Revenue & Taxation- House

Are you ready Sir. But you have somebody if you want to join you again the time to. Okay. Thank you Tim good January. When you get ready Sir recognize yourself go and start. I am Lanny Fite the district twenty three to my ride is Tim let alone to introduce himself here. I'm ten others within their toss here on behalf of our bin of the Arkansas beverage association the American beverage association. Thank you get a good start all right thank you Mister of House Bill fifteen forty six there is a very simple bill starting in two thousand twenty two running through two thousand twenty five years of three year phase out of the soft drink tax with the money being replaced on general revenue being placed in category a in our budget. this tax started in the early nineties is started out as a temporary tax and is supposed to last about three years and twenty eight years later the taxes still alone. there's only two states in the United States that Hasse's stacked Arkansas and West Virginia and we or three times the of what of West Virginia levees in this tax. It is hurt the ability of the soft drink industry for twenty eight years to compete with our surrounding states. It's an excise taxes we put on them. in the excise taxes is usually reserved for things like alcohol and cigarettes and we really don't care what the impact is to be honest with you also this is the if we recruit recruiting new industry in our state we would be given on tax incentives of on the local level and on the state level and now we've got a industry in our state that we level an excise tax against them. Of. The Medicaid trust fund has several of of of revenue streams coming into it. the sort of taxes the only one that is outside the healthcare industry the rest of the under that are I have a tax levied against summer in the healthcare industry. And those in the healthcare industry also benefit from that tax. You know we've been hit with covered pretty hard in our state and our small businesses or have been hit extremely hard our box stores are having record sales but our restaurants in in our home towns or or suffering greatly many closed and many will probably close in the next coming year as they rebuild is this year later in this year we hopefully things will turn to normal is a rebuild of this would be good for them they've also been hit with a minimum wage increase during this time period also and again this tax is unfair to consumers the House to restaurants and hardest hit sector during this pandemic has been the restaurants in my opinion but K. trust fund will remain hold. I know a lot of things have been said that you start correct or other that I have received of the soft drink this unnecessary and discriminatory and inflates the prices to all Arkansans the governor supports this bill for the removal of this tax. with that being said I'll be glad to answer any questions okay thank or certified to a special to have anything to add to that Sir. No Sir just that A personal note looking at this over the years which is long overdue something that we we should have done you know what you get the opportunity there's always something else competing and also to point out that in the beginning we want to make sure that the Medicaid trust fund was whole and that we maintain that and that's what this bill does so that money will be in Medicaid trust fund And when money is moved there and spend out of Medicaid it will be match just like soft drink tax the only difference is the level of scrutiny that the money gets at the additional Thank you Sir. Remember you have a question ma'am. Thank you Mr chair you're welcome Representative fight I know I know your heart I'm not trying to do any attacking I'm just looking at the bill and and all that so please understand I'm not trying to create controversy here but I've struggled with this bill because session after session after session after session we have heard that we do not want to take general revenue and slowly gradually move it over to some other fun specifically highway funds we have highway find problems and we talked about that we could even present the bill to this committee because there was such opposition to doing that and so I'm really struggling with understanding how in past sessions we haven't been able to move general revenue funds because it would be way too risky and instead we ended up passing taxes that go to things that we need like gasoline and cars and now we're going to have General Revenue move over into a Medicaid trust fund and remove some of that money that was voted on by the voters to be there to take care of our most vulnerable population so help me understand what has what has transpired maybe there is a lot more money out there that I'm aware of but what has transpired that has helped us go from. No there's no way we can transfer general revenue to now yeah this is it this is a no brainer this is easy. Okay and and I'll let Mr leathers also answer the question after I do but There was four hundred million dollars in surpluses time and what happens in government you know as I do that you that surplus will get spent will make new programs will do things and if you're going to cut taxes you're going to have to spend that revenue on existing things. And that's one reason for the three year phase out of this is to allow that for the growth for the next three years the to soften that and for example of in two thousand seventeen of the soda pops were charged as groceries and in two thousand seventeen that came office that and went to the full sales tax in that revenue growth by the year twenty twenty six should make up the difference in this right here just that along. Do you have anything you want to add on that too. You. Per the chairman Mr would represent a fight to raise the main issue that I was going to raise and that is this the industry's paying to taxes the consumers are paying to taxes in fact the sales tax calculated on top of the excise tax in there and that there is a growth in this money and I