Revenue & Taxation- House

Match representative Jett does everyone have a copy of the bill. Now. Yes it does a hold on. You look for impact statement do you have one. Okay do you have a Izard impact statement on the. Is it on the way over to you we have paper copies of it. Well let's let's go ahead and get it distributed. And also Mr your indulgence was as Paul come on down to win against okay because we ask questions as well. And what we get this copied of this first if you want to go ahead and continue yes Sir but we we want to we will finish tonight with the impact statement thank you Sir this bill essentially raises the cap on the historic tax credit it also allows for the Division of heritage to use the fees that are collected for administration of the program and it extends the sunset provision from twenty twenty seven to twenty thirty seven and I'm just really pleased to be able to speak with you today about something that I'm I think it's very important and impactful for our state I know that we share mutual goals to create a state that is attractive for investment and business growth that offers good quality of life enticing people to live here work here and raise their families here. At the Department of Parks heritage and tourism we work across the state and towns big and small to identify protect and promote the best of Arkansas frequently we work with residents and business owners to revitalize communities. One of the most effective tools in our quiver it's the state historic tax credit. And twenty twenty you all may recall that you authorize us through the historic preservation program to conduct an economic impact study on the effects of our historic preservation programs including the state historic tax credit this document was distributed to you all at the very beginning of the session. And I we were able to hire a company called place economics that is a highly regarded company that does economic analysis on the impact of historic preservation across the world I won't read the entire report to you all but I do want to improper provide some very important specific data points that were realized to add this study. First of all large while large scale projects get the most attention as a regards historic tax credits nearly seventy five percent of all state historic tax credit credit projects have taken place on income producing projects with project cost below five hundred thousand dollars. So the lion's share of the projects are what we would consider a mid size project sixty one percent below two hundred fifty thousand dollars. Naturally tax credit projects are more prevalent in central Arkansas including little rock in hot springs but this tool has been used in all regions of the state. Importantly and this is a very important point I want you all to hear over the life of this program for every one dollar of foregone revenue to Arkansas state Cobb coffers in the form of a tax credit. Roughly ten dollars has been made in private investment. So for every one dollar invested ten dollars is returned over the past five years the rate of return has increased to roughly eighteen dollars in private investment for every one dollar invested. As you know the cap on our tax credits is currently set at four million dollars annually we are asking you to consider raising the cap to ten million dollars annually. For your information we've already expended four million dollars for fiscal year twenty one. We've already ex met the cap for this fiscal year so the fund is depleted as of now. And for twenty fiscal year twenty two we're currently at two and a half million dollars with fifty one approved projects in the queue. As you can see there's a great demand for this product. This bill as I mentioned extends a sunset provision and it allows the Division of heritage to be smart about the use of the fees that we charge to administer the program that allows us to cover the cost of staff to administer the program. So enclosing thirty nine states have historic tax credit programs I can assure you that we feel very fortunate to have this one I thank you for your support over the years it is a proven effective tool that leverages private investment in the state. The state historic tax credit we see a solid returned to the treasury we see new jobs created and we realize community revitalization and the protection of our most treasured historic structures thank you very much for your consideration. All right members for bring Paul gearing up they will get any questions for either Victor hers for represented yet. Preventive war you're recognized. Thank you Mr chairman. I know that and I love what you're you're sharing. And I know I've seen this before but do you know how we. If we get to the ten million how we compare with contiguous states. I don't have the full facts on that I know of few states for example Missouri I think it's is up there tax credits I don't have a cap actually I have a some understanding of the Texas credit and that is substantially larger Texas is substantially bigger than we are and as I noted I feel fortunate that we have a four million dollar tax credit here in Arkansas but as demonstrated by the request for our credits for this program I think we can accommodate substantial increased activity and so I anticipate that while we won't immediately jumped to the ten million dollars we will certainly grow and to meet that if you all would allow that. Thank we can provide you let me say we can provide you a full list if you all would like to see that of our budding states and what their tax credit programs are. It also I might add I will represent did you go out to South Carolina couple years going as you sail member that South Carolina was big in this program and and took a look at Boeing everything on down to smaller companies took advantage some of this stuff so this is a big economic incentive package for the state. Representive late you're recognized. So is that the person that donates to the program against the tax credit. It gets the tax rate. I'm who what that person the developer whoever does the project whoever makes the private investment those investors so yes Sir okay. So then. Whatever he pay well ATPases people that pay taxes on that. I would assume so yes Sir. Any other questions. Four bring Mr gearing up. Represented by your question. District a question about the state tax credits by county and the federal tax credits by county it are these two documents in relation to this bill. I don't see what you have a president. yes Sir that's correct that is correct. I think staff and I'm out on behalf of split right. The staff you. Where did okay from her. Our thank you there is because you can you can verify that right. What those okay okay any other questions for go to securing. If you're if you cover the table identify yourself. Thank you Mr chair members of the committee Paul guarantee FAA DFA issued a fiscal impact statement for house bill fifteen fifty five. As noted in the prior testimony the a four million dollar cap has already been reached in the current year and the four million dollar cap was reached in the