personal property and made a silent auction there's other ways to do this live auctions all kinds of things for people you know sale. Sometimes very valuable tangible personal property and I don't know where that I'm I'm I have been doing this wrong for for twenty something years I know what you know I guess the statute front on that Mr but. I'm talking to the man so I guess what I see but but basically I would be concerned about the the treatment of that charitable and some of those charities have specific sales tax exemptions and it might cover him on that one organization it I've just described did have such an exemption and I know not all of them do but I'm just trying to to make sure we're not opening up a little bit of a problem that could could come back and cannot bind us on the rear end as when a representative Collins approached DFA about this potential legislation in two thousand twenty he he was approaching us on behalf of a a local charitable organization that really wanted to broaden the number of events that they could conduct because right now that three is in pre year was really limiting their ability to do all the different. charitable events that not only benefit the charitable organization but also those communities that host them whether it's going to be on on main street or another area within within little rock or north little rock. Allen was is that they were limited in the number of those in advance that they could sell the tangible personal property so that the food and drink the those types of items exempt from sales tax so we work with representative Collins on on the concept of how to best amend or existing law to accommodate the ability to to have a greater number of of events that could be conducted a year with with with they they represent consolation on ten because that was that was going to fit this particular organization's needs what they what they planned the the the purpose of the of the bill I'm sorry purpose of this the law as it is right now is to prevent that competition by the charitable organization have a standalone storefront so if you have you have a story that of a for profit business that's collecting sales tax on all of their taxable transactions but if you have a terrible organization that opens up the exact same store doesn't have to collect sales tax that's why we have this limitation in the law to invent a limited to three events per year that the organization has to be making the sales of the members of the organization have to be sales and all of the the receipts from the sales have to go to the benefit of the terrible organization so those are those are the kind of the the the barriers that have been put into place to qualify for this exemption to make sure that we don't have professional individuals come in and conduct these on behalf of at your workstation the actual members have to do the sales and all of the the returns they can only keep five percent in the rest go to that that for profit company all of the all of the proceeds and all the profits from the sales have to go to the benefit of the charitable organization and the final one is that they can't do that still more than three times per year this bill would broaden that ten times per year to allow for those organizations that would really like to do more events to benefit the community and also to that benefit those other businesses those other for profit businesses that are ancillary and locate. Shin to where the events going to take place because these events can drive business to that community that when you have a special event as well I understand that part and I want to just want to mention that this is similar I guess to away we've done being go that you can have a nonprofit organization can have been go but they can't bring in you know they can hire Senator Dismang not running for men we pay them five percent we keep ninety five we we we used to have that kind of thing happen in the the constitutional amendment that allows a bingo I think covered that in the same manner is that yellow goes to that yes and also to that point on under the nature of the organization is also important as well because we there you have to be a a charitable or CA three and not necessarily as five oh one see three because I nonprofit organization is not always a a charitable organization under our sales tax rules chairman organization has to have a benevolent philanthropic purposes and their function has to be a function that would be provided binds the community by the government in the absence of the organ of the terrible organization performing that function so there's a a number of of requirements that an organization has to really meet before they qualify for the specific and exemption under our law with this bill is only a going to do is allow the the frequency of the fund raising events to occur to be brought in from three times per year up to ten times per year so there's certainly a lot of these fundraisers that are going on right now under the limitations within our law and our sales tax rules this is only gonna allow them to do them more often okay thank you Mr thank you senator design center or you have a question. Where they enter my question do on statement of in times past for decades twenty revisions made a donation for someone for a auction item whatever we had pay sales tax on an item when we gave it to all of leave or not so it in no Sir Clark we're trying to run a bill two years ago to change at all he did or not but it is okay that's fine with me to ask you a question last statement thank you thank you Sir. Or is there is there any other questions for. Mr Gehringer Senator Dismang. Seeing none. Census says an impact we don't take a vote of members out I need to go back in and. President Senate bill five twenty eight as amended. Willekes funds the vote I mean that they do expunge the vote of. How five twenty eight past. The motion to second all in favor say aye. Okay now I'd like to take and make a motion to do pass as amended on Senate bill five twenty eight because section in groom. All in favor say aye. Pose no thank you Representative Jett. Thank you for waiting so long. I can present to present your bill that you're here. Thank you Mr chairman I appreciate you guys let me spend the last two hours my life with you all. It also Mister chairman I appreciate you tell me heard and get down here by nine o'clock this morning and. Get down on my end of the billing I look forward to seeing you are. Were you asking for do pass on the. The. It just depends on what you've got coming my way buddy. Okay you're presenting House bill ten forty four correct I am. This is the if a bill is Joe Jett state representative fifty six northeast Arkansas state road this is a DFA bill and basically on the books right now DFA was tell you I think public testify to the fact that if a married couple has a used to divorce or if there's a fire somebody loses or tax records whatever