think more than I know more than DFA something that they anticipated so one of the reason we have the excess general revenue and sales tax we have now is because there's more sales tax than had been anticipated back in two thousand seventeen so they have in fact raised the money for this Monday another way and have taken care of that it's built in the budget is part of the surplus it's out there now and by doing this incrementally there's the opportunity to move that and manage it in the budget that has never been there before and likely not to be there again entity exists because the levy the sales tax on soft drinks and they're not no longer treated as for. Yes ma'am with. Area okay. I I still kind of struggle to understand how you know this is surplus this time there's no guarantee that we're gonna have start surplus in the future it was voters that voted for this because we had a shortfall and that is one area we don't want to have a shortfall in is taking care of our weakest and most vulnerable population I can tell you that right now we still have over three thousand people waiting on a developmental disabilities list waiting list waiting for services we have talked about that session after session after session and I keep hearing well there's just no money form. It's our families who are waiting years for services. And and if we have surplus money then why can't we take care of the weakest and most vulnerable in our society. The questions. Represent Garner you're recognized. Thank you I've got several questions What I'm getting some I'm getting calls from representatives who were here and and senators who were here when I wasn't so some of this is just to clarify but the regional bill was in ninety two. And I did see a sunset clause was where's the sunset clause in that bill. That there was no sense said in the original okay I thought you said that was a sensitive three years now is just intended and that was the discussion at the time that was passed the okay so there wasn't a sense that bill and then in the ninety four ballot initiative that's when the people determined that they wanted this the soda tax to pay for Medicaid right there was a ballot initiative that passed okay one of the things that You talk about the sales tax while ago the double tax does that tax go into the Medicare trust fund is that going to general revenue. It goes into general okay that's what I thought okay I'll get back in the queue if there's somebody else yes ma'am okay thank you for these you're recognized her. Thank you Mr chairman I want to go back to something you said at the beginning Representative fight about the. Or I'm sorry Mr letters about the. If we remove this this soda tax that removes the revenue stream for the Medicare trust fund but that we're gonna put that in category a. And I've been doing RSA meeting my first time as a freshman I'm fairly certain I was expected or that event had no input but how are we going to guarantee and maybe this is on the question of our budget chairman who's down here but how are we going to guarantee that future general assemblies are going to prioritize that money in category a is there a federal law that requires us to fund the Medicaid trust fund and just looking for some sort of guarantees that we're not going to damage that fund. This chairman I want to point out first of all of that. This bill specifically provides that it's in category a. That each of those increments that amount coming from category a is going to be increased and of course as everyone knows and that any legislature that can come in and do any of this including the whole Medicaid trust fund if they want you know know any laws temporary if the legislature wants to change. But this sets in law the program to incrementally four million dollars in an additional twelve an additional twelve to finally do away with the tax but not the revenant the revenue comes out of general revenue. And if you keep in mind that is incrementally and can be fit within the budget. Well I understand that but and and I'm certainly. But almost always vote for the removal of the tax. But I I'm I'm a little bit leery of of this one to some degree because I don't want to do anything that would jeopardize that Medicaid trust fund for a lot of reasons some what you've heard just now another reason is I believe there's a federal match to that money if I'm not mistaken. So I just I just. You've been and maybe someone else in the room can answer this question how are we going to. Right now we can guarantee I think we've pretty much certainty that we can find that Medicaid trust fund because people are going to stop drinking coca Cola is right now. But how are we going to guarantee that fund is solvent and can provide for those citizens that we've talked about going forward I understand we can. It was the General Assembly we can do what we want with the budget but how are we going to guarantee one hundred percent guarantee that we are not going to hurt this fun. Well first of all I want to clarify find something about matching Medicaid. The money is not matched when it goes the Medicare trust fund I understand money is matched after it spent so it doesn't matter the character of the money. It's when DHS whatever agency spends that subject to a Medicaid match that that applies so if the money's there that's not really an issue. But there's a much a guarantee in this bill. That the money will be there. But the fact that we're going to have the state budget. And we're going to have money in the first category a. That's going to be available as there is that soft drinks might not of the. Declining to the point that it doesn't exist in fact if you look the market is changed on soft drinks and it's been declining. Over a period of time and continues to decline I think that This farmer with the our band has a some charts and things to show you that sort of thing but that industry shifting so there's no guarantee it anything and budgeting or a revenue source the only guarantee you've got is you've got the sales