last year so are revenue impact is based upon the increased utilization of the credits a clearly there is a demand for additional credits to be issued for these projects we're estimating FOR FY twenty two if House Bill fifteen fifty five would were to become enacted that the revenue impact would be one million for FY twenty two in FY twenty three that would increase to two million and then FY twenty four and after three million in general revenue per year. I'd be happy to answer questions about the fiscal impact statement. The grew you're recognized. I just had a question this is a. I've used the historical tax credit up on three different buildings and Hans Brian just been a great thing for for my company we've been able to it helped us along with the federal to be able to do the project but the return of the increase on the property tax the income tax and all that I wouldn't of thought that been a reduction I would have thought that would be an increase. So I'm just I'm just curious to see have you figured all that. Increase in a representative at the revenue impact that we issue for tax changes they are ecstatic impact they do not take into account increased economic productivity but certainly from the perspective of when our tax credits or are audited By either a third party organizations or by the General Assembly of course we're looking for tax credits and incentives that have a positive economic benefit to the state. Despite our go ahead did you say in mantis and I do appreciate him but it's definitely resulted in me paying more out over a period of time that it is in and I think it's a great a great. This is a really good thing thank you. The reddit obeyed you have a question. Just a question on the tax credit program are are these awarded on a first come first served basis. They have been server because and we have not met the cap other than last fiscal year this fiscal year last fiscal year and I believe one time in two thousand and nine or before I mean maybe maybe two thousand and nine the point is that we have we have been able to accommodate all of the tax credits in previous years now that we have More demand than we can accommodate we consider things like economic impact community impact and other factors so that is how it is determined at this point. Your follow up I do that I was just noticing on the charts that were provided I see very little of these tax credits in Southeast Arkansas as one or maybe how we could maybe have some outreach in in my part of the state so that we can take advantage of some of these credits but I see you know out of the seventy five counties we have about twenty eight that take advantage of this other forty seven that are participating that probably have some the so what can we do to expand that I certainly appreciate your question on that yes Sir and and through this economic analysis and the study for this bill actually but we have re committed ourselves to do more outreach help communities again large and small to take full advantage of this task tax credit and some of that has to do with our outreach with mayors county judges and others establishing historic districts working with local property owners to get properties listed on the national register and then showing them how to execute a tax credit application and working with them on that so I yes I appreciate your question and we have committed to do so. Good representative thank you all right any other questions before we get to the public. Seeing none we have nobody to signed up to speak against but we have a Rachel Patton. Is Pat if you come to the table. And identify yourself in you can proceed with your testimony. Hello good afternoon Mr chairman and committee my name is Rachel Patton and I'm the executive director of preserve Arkansas the statewide nonprofit advocate for historic preservation. Thank you for the opportunity to comment on house bill fifteen fifty five. The state historic tax credit is a smart investment for Arkansas it is an important financial incentive for property owners developers and investors who seek to revitalize our historic downtowns and neighborhoods both urban and rural. The credit leverages private investment creates jobs enhances communities and it preserves our heritage. As you've already heard from secretary Hurst the state historic tax credit generate a good return on investment for the state of Arkansas. But I want to re emphasize one statistic that in two thousand nineteen for every one dollar in tax credit issued by the state of Arkansas the private sector made investment of nearly eighteen dollars so for four million dollars in tax credits that resulted in nearly seventy two million dollars in private investment in Arkansas. Not to mention the benefits of rehabilitated buildings job creation and income generation. Arkansas is blessed with an abundance of unique historic resources that make our state a wonderful place to live and to visit. It's time to improve the decade old incentive that allows us to keep these assets and good use. I appreciate your careful consideration and support for this bill thank you. Any questions for miss Patton. Seeing none thank you for your testimony thank you and we have also Patricia Blick. If you come to the table ma'am. And identify yourself then you can proceed with your testimony. Thank you. Mr chairman vice chairman representatives thank you for giving me an opportunity to speak in support of house bill fifteen fifty five I'm Patricia black the executive director of the popcorn Association we've been advocating for historic preservation of little rock's resources since nineteen sixty eight Secretary Hurst and miss Patton shared the state historic tax credit is a vital incentives for historic preservation throughout Arkansas to include greater little rock our area of focus we appreciate the testimony which is echoed by many homeowners investors and developers who are currently unable to receive tax credits for completed projects since the allocation for fiscal year twenty one has already been fully awarded right now we know that projects are suspended new projects are not initiated craftsman contractors have been laid off and we may lose historic resources raising the cap which is not been increased since the program was started in two thousand and nine is needed to create jobs invest in our communities and save our heritage thank you for your support of house bill fifteen fifty five. Member of any questions for Mr Blix. Seeing none thank you for your testimony thank you we've got Tom Maher. If you don't pass okay all right do we have anybody else that would like to speak for against Sir if you go the table indemnify yourself. You speak for against okay. You get in there and identify yourself you continue. Hello everyone my name is Nathan George and my family and I own and operate a business in Russellville Arkansas that was able to Benefit from this program I say benefit in that we have yet to realize the benefit from the program because our program was in twenty are are renovation was in twenty nineteen we did a three hundred fifty thousand dollar renovation