reason DFA there's a state statute on the books where they can access what the tax should be based on loss records what this what this bill does is if somebody if you just give the records then the FAA take that same authority and to assess taxes on somebody refusing to give records up I think you're right in this room as known of somebody prior couple years ago was in that situation so with that all the turnover ball. Mr. Thank you Mr chair Paul hearing with the department of finance administration. Under current law yeah DFA under the tax procedure act we have to have the ability to issue an estimate assessment in those circumstances where the taxpayer has failed to keep adequate records in support of the returns that they filed for they have not filed the return. The taxpayer under the taxi driver if we issue an estimate assessment they have the ability if they protest the assessment they can refute the assessment as well but they do have if they didn't keep records they do have the burden to refute the recess assessment. What this bill is designed to address are those circumstances where taxpayer will not tell us if they fail to keep records but otherwise they're refusing to provide records to us when we asked to the taxpayer to produce their records we do have the ability under existing law to issue a subpoena to a taxpayer we also have the ability under existing law to go to court and compel the taxpayer to produce records as well but what this bill would do would allow us to also estimate an assessment if the taxpayer refuses to provide records after we have made a lawful request either by by request issuing a subpoena or getting a court order. This will not impair the taxpayer's ability once they have had the assessment assessment to be able to come back to DFA have an administrative hearing or to go to court in appeal the assessment this just empowers DFA to issue an estimated assessment in those circumstances where the taxpayer has refused to comply with a lawful requests for records would have to answer any questions. Or other questions. Centered so on the time frame on refusal is that just something that's going to be special part of the subpoena or I mean is that where that's gonna be spelled out like how do you define what refusal is or what's the time frame frame before it was something to be refusal or certainly we our autres work under the statute of limitations for assessments we generally have three years for it to issue an assessment for most tax purposes now if it's determined that that taxpayer has under reported their liability by twenty five percent or more than we have the ability to extend that three years that's limitations to six years of course of or fraudulent returns there is no there is no statute imitations but generally what we try to do when we work with taxpayers on requesting records we want to make sure that we give them adequate time especially during the last year or so during the pandemic it's been very difficult for taxpayers to to have access to records let alone Leding third party auditor for DFA having access to records as well but we certainly reach out to a taxpayer by. By regular mail to notify them that we would like to schedule an audit those letters go out repeatedly we make contact it some point if we don't get any cooperation will have to issue some type subpoena or court this particular bill does not specify any specific guide deadlines in time on when we would be able to issue an estimate issue an estimated assessment but all the period of time that our auditors are working to try to get records though it that's just time that any delay is causing more more periods to fall off under the statue limitations so we certainly aren't trying to put impose any undue burden that the taxpayer has the legal requirement to maintain their records and also to furnish them to DFA upon request but we do have challenges with taxpayers that for sometime the stone wall or promised the records promised records and don't produce them and we make every effort to make a lawful request issue the taxpayer S. subpoena under the taxi direct or as a last resort have to file an action in circuit court to get a court order certainly you know we're going to have to do whatever we have to do to do our work but but we want to give the taxpayer every opportunity to comply and provide the records but this particular bill does not have a specified time period that we would have that we would certainly want to be mindful of the statue limitations in place that we can't we can't wait forever for the taxpayer to comply because those periods will eventually fall off we can't audit them anymore. Are there other questions. Seven nine. What's will of the committee. The motion do pass. I have a second Senator Hickey. The discussion on the motion. Saying none all in favor say aye. Filippos NO. Congratulations and of. Representive you're gonna run house bill fourteen sixty eight yeah what what number what is that Mr that independent. Yes Sir Mr. I thank you guys like this bill so well you guys won't I have never committee down here over here Insurance and Commerce yesterday revenue tax today Public Health tomorrow. Okay. I'm sorry. And and that was my mistake this bill is already been heard. In another committee and so we're going pass over it and do you have. seventeen oh three would you like me to come in and run it for its the the can I do the ten fifteen Mister chairman yes you can since I'm here I'll do ten fifteen members this also is the if a bill and before the DFA had employers it through and fifty more employees required to file income tax withholding for W. two electronically and the divide come down to the House side and ask for twenty five to fifty one fifty down to twenty five thank you because a little bit of a. Heartburn I guess for some of my members because they said that restaurant owners and some other folks got a lot of turnovers is either type industry. So as agreed upon DFA we amended the bill back up to fifty on this I think if I will tell you that also the reason why this is is before going to be to turn around would be takes thirty to ninety days to turn that around and if I think the politics filed thing do this in a matter of three weeks now provided electronically files the Division also that was put in on the In the minute that DFA offers a hardship some and. I'm as hardship Yunis electronically file DFA will issue a waiver. So that Mister chairman I'll entertain any questions. Members of the questions. Seeing none. What's will of the committee. Motion to various for centre Johnson. Sekhemre Senator Ingram discussion on the motion. All in favor say aye will pose no members we're gonna go back to just for just a second Two. House Bill fourteen sixty eight. It's it's been heard I'll make a motion as do pass. What will what will. That's. Mr Noveleta try to answer questions of us has a questions on the bill. Well I'm sorry it does have a fiscal