tax now. On top of the soft drink tax the sales tax is bringing in a lot more money than was needed to cover of the original law as a result of the market Nicks and what's going on is that's why we have the excess money available general revenues and that's one in the future going to be able to take those incremental amounts each year not take it all at once and in and to afford that in the budget. Yeah I I get that I appreciate the information and and I'm. Probably agree with you on the sales tax issue that that's probably going to be a plenty money to cover this I just don't wanna get a situation where we're supposed to be putting this in a and we end up putting this money in the like we did last time and it's never going to get funded and I understand how the matching works I think that's going to be another of budgeting issue as you go down the road but I just think it would make us all more come to we knew there was a guarantee I feel like special revenues more guarantee but I get what you're saying declining sales may alter that somewhat and and I think that I would speak for most members on this committee we're just wanna make sure that we're not going to do any sort of damage to that Medicaid trust fund because that is a critical need we have for many citizens in our state so I appreciate your your responses thank you. Thank assent members if you're not talking you're please make sure your microphones are turned off because of miss with the system rezar McCollum do you have a question Sir. You're recognized. I'm sorry that I I came in a little late so this is already been answered by bad but love to hear it as well and that I guess is the question for anyone that can answer it at because obviously a lot of what I've been hearing leading up to this discussion is regarding the Medicare trust fund I just like to kind of level set. How much is currently in the Medicaid trust fund and I guess how much is that grown over the past five years. The numbers. Okay okay I'm not looked as of other dating there was over two hundred and thirty million in the trust fund when the governor took over I think it was six million in the trust fund and I have built it up the FNA tells me that their plan on maintaining that trust fund at two hundred fifty million dollars the trust fund actually just supplements general revenue and and and the overall budget isn't like the overall budgets like eight billion dollars with about two billion coming from the state matching part so as again that trust fund the the governor in his budget can take out as much or as little of that trust fund is here she wants to. in making that budget. Present that it did I hear it went from about six million to two hundred thirty million yes okay in office also members you meet a person to come if I will be come to the end of the table all customers questions as well. In general questions. If not. Garni recognized welcome I just have a quick question what how much does the tax actually increase a Cup of coke. Go ahead to. It's roughly on a canned drink it's less than two cents parking. Okay and then the sales tax is calculated at that and top of that the property I just the surtax the so the surtax is instead being about two cents per can. For consumer costs this man also point out issues not soft drinks you take sent flavored water prior drinks across the gamut there is many things that are in the under the Soto or the soft drink bill should I sign. Dennis you have anything to add to that. Mr farmer you get you get okay. Regard especially question now that it thank you very much person with whom you have a question Sir. I was just going to comment about the home of. quick question regarding the cost at the at the retail level but he covered thank you Sir yes ma'am general questions. The server Miller. I can Kerr number one priority is protecting the funding for Medicaid. But I do have an interesting question. What percent of this excise tax of a consumer product. Is being generated by low income families and their purchases. Mr chairman I don't know that we have anyway to determine that and who buys or and the Senate economic analysis on that but it a it is you know taxes generally on any food top product is regressive I would presume that would be the same here. Thank missed letters and also a certified check and head over there and I can address this short as well thank or taking notes. New question members. The availability in the table for me please. Paranjape yes don't care recognize yourself for the cameras. Public hearing assistant revenue commissioner DFA Jake plea DFA office of budget. Kampala Mr me on Speaker for the bill for the governor's office that's correct Mister chair thank you members of the committee the governor's office is supportive of House Bill fifteen forty six back in two thousand seventeen the first reduction under the governor to the soft drink tax was a part of act one forty one of two thousand seventeen that reduce the soft drink tax approximately five point nine million dollars. The governor supported both represented Fite's plan to reduce and phase out the soft drink tax the first rate change will occur in January of two thousand twenty three there will be another rate reduction in two thousand and twenty four and two thousand twenty five the soft drink tax will be phased out House Bill fifteen forty six provides a mechanism so that there are distributions in category a that will replenish the amount of funds that were not going to be collected on the soft drink tax to make sure that the Medicare trust fund is appropriately funded. Going forward we would have to be answer any questions about the fiscal impact statement or any of the particular budget questions as well. Okay members whose accounts representar. Yes thank you Thank you Mr chair could you. Could you elaborate on how much federal match we've gotten since the corona viruses in the cares Act for that Medicaid trust fund sure so the state's matching rate the F. mapping you hear that acronym that federal Medicaid allocation