to our property in downtown Russellville and we have yet to receive tax credits for the Renovation of from the state because of the cap and so we are one of the businesses that while we believe in this program are kind of in a set back especially through a pandemic in twenty twenty many of you I know have I assume have businesses that you had to go through the pandemic and figure out how to manage it through those processes and we took a big step in twenty nineteen unaware of how twenty twenty was going to affect everyone however because of the renovation or property we have received extra income so it was a blessing but it would be nice to be able to realize those tax credits through the state and like I said I said three I believe in this program so much that I joined our local historic district committee and since twenty fifteen in Russellville we have realized over five million dollars in our local economy through renovations through this program. Any questions for Mr George. Review the Mayberry you're recognized. Thank you I I'm just curious so with this you can go could you talk about twenty nineteen the project is complete. So you can go backwards and get that tax credit if because of the the cat with me that's good news I'm just curious because I I haven't heard that is part of the conversation we we were not aware of that when he and so in in June of twenty twenty one we were expecting to receive now the people that helped us through this process amber Jones I don't know if you're aware of her but she was very and up front and saying Hey you're not gonna get your money this year but you will get your money next year and I'm assuming that's why before the into you know this close to beginning of the year that twenty twenty one the papers already become close to the cat because there are several people from last year that did not receive their funds and that's just an assumption of mine The. You're good repair Mayberry any other questions Mr George. Your preview coming for your testimony today than anyone else need to speak for against house Bill fifteen fifty five. Rigid yet you're ready closed I am sure for members that you've heard some detailed explanation about how serious this is and how much impact not not once again not not different IT but when the face or something they scored a static since they don't have the ability to score dynamic scoring office was scored dynamic scoring you to see this project would actually be worth multi millions of dollars coming back into Arkansas economy and I think your testimony that I dislike per state madam secretary Christian racial and John's coming down to testify for the bill and as we go along and put this into consideration on the bills or let others committee here in the next week or so I would appreciate a good consideration this bill because this this is a good bill for the state of Arkansas that Mister Speaker I mean Mister chairman I'm closed all right. Members will go on to house bill seventeen seventy eight four front taking of only these today that a fiscal impacts and riveted Jett you've got that too. Mr president Mr chairman members house bill seventeen seventy eight as once again this is not a bill that were laid out take a vote on Davis has a fiscal impact to and I think I have some folks are going to survive this today. We do have the fiscal impact in our package if you do not have one raise your hand will will get staff to give you one point seventeen seventy eight. Login. Right. All right Mister recognized thank you Sir. So members of the State Farm State Farm bureau folks have come to stay far from folks were come from for the event yes and no no well I get to know you know since since since since you got a five I was thinking is durable tax credit we will Tatian was used thank you maybe as a facelift airplanes for you something but wasn't sure about that. But not so far bills post but this to me and this probabilities bills we might have to put in study yet in the session come back maybe just wanna run this bill get everybody kind of talking about because at the end of the day farmers and rural Arkansas I think the average age of a farmer right now it's probably around sixty years old but my age there's not a lot of new farmers coming in is so capital intensive to get new farmers company and not less you have a dad or uncle or family members that can set a new farmer up this just about nonexistent so um so they brought me this bill and I thought it was good just to do not build a have a conversation maybe something down the road where the state can actually take A stake into this matter and try to help out but the general off my site not my lifters one Anderson self and who explained ability. I feel that if I yourself you can continue. Yes thank you for letting me be here rusty Smith I'm a farmer with my wife and son over and Cotton Plant southern part of Woodruff County and he did part of testimony for me about the age of farmers we're over over the age of fifty five more than half the people in the state and I have hit that number senator say I moved it to Cotton Plant in eighty nine and my in laws were good enough to take me in it and uh teach me and were patient with me and Here I am coming close to due to the end of my career thank you for bringing this this bill forward I've been blessed that that my son's Act have got three kids two of them went off different direction in the world. My oldest son's Acree is chosen to stay on the farm and it's been a blessing to watch him grow and and his mind and is back to make it makes living in and grow food for for all of us you take secretary of the of the equation if he chose not to come to and and stay home stay in okay I can see in four five six ten years down the road all I can do is have a sale so must of and bring in the neighbors OR someone local. Bring in bigger equipment of bigger faster stronger and the help that I have would probably be let go not needed of and what happens is you know our small communities are losing people. This bill will allow a retiring farmer or rancher How to do to reach outside of his family hopefully go to a far to the FFA group for each group or even of a kid that work from through the through the through the years and summers to help get back this is to allow them to find someone. Give them a tax credit on the retiring side as well as a credit on the beginning farmers the idea is to give these small communities a small chance to keep some very young people a bit bit teller or success or Cotton Plant or Brinkley or or Crossett of where the case may be this this bill is not row crop specific. cattle livestock it can it can go whichever way it needs to go like Sam blessed I have a son staying this bill will not affect me personally at all of. We just need help I'm not naive enough to think this is this will. Keep our committee our small communities growing but any little bit that we can do to help them are our rural communities are suffering and with that thank you once again let me speak to you and thank you for bringing this bill. You identify yourself my name is Jessica Clouser Beckham