impact. We played so the Bill Cosby Mr yes Sir but I know is is there is a fiscal impact but it also has an offset you know was read upon I thought that the that we're going to use the pass through entity mining the four million dollars is going back to general revenue to offset this two point five million dollars that this is going to cost I thought that was what was agreed upon earlier. Okay. One. All. Fourteen sixty eight is this not the bill it went to register my understanding Mr in this is the bill that the second got run insurance commerce yeah that's what I was thinking. Senator Hickey you still have questions. All right. All right did we write that in there about the office it no Sir we did not but progression the main that's what was testified at in on the budget hearings and that's what I was test fired on the house for that we would do and I thought that was agreement when house and Senate yes Sir and I agree with that okay good thank you thank you. Are there other questions. Seeing none what's will of the committee motion to pastor Senator Hickey of second by Senator Ingram or the discussion on the motion saying none all in favor say aye opposed no. Thank you thank you thank you Committee. which one worry at. You for seventeen oh three and do you have that or you might come down right is subpoenas chairman all I'm I can answer questions about couple can you will come down to it off I'm gonna do whatever you want your committee Hey okay they can answer the question all right of center right here already Members I will tell you that represent Porter's wives is a undergoing chemo treatment and it's probably been out of pocket last couple days so also in this place and I was one hundred over to our guarantee of a Mr and I can come in if you like but go ahead. Thank you Mr chair house bill seventeen oh three we provide for the federal requirements for reporting of gambling winnings as well as the Withholding for gambling winnings to mirror the federal government as a as a result of the Arkansas voters have enacted casino gambling within the state of Arkansas previously we had electronic games of skill and there was a withholding mechanism in place but of course all those EGS licenses now of all been converted to a casino gaming license so what we're doing with house bill seventeen oh three is just a mere exactly what the federal government requires for reporting gambling winnings as well as withholding were applicable would be happy to answer any questions. Senator Ingram yeah of course it's just the same thing you're doing with dogs and horses now for big big just exactly that that's correct Senator Ingram everything that the the casinos are required to report to the federal government and do withholding we are nearing the exact same requirements so the casinos would provide the same information to the effect. Senator John. Thank you Mr chairman of. Mister Mister at the minute I'm kind of behind the times on some of these casinos to try to heal myself of some of that but only on games that have a progressive like the. I'm member could Caribbean stud poker was one that you like a side bet and you were basically paying into a pool of multiple Progressive pool up and these are large winnings like to save one hundred thousand dollars if you had a royal flush or something like that Is that is with this supply that withholding apply to those types of winnings because they're not just paid out you know in chips at the table because it so obviously someone I'm just curious how those types of things to be treated just like you know the the large you know winning ticket on a horse kind of thing like that and just just for clarification the distant which or understand your question is this an electronic game that you would as a progressive jackpot or something different kind of a hybrid yes okay you actually pay playing with your playing poker against the the dealer okay but every hand you you drop an extra dollar chip into a slot and it. Goes into a progressive bill and I guess multiple casinos or. All tied together on it. So that for purposes of roof of reporting and right now there's not a requirement to withhold on those electronic games with there is a requirement to report their winnings that if they need a specific threshold it sounds to me what you're describing is some type of electronic game but there are also is it a separate requirements for poker tournaments in terms of reporting it has a different threshold whatever whatever the the casinos are are withholding reporting we're just going to mere exactly what defensive whatever whatever the three casinos are doing and providing for the federal government they're gonna do the exact same thing for us withholding is is generally only required in certain types of games or if the the the battle or does not provide information to the casino about who they are and in their tax information so withholding can occur then you have automatic backup withholding but I it in terms of your specific game I'm not as familiar but whatever and there are others that work on a similar thing I'm just curious that was the only one I and they may have changed how they do all those yeah I have not been to our new casinos of the State of I've only been once and and I didn't I didn't get to stay very long but I'm I'm not aware of all the different different games that are played but certainly whatever the casino is having to do for the federal government they're going to do the exact same thing for us for for providing the information now they have a of course they have a higher withholding rate for the federal government has their individual income tax rates are are are much higher than they are but are withholding would be at the top rate in Arkansas with his I ask this because of time but do we still allow did of deduction for basically that your winnings are taxable. minus your your what you paid and we still do that that's correct gambling losses are deductible so if you were. Say I had a membership card I'm. Preferred player in that Safira car whatever I show my card and I given the hundred dollar bill they give me some chips the network they recorded that I played in a hundred dollars I could access that information and. And that would be my pay in the pay out would could I could deduct that hundred because I would have some electronic record in their records that I paid in a hundred is that that's correct but only to the extent of your winnings is that right I stand so you can only deduct you could deduct against your Get your wages I understand other income options thank you thank you Sir thank you report. Sperber time which motion. I have a motion do pass from Senator Ingram second motion Caldwell or discussion on the motion saying none all in favor say aye opposed no. Congratulations representative Jett. Time well spent thank you Mister you guys did great work down here on my that. Yeah I consider the source. And with that. We are joined.