percentage of the the number of the percentage of each dollar Medicaid that the feds pay for. R. F. map rate in Arkansas fluctuates from year to year based on factors are well beyond our control it's really based on our relative wealth as a state compared to all the other states. Usually that's about seventy to seventy three cents on the dollar is paid by the feds and were responsible for the remaining twenty seven or twenty eight cents with the charismatic to though the Congress enacted a six point two percent increase in the federal match so they're matching jump from seventy two cents on the dollar to about seventy eight cents for purposes of the state that's really I think one of the major factors that's driven the growth in the Medicaid trust fund balance that six cents on the dollar because of the size of Medicaid has translated over the years is about ninety million dollars to our favor for every calendar quarter did the emergencies continued when it first started of course we thought we were going to get a head of the corona virus in June that it became September that it became December I think we're out to June thirtieth now as far as the Federal Emergency which drives that enhanced evaporates so that that's been a big variable and all this act but that but the point is is that the trust fund match the trust fund right now it's weird is because of that six point two federal match among other variables yeah. Remember you're recognized thank you. You too might be more appropriate to answer my question then I know in years past we've talked about gradually moving over general revenue to take care of specific things like highways and that was adamantly opposed by the governor's office and by legislators so why are we now discussing moving general revenue over to take care of this when we already have this problem solved. Well I guess that's a policy considerations decision it would be made by the governor's office of course the General Assembly. And Hey I'm not sure what you mean by when we already have this problem solved because of I'm assuming the sponsor of the legislation actually had identified a problem in particular that this legislation would in fact try to fix. I get I guess I meant by that is that we already have money dedicated to this Medicaid trust fund or is before we didn't have money dedicated to the highway fund. So we were trying to solve a problem in trying to give more money to highways and it was adamantly opposed no we cannot. Bring general revenue over that's a bad idea and now suddenly it's a good idea and I'm just trying to figure out what what if I missed I've missed something will the connection between general revenue Medicaid is very strong as it is anybody who's dealt with the RSA balance budget general revenue now we we contribute huge amounts of general revenue either through directly to the Medicaid or to Medicaid trust fund to one wish to perform another we don't provide general revenue to the highway department their revenues are exclusively special revenues so by allowing them to have general revenue I think that would have broken that barrier a little bit and I think that was the primary concern with the highway funding with Medicaid of course there for the primary source of state support is general revenues so I don't think that issue is quite as much at the. I play. Roger Lynch recognized her. Well I'll stop you have how many how much money does the state of Arkansas. Provide for the Medicaid. Trust Fund in park Medicaid general so Medicaid trust well Medicaid gets funding of on the state side from a number of different sources about one point seven issue billion of the general revenue budget goes into Medicaid the second largest line after the Public School Fund but in addition to that we have special revenue sources this is one of them but of course there's a bed tax there's a premium taxes is a variety of different streams of revenue to go into support Medicaid Medicaid's a big program has different matching rates different the wrinkles to it depending on how it's being used but we that's so that it's. It's so that we have several people in our office whose primary job is monitoring it just because it is so complicated follows yes Sir you want to ask. Okay so there's the fear that I've had. Communicate to me is that if we move the special source of revenue. Away from the Medicaid trust fund that that is that would have more impact than anything else we could do that would impact the funding for these different entities but in fact. One point seven billion of our dollars are already going there and that can be influenced at any time. That the budgeting process our legislation. Yes I mean how much the the budgeting needs for Medicaid or he's without question the big kind of question that we face as a state whenever we put together the balanced budget it's not the biggest line but it's certainly the area where we've seen the biggest growth. One of the challenges that we have with Medicaid whenever we talk about Medicaid is keeping the perspective of the that the size of that budget compared to everything else in the state. It's a challenge for us at D. F. A. and I think it's a challenge obviously for the members as well. Thanks Sir represent Wooten. Relative to the the. highway funding verses this. Both or either the client situation I mean hell of the server and is viewed today as a health circumstance to the uses of retail drinks are dropping in sales what was happening in gasoline same funny. More efficient cars reduced gasoline usage reduce sale will reduce income for the highway department so we're coming in two different things here we start talking about how what he's that's a whole that's a whole different pitcher. And here's here's the other thing sixty percent of the people voted. Just recently for a half cent sales tax extension for the Highway. So we've got to situations here but what what baffles me. About this is do you think. Is there anyone in this room funny that any of us are going to send here. And this