I am the director of policy development with Arkansas farm bureau and. Good afternoon Mr chairman and members of the committee and and thank you representative Jett for bringing this bill and before I so I am here today representing or more than one hundred and ninety thousand member families from across the state I come before you to speak in favor of each B. seventeen seventy eight which aims to assist beginning farmers through several income tax credits in Arkansas is rusty alluded to fifty percent of our farmers are over the age of fifty five and of this distant statistic twenty three percent or nearly half for over sixty five years of age compare this to less than twenty percent of our farmers and ranchers are under the age of forty four. Meanwhile the price of Arkansas farmland has only increased from roughly twenty five hundred dollars per acre in two thousand eight to nearly thirty five hundred dollars per acre in two thousand twenty. H. the seventeen seventy eight aims to help the next generation enter production agriculture by removing some of the existing barriers to entry. Specifically the bill establishes an income tax credit for beginning farmers who participate and a financial management program administered by the Arkansas department of agriculture the bill also creates an income tax credit for established farmers who sell or rent. Assets including farmland livestock buildings or equipment to beginning farmers. Under the bill a beginning farmer is defined as someone who intends to farm in Arkansas or they have been farming in the state for less than ten years they have a household net worth of less than eight hundred thousand dollars they provide the majority of the day today Labor and work and management of the farm they have adequate farming experience or demonstrate adequate knowledge about farming. And as I mentioned earlier they have to participate in the financial management program approved by the Arkansas department of agriculture. Also under the bill the owner of agricultural assets who sell or rent to a beginning farmer would be issued a tax credit in one or three ways one of three ways either five percent of the sale price of the asset. Ten percent of the cash equivalent of the gross rental income of the rental agreement or fifteen percent of the cash equivalent of the gross rental income of a share rent agreement. Recognizing the current age of our farmers and ranchers and the challenges it presents Arkansas farm bureau members adopted policy led by rusty and and his peers supporting a tax incentive program for established farmers and landowners to sell or transfer assets to younger beginning farmers additionally our policy supports tax credits incentivizing younger beginning farmers entering into production agriculture or expanding their current operation. H. B. seventeen seventy eight directly addresses these policy statements and we're very appreciative of representative Jack for your work on this thank you Sir even get started in production agriculture high amounts of capital are needed H. B. seventeen seventy eight gives beginning farmers a chance to pursue their passion on a level playing field from bureau encourages encourages you to support this legislation and thank you for allowing me to testify today and I'm happy to answer any questions. Okay members have any questions. Rosa McElroy you're recognized. I'm a little retired farmers that so let me to value just a moment and I'm printing mount farm that. Okay we've got a a young upcoming young man working hard well to start farming Review macro let me stop you right quick. Of the the two speakers you'll turn your Microsoft I think we got to okay. And the. they don't really have a track record you don't know yet so this is it incentivize me to take a chance in and even with him not having a track record I get a tax deduction a a tax credit for running him my property or my rent is that correct. Yes Sir so under eight rental agreements you can get up to ten percent of the cash equivalent and you could you have a fifteen year carry forward of that asset so you don't need it that the tax income that first year you can carry that forward up to fifteen years that that is a great a great program that when the when informing those same way in it it's it's such a challenge back then back then it in takes exempt many assets to get in the business now now if you you don't have a family member that's willing to mortgage his farm thank you get in the business is almost impossible so and I really appreciate your rainy as Ford I think it's great you thank you. One other comment of. This is not this is not novel how will Minnesota Nebraska Pennsylvania and Texas just to name a few already have products already have these programs in place and we're we're just we're just late I guess to the game but we're not we're not blazing new ground but we're. Plowing ground that needs to thank you thank you so much. The representative Cllr you're recognized. Like representative McElroy also have a extensive farm background. for my colleagues here the start cost in farming if you're going to make a living at it would be some of the highest start up cost of any industry out there but my question is this do we have any numbers on the this definition of beginning farmer new farmer those that are coming in what's a breakdown of how many of our family. How many maybe just new corporations mergers coming together and how many are foreign do we have any idea in those areas. No Sir we don't have those specific category breakdowns now the latest census of agriculture that came out in twenty seventeen and showed a five percent increase in beginning farmers from the previous twenty twelve census of agriculture but in terms of that actual breakdown of family. That trends you know new new folks coming on board know that that's not a breakdown but that's certainly something maybe we can work with and the U. of a and some of their extension assets on identifying those numbers. President of eve you're recognized. Thank you Mr chairman I liked the idea and the seller gets really good program what water safeguards or they're in place to say prevent a large landowner that you know guy owns twenty thirty thousand acres to setting up a bunch of different companies to meet his family or friends and calling them new farmers and and you know leasing out five thousand acres ten fifteen times on his own property when that's happened in the past you know in on a federal level to some of these guys don't quite a bit of property they were setting up separate companies for people that work for them is there are there any safeguards in place so that we make sure that the people who are are getting this tax credit are the ones that deserved it and and and are benefiting from it. Thank you for the question and so under the text in the text of the bill they lay out the parameters of what it beginning farmer and must be in those are some of the things I I went through and it's up to the department of agriculture to certify that that is the beginning farmer and there is specific language in the bill that prohibits family members any type of relation so I don't know this but you know the specific answer to your question I think it's it and extremely important questions it would probably fall to the department of agriculture and some type of audit that they would do to ensure that taxpayer dollars are being utilized in the most appropriate way possible that this program is not abused do you so the criteria for what you're concerning new farmer do you do you know what those are I mean I guess I could read the bill that you tell me what that is absolutely so under the bill I am someone who intends to farm in Arkansas or they have been forming in the state less than ten years they have a household net worth combined net worth of less than eight hundred thousand dollars they provide the majority the day to day work they have experience and then they have to participate in that financial management program that the department of ag has to develop for that okay so the those all makes sense but but except for one you said farming for less than ten years I mean that someone farming for nine years would be considered a new farmer under this language yes. That seems like the kind of experience I mean it at that time I'm not a farmer maybe purposes that can answer that yes rest rest I think that's a great question for you to answer in terms of your son's been farming for years but he may have an opportunity as a young at the beginning by He started he got on to come by when he was twelve Stayed with me all you know to his high school career played sports you know thing what would University and he'd been out on is with the co op as well as farming so I guess you could say he's been farming at least ten to twelve years but he's nowhere near that the financial side yeah that makes sense the other labor the labor portion is there he can do that but the the financial side it and not knock and mon sun because I'm weak there's well but the ten years maybe maybe the law of the we use some of the parameters that the other states are using you know that you know I don't think that tennis. Okay so right right right others just takes it takes a long time right other states have used this ten year parameter server and have had no issue with it okay I'm not to say that we need to just be a blueprint as you know other states but just as an example we follow back up on what we talk about a second ago when you mentioned your family members would be excluded is that what you said what what about their employees of a like I mentioned order large landowner or large farmer I guess I mean I kinda want to dig into that a little bit about how we're going to make sure that the the people that you're intending to benefit from this program are going to be the actual people that benefit from it not. You know I just set up of a guy leasing out ten tract of land to his own employees. Short and just re familiarizing myself with the bill it's basically says you know it's not related to birth in eighty two and the the asset owner or the agriculture asset owner it does not specifically mention and. A employee it says with me real quick. Income tax credit section. So that they can be if they are a partner members shareholder trustee of the owner of the agriculture assets so that would allow employees and for partners yes Sir how do we prevent what I'm describing happens. Because I'm a. Total support bill but I want to make sure it gets where it needs to be how how do we prevent someone from breaking up a large farm into a bunch of little small ones for their own employees and then this guy gets you know ten different tax credits of up ten percent the rent he's charging I guess these can other companies sharks sharks a representative Jett do you have any for that and I'm not trying to put on the spot I'm totally supportive of the bill I just want to figure out that. And maybe some of these other states have faced this too will represent Asia I would say I mean part first of all this is just a bill that we're just putting out there so we're not nothing's nothing's concrete in a bill right now but also on the federal farm from if you sign up the if it's safe for example ministerial guidelines that that says that right now that you got to be like you're gonna direct payment check for example you got to have active actively be math and management so many Amiga Act if you ever get out of the by these guys you understand because I've been through one is August cost about thirty thousand dollars go through any spent a lot of with that they will come back they're going to ask you how many hours you actually manage what and that they won't detailed explanation and I could see this that secretary agriculture was workshop sending up something that would model on the federal side to keep people from now this problem everything right I mean we we all know that nobody's Center trying to say this I would be maybe absolute I resent fraud proof but I can see this program model on far as the federal FSA programs thank. Representative may very good question. Thank you Mr I was just wondering you mentioned that they're it this was in other states do they use the same percentages that that the credits the five percent to ten percent to fifteen percent is it is it set up exactly the same just curious. Yes ma'am so and Iowa does a five percent on cash rent and they do you a fifteen percent on share rent Nebraska does a ten percent on cash rent in the fifteen percent on share rent Minnesota the same ten percent cash rents fifteen percent share rent and then they also have the five percent in the in the actual sale of of the asset and that's the same for Ohio so very very similar looks like Minnesota Ohio and then representative jets bill all and include the five percent for the sale of assets. Good. Chairman also swung back up to just very British couple points representative you talked about the ten year ten years I would say you know most like my my son's coming on farm it usually takes about around ten years really grasp of this of this complexity because you're dealing with finance you don't chemistry dealing with the whether you're dealing with the extreme agronomist conditions just I mean you name it so usually if you look around farm countries most of the time a young man or young woman coming into the industry usually around thirty years old before they really start. Sign in the bottom line it to check if you will in and one reason why this bill is so important is because these numbers are not absolute but I would say Justin rice country row crop farming rice country you say most on average farm probably around twenty five hundred acres well it's going to cost probably about one one million to one point two five million dollars for it per thousand acres to operate so you know you got to thirty year old young man trying to get into the farming industry and although he's been on a farm for say eight nine going on ten years but it was still in the big scheme of things is only thirty years old one thing also remember on a farm I read about this stuff all day long but most businesses most businesses you have multiple