happened. Is representing Mayberry said are less fortunate Harding six ill people we're not going to the. We're just not going to do that. That would have the pleasure of the governor. That he's going taken he's going to fill this my commitment on this bill has been and will continue to be and I apologize Mr chairman that. My commitment on this bill has been I would not be forwarded to notice the governor stood forth and said he would come over and take care. The FAA is here today tell us that. I've been accused of all use that later. But I will use that later but my question Jake is this. Is not there the client and the server tax collection. Over the past few years. A person would be happy to go back and look at the collections but it seems that they have been relatively static over the over the real world is not increased the other water medical costs to. Certainly medical costs do not coincide with the the rate of collections of the of the soft drink tax we did have the reduction in seventeen to take out five point nine million in collections so that has been hovering around the thirty nine forty million dollar range since that reduction okay so it has not kept pace with the cost of living I agree okay thank you thank you Mr chairman of all your tuition and if I could I'm sorry to interrupt I need to clarify the amount provided through Medicaid to the balanced budget is one point three million dollars not one point seven for those of you watching online or anxious to correct me. Thank you carry put your cell phone number out there for the public. no but. Ricimer clear you have a question Sir. Yes again I just wanna make sure that we're protecting our very most vulnerable who need services. Of but what percent of the and on the state side what it percent of the annual Medicaid funds. Is coming from this tax when I look at it from a percentage because it twenty percent of the funding for Medicaid is it what what's a number of if you think about the total amount of Medicaid going in just from a general revenue perspective one point three billion dollars this tax raises about forty million annually I think that's about right so I don't know what percentage that would be but certainly when you put it into perspective of the total amount of state funding it is not a huge amount of percentage wise. Thank you. Okay. Representative Jim question. Always. Jake Emen put you on the spot here do you know how other states fund their Medicaid trust one or do any of you special revenues like we do my assumption is that the states all are in the same boat that were in which is every year were wrestling with the growth in costs and that they're looking at all the options just like we are to fund Medicaid a you know in Arkansas because were balanced budget state when we say special revenue versus general revenue kind of means different things course a lot of states borrow money but my assumption is that all states are are relying on some combination of funding to to meet their Medicaid match requirements six so. If not you may have or may not have the answer but why does the governor support this bill. Thank you representatives as I represent a fight in his presentation indicated that this will Arkansas is just one of two states that has this particular tax and reducing this tax and then ultimately eliminated this tax will reduce the burden of the individuals that are bearing this tax As a former commissioner letters indicated this is approximately two cents per can of soft drink so this would ease the burden on all those individuals that consume this product by two cents. For per per beverage for members so but then then this thing that that you mentioned earlier and I guess it's kind of. I hate to say the word sunset but go away completely in twenty twenty five so this governor won't be. That governor that see this through to the end of it to make sure that we're not going to do any damage to the trust fund. Right. That is correct I guess if we rely on general revenue to to back fill this that's correct the the our new governor will be sworn in sometime in January of two thousand and twenty three and these effects will be as a part of those future general assemblies to assure that category a is appropriately funded for to replace these revenues. Okay thank you. Once again please we're not talking police Alice or turn off your of microphones is missing our system up. Any other questions members. Regarder. I just wanna make sure record at that I've understood exactly. From Representative aids questions so. Going back to the twenty seventeen bill where we were promised category a for Medicaid funding. And it ended up in category D. where is that where is that in the budget now. So as part of the balanced budget and this is my decision and I wasn't a part of the discussion in the previous bill we were at like I mentioned earlier wrestling with the large cost of Medicaid and we provide significant increases the amount every year for Medicaid given the health of the Medicare trust fund at that time against the needs of the Medicaid program we moved that five point nine million dollars basically up into the main line for Medicaid we're increasing the amount they're getting annually by about seventy five million within the governor's balance budget. And then that. The other thing is I was just gonna mention that are governors are going to be there I would love like Representative wouldn't to assume that. We're here and we're going to protect our most vulnerable ripple but the our governors not gonna be there many of us may not be here so that's a little frightening. To me. Thank you Mr the two welcome observer. Would you mind just credit thank you sorry Mr would you mind just kind of backing up a little bit and giving everybody a little history as to how we got this tax to begin with but it was actually a vote by the people in nineteen ninety four and what was going on at that time that you might I don't know if you're the appropriate person to kind of explain how this came about and thank