multiple times to make. Make your money at Pratt okay so I have farm to allows for it but fifty five years old when I retired Sturch about twenty to twenty right so obviously got to thirty years in so I had only thirty chances to get my stuff right because you only get paid once a year at so any other business out there it whether you're a doctor lawyer you work for somebody you sell trailers you can make money off the trailers in the farming industry you only get one time per year to get this thing right into my my business only had thirty cases to get right so make sense so that's how serious this is to get young people in so now I want to back up and I say for example I say is going to a per thousand acres about one to one point two five million dollars We got to remember that you know they testify that most farmers are my a sixty years old or over. The gross domestic product in the State of Arkansas is very culture is one third so now we're saying it is is. Ford or GDP for Arkansas agriculture brings in one third of that in so we're went right now we're based at one third of our gross domestic product dependent on people older than myself older than Lane Jean up there and that's pretty significant you know it's you know as we're we're we're not going to hit it we're not will keep hidden and so that's how come this bill is so important because trying to get the younger farmers involved in the best way we can do that so. You have more questions riveted clear what women if you'd me. Everybody was referred. Are you reporter you're you're recognized. Representative Jett if you want to shop for new combine today will be the ballpark you be looking to sign five hundred fifty thousand that header when I first started farming nineteen eighty I come back from the Force Navy to learn the life and had kids and all that stuff and got caught in her technical distracts hold back on what my father law on a farm but nineteen eighty four about my first combine brand spanking new combine I paid thirty four thousand dollars for it was all the money in the world less complex combine about was five hundred twenty thousand so much as the header it add to it depends on the type where you get I mean anywhere from a new header probably seventy five thousand fifty thousand dollars so basically the eight hundred thousand dollars mass that was talking about want to go is one piece of equipment pretty much and runs that one piece equipment runs pretty much may be in in the in the cycle of farming maybe thirty five days three three on our combines in our farm will put three hundred hours a year on the combine not the time when I retired farmers from a thousand acres we had two three combines but but that's maybe a little bit put in more hours on the combine them the average farmer I guess I don't know Resi probably tell you more about that is is much as I can but restaurant hours for five hundred thousand dollar piece equipment the cost. Of this pretty expand you know assistance this is a high intense Thing that we got going on here but obviously like I said you know this brings in one third of our gross domestic product Arkansas without this Arkansas all Arkansas is in trouble you know. We got two more questions we got three more now or representive McElroy your next. I just wanted to touch on something we talked about not letting employees get involved I think that's a mistake because it's hard enough to find employees on the farm now in its kind of like their previous few when they come in they learn on the farm I've seen some good folks working on the farm but they just didn't have the assets didn't have a family to get informed as so what do we do please don't lock them lawyers that. Like you have to thank you to my cousin got double because of the he actually a long time employees little or not I am retired as long time employees set him up farm pharmacists of Soviet because you that a lot of folks don't have signed your kids or daughters or anybody Merion in Iowa that they don't want to sell out because obviously when you sell out this you got three four five six million dollars over the quickness and out there when you sell out the taxes will kill you. You too reprimand or Roy. Riveted Lynch you're recognized. So when I look through here I'm trying to figure find were the new farmer himself benefits from it is it is it stared towards the people that only assets encourage them to fill the new farm. Yes so and the bill does establish an income tax credit for beginning farmers and if they don't need that. At a specific income tax credit and one year they have a three year rolling with that thing and. It's going to be established by the. Secretary of Agathe my understanding representative Jack under under your bill and and it doesn't include specifics I guess are all let you speak to that it doesn't. So if I'm a beginning farmer and I'm apartment twelve hundred acres and I make eighty thousand clear after I pay everything all. And then I pay my taxes that were critical. So it says on page for the total amount of the income tax credits allowed for beginning farmer may be claimed I'm in a tax year shall not exceed the amount of income tax due by the taxpayer. That in Sir so so so much represent Lynch I mean was bills written be drafted this the new farmer can capture tax credits and the landowner somebody set them up also capture the tax credit that's what I'm trying to figure out has the new farmers okay great I don't see that in here. I see that one line but it didn't tell me. What is the the qualified or tax. Yes to qualify for a tax credit by needing those beginning farmer criteria that we discuss that okay so what is it how to get the credit I think what is life it doesn't have any specifics on their okay so who develop those president will let's will come up missing and studying and working through that okay I got to yeah this is just a minute we're commercial. No we're not we're not here to vote on this is just something to be aware of that we have a series from the state of Arkansas and then we're gonna put forth this really at this section of my sons is forty years of former right now he's just hit a million dollars in used equipment yeah because they can't afford it he's twenty nine years of. Bills may end up. It scares me to death. Yeah all right of revision Garner give question. Thank you we've been talking about traditional farming which I'm all for this bill we are in Northwest Arkansas and have local. Restaurant with local produce we use hydroponics aquaponics all those kind of things are those kinds of things also included in this bill so that some of the nontraditional farmers could be we're having problems getting let us now because our hydroponics folks can't get us let us all the time so. I mean it seems like it would benefit those guys as well. Absolutely yes ma'am under the definition of of agriculture in the bill it does include timber field crops tobacco fruits vegetables nursery stock ornamental shrubs ornamental trees flowers and it does encompass the entire broad okay sure agriculture. Thank you pretty much anything falls in the office sector agriculture disk and my other question was the the Department of ads financial education or is that depend on the education prior to or I mean we're graduating a lot of farmers they don't have a place to go and this would this be an addition to any type of you know junior college undergraduate each technical school it would just be a financial management program now Ohio they're going through a similar process and and and they mentioned partnering with their land grant universities to help develop that financial management programs and maybe that's in the any and in the study that we could if representative is obliged to look at using utilizing our our land grants and developing that it might its financial management specific. Resented vive you're recognized. I just wanna say to chairman Jeff I appreciate you bringing this bill clarifying that I think it's a great idea and it's a good forward looking bill I know that's really important my question is if you you said you had at thirty chances to get it right how many times you get right of those thirty thirty one there you go. His modest off. All right members we're going Mr Paul gearing is signed up to talk about the fiscal impact let him come to the table. And then we'll wrap this up with the closing would representative Jett. I'm sorry Mr. Say so as to Mister Gerry will come talk about the fiscal impact. Thank you Mr chair members of the committee Give a issued a fiscal impact statement for house bill seventeen seventy eight we looked at the various information from the department of agriculture Arkansas farm bureau University of Arkansas department of agriculture as well as the information that we could find regarding the Minnesota tax credit program we anticipate that the revenue impact for FY twenty three would be eleven point five million to general revenue FY twenty four twelve point nine million two G. R. and then for FY two thousand twenty five in following years fourteen point four million would be happy to answer any questions about the fiscal impact. Any questions Mr Gehring. But the debate you're recognized. Question on the revenue impact on the eleven and a half million I see how the the calculation could flow for the owner of the agricultural asset but on the beginning farmer where it says As allowed an income tax credit equal to the cost of participating in a certified financial management program can you break that out and tell me what that that portion of of of that calculation would be yes income tax on the on the second page of the fiscal impact statement on under the explanation of the revenue impact we broke it down into into three sections we provided that the the beginning farmers with the three year carry for tax credit was an estimate of of four million dollars per year of that. The initial eleven point five million for the five percent tax credit in section to their regarding the sale of agricultural assets by the owner or to a new farmer and the estimate was six million dollars per year and then of the ten percent of gross rental income for the first three years or fifteen percent of the principal of a share rent agreement. We anticipated the revenue impact would be one point four million for the first year two point eight million for the second year and four point two million in year three and following so with the revenue impact for each of this these fiscal years is just the sum of those three individual components we used information from that we were able to find from these other sources in order to arrive at this fiscal impact and we do have some other states that have similar programs so we we use that information to derive our fiscal impact of course we do see that this from conversations of this bill this there may be certainly changes that might occur while this bill is studied in greater detail but we we wouldn't have any data within DFA's current system on on how to measure this because this would be a new credit. Your follow up. At a with that I mean I I read that in in on the second page about the four million I was I was hoping maybe for a little bit more break down I think it's an excellent bill but when when you look at the limit of a twelve million dollar total I think it's a better deal for the owners of the asset then the the the beginning farmer so I I I was just looking for a little more information on that four million dollar section sh and how you have that that that portion sugar certainly of representative will be happy to I'm happy with the income tax section to get all the that the season for the data that we utilize to get to that four million dollar figure would be happy to share with you as well as the other members of the committee what just again the state I think it's really great bill I I would just like to get maybe in the weeds a little deeper I understand yes Sir. Any other questions for Mr hearing. Seeing none is or anybody in the room they will speak against this bill or for this bill. German Jett you're recognized close thank you Mr chairman of members appreciate your diligence and they concerning this bill speaks highly for you guys we're trying to accomplish here in this committee but this bill be going on in the study and and maybe trying to bring this thing back in earnest for next session to really try to compensate them for the young farmers State of Arkansas that Mister chairman I'm closed. Thank you chairman members for that Mister chairman come back up to the seat we're going to take up house bill ten forty three read in the group that your bill. Clear skews me provision the clover go then the table. Okay. Representative right you're recognized okay. US bill ten forty three has to do the statute of limitation a collection of certain types of taxes and there's no revenue impact and I will turn it over to Paul let me explain okay. All recognize yourself okay thank you Mr chairman members the committee Paul gearing DFA I would like to thank representatives McClure and representative Jett for agreeing to sponsor this legislation on behalf of DFA what this legislation is is trying to address is currently right now for ad valorem taxes that are assessed by the Arkansas Public Service Commission DFA has responsibility for collecting those taxes so when assessment is final at the public service commission that that amount of debt is certified to DFA and then DFA is the collection agent for those taxes. What has come up from time to time is that there will be an assessment from the public service commission that was not a at an actual contested matter that becomes a final assessment DFA is tasked with collecting that debt however the taxpayer has will approach DFA and say I'm sorry there was a mistake in my return that I reported to the public service commission sometime it's it's a matter of a multiplying their liability by a significant amount but currently within the Arkansas Tax procedure act DFA doesn't have any authority whatsoever to consider any additional information that the taxpayer may provide to us that would give them relief from the assessment this bill does not create any type of new hearing mechanism within DFA but if the taxpayer comes to us as there is a problem with the report that I filed with the public service commission there was an inadvertent error I really only a couple hundred dollars but what this assessment is showing is actually a couple thousand that's incorrect this would provide DFA with the same legal authority that we currently have under the tax procedure act for when a taxpayer make some type of mistake that we can consider that information and give a either relief from the amount of the assessment which is the tax that was assessed the interest or the penalty. Additionally what this bill does is provides a statute of limitations that doesn't currently exist in our law for how long these debts would should remain on DFA's books currently we have a statue limitations for the taxes that we administer income tax sales tax of that once we file a lien it's only we can only collect upon that debt for ten years with this bill would do we would create a ten year statute imitations from the date that the public service commission's certifies the debt to DFA we have shared this bill with the public service commission and we were authorized to state that the public service commission does not have any objections to this bill. I'd be happy to answer any questions about about the bill. Personally recognized. So what would happen to the debt at the end of ten years these sellers are that just go away it certain represent less currently when when for other tax debts we once were beyond that ten year period we are no longer authorized to take affirmative action to to make a collection effort on the debt so we're not going to be doing writs of execution we're not going to be making any collection efforts by contacting the taxpayer it then eventually is charged off of our books as uncollectible the you don't sell and that the godfather and he didn't go out and break are to get what he can absolutely not yes yeah we what we are we are the we are the only agent for collection of these debts we don't have any any third parties that collect debts on on behalf DFA. We reserve the questions. In writing as we speak against the bill for the bill. Are you closing your bill yes Sir closed at first okay members you have you heard the testimony we have a motion. The motion do pass any debate all in favor say aye. Those registry pastor bill. Thank you personal you go Sir. Members be house bill ten forty eight. Thank you Mr president Milliken District fifty three house bill ten forty eight is pretty simple straightforward bill of it allows Dismang to to if you have a. A tax legally after the also announcmenet on everything's been done it allows them with the next year you have a. A refine it allows them to sell your debt and they send you the difference in the revised. Correct. Pretty it's pretty simple pretty stable straightforward and and and it does not limit the taxpayer bill to challenge the pros assessment of a taxi there all the everything is completely done and then they move forward with this process. Sure it's nice to the billing questions. Paul you anything dead body. Only think that we like to add as I think that's a good part of what this bill and I like to think I represent militant million and Jett for referring to sponsor this legislation is that uh not only will this save administrative costs within DFA so we won't have to if we're able to offset a debt that's owed in the system to a refund that we owe to a taxpayer and that get is fully offset that will state say the state the expense of sending a tax lien to that a taxpayer's county courthouse in recording a lean and also even better for the taxpayer if we're avoiding filing a tax lien anytime a tax lien is filed against somebody there's a substantial hit to their credit score and from time to time the taxpayer would I would assume that if they have any any disagreements with the amount of the final assessment we're always going to be able to go back and look and see if they're if that liability that we determine for the taxpayer was incorrect but certainly this would save the hit to the credit score potential embarrassment no one likes to see their name in the of the court records with a tax lien being filed against them. Thanks Sir there's a neighbor. Thank you Mr chair I'm just curious how often you think that might actually be utilized. How many taxpayers any year. This might affect we we certainly send out hundreds of thousands of assessments in a given year to taxpayers there are certainly are going to be offsets I'd be happy to go back and and talk with her heirs personnel to see if we can find out how many actually means that we could possibly save for being filed but I have to follow up and see if we can get a number on how many circumstances that would. Okay I'm sorry I don't have that with me. Member center questions. Anybody I speak against the bill for the bill no closed rebuilder closed. Members your legislation the bill we have a motion and a motion any debate all in favor say aye opposed registry best real thank you very much. Members that's it for today what kind of taking it what I will tell you is is kind of loosely might change was gonna give our body kind of a heads up the way this thing looks like we're going to roll. On April eighth we're looking like that we're going to actually start taken. that's one of this is what was right. Okay April April that is like it's gonna be on Thursday nights looks like we're going to start taking real votes on this staff to start a correlate the bills we've held up in in the morning as staff to start email everybody on the committee and everybody kinda start putting back your mind the bills that you like the most start writing ranking on or let out here a house leadership's meeting was sent leadership tomorrow morning try to figure out how much money that we're going to try to get what I say. It shall be what talking. Lustron thought. so we will try to get the with leadership Senate house tried for how much money will lead out and then or get start getting these things right and so that might be actually couple mornings went come into start hearing bills or start on all the members because I think there's like twenty some bills out there that we've not heard this kind of fiscal impact to them I know it's DFA's probably won't hear that once I haven't scored up but so anyway this was gonna start coming us pretty fast and furious you're pretty soon and I would expect the surtax and the car tax bill to be a different four front St may when I'm talking to members of the House for members of the committee thus the two bills and everybody's asking about so I expect likes it is not in set in stone but I can X. see this both those bills been around that day along with some other bills so just be prepared to start meeting sometimes in the morning in the afternoon both to start working through this access staff will start emailing out the bills that we've heard the fiscal impact and then start getting back with my I suffragette Fortner also Jett for his wife's first day of chemo so keep him in your prayers and you by any questions.