you represent maybe I can give you of the very small picture and we did have as noted in the legal analysis in the revenue impact we had ACT seven of the second extraordinary session in nineteen ninety two with the General Assembly levy this tax and then in nineteen ninety four we had a referendum where the taxes voted on of the by the people now a certainly made me want to yield to former Commission letters he was here at the time he would give you a much better doctor but the history of of how the legislature was dealing with this you this issue at the time so I'd be happy to yield the to allow him to speak to that issue. You like it Mr remember. The team I think apologist said It use old so come to the table tell us how you really are. He's wise and experienced. Mr chairman I just sit here thank about how old I am and I remember that Mr Wooten was the DFA director in his office right now the end of the hall when I started work as a young law student DFA so it's it's been a while I'll tell you one a actually when I actually observed it at my level of back when this past and then Dennis is here with our band he could tell you he was not with our bed at the time but what happened and you know there's back at a time when there is less emphasis on tax planning and looking at our overall tax process and cutting taxes like we're doing now it was more of raise revenue and raise revenue to throw at for whatever purpose and there was a need for as I recall about twenty million dollars or somewhere in that range for Medicaid and the soft drink industry there's a look around and someone came up with the idea and I've heard credit for a lot of folks in the Senate on some of the early meeting so I couldn't pin it on anyone in particular but. You know it was not one of the big taxes so you didn't want to raise one of those because you didn't need that much money and he didn't want to do anything that took a three fourths vote so soft drink was a good target. Yeah they were out there and handful of other states did this. So that's why this was done as a convenient way no relationship to the industry or anything that it was a bad product or anything like that just other states do this and we think we can raise about as much money as them. So we went through that process passed the law and at the vote. And it was implemented and we actually when we did the original estimates. We looked at what the other states did. How much money they were getting we copy their rates. Look at our population said we ought to be about the same we got twice as much money. Which leads me to believe that either we drank a lot more soft drinks or we had industry who is in compliance which I think that was the case is that that they were in you know I had to deal with a lot of those of businesses out there that we're collecting this and having to pay it and work through that period many years ago but that's kind of how it happened it wasn't because of any health reasons or anything else. And then later the money was put in the trust fund was not in the trust fund immediately and one of the concepts that I think that some people struggle with this is going in the trust fund is that's a fund that kind of sets off to the side for at least the purposes of the soft drink tax some of the other money comes in and it specified to go to a specific place like back to the people that actually paying the tax it's matched and set back there all sorts of things that go on but the soft drink tax in that trust fund. Over the years as set there and the funds accumulated and DHS always has lots of appropriation or and they're able to if they have a need for a new program or whatever legislatures giving them a budget. But they got this money on the side and they'll draw from that for whatever purpose and you know I've actually made a part of that process before where that money would accumulate and governor would say you know you better start spending some of this money and not let it accumulate so it's a. The difference it would be here to be going through a so from the legislative oversight you would know where it was going and maybe where it was spent my being in a. As opposed to it setting in the trust fund and waiting to be spent in addition to what you provided in funding for Medicaid. But that's kind of my my history with it and I've worked with the industry over the years and And they're trying to Determine you know where the money was going how it's being spent and this is the history that I recall. Miss farmer have something wanted to that Sir. Yes Mister Dennis farmer Arkansas beverage association and I'm so was it represented garnered that asked the question how we got here. Very the damage corrected that it did come in and this special session in nineteen ninety two and it was a package of bills for the shortfall in Medicaid funding that that time there was an increase in the cigarette tax there was the tax exemptions for certain luxury items like health clubs private clubs you also it for parking lot spaces or you pay by the month and so it was a complete package of bills the soft drink taxes only twenty million estimated that even though I came in at thirty two but none of those other taxes that were raised for Then we originally regenerative in a in nineteen ninety three it was dedicated to the trust fund for two year period and then during the course of all the political things that went on for the referendum in August of ninety four was when the quote unquote permanent earmark was placed on the soft drink tax to the Medicare trust fund but I do remember senator cliff of the windows on the floor senator Steve bills presenting the bill that they asked that could be changed at any time that we could remove the soft drink tax from the Medicaid trust fund and there was an affirmative answer that it could be changed at any time so while it has a long history of being there there's nothing that is absolutely guaranteed about that being in the Medicaid trust fund to those just to answer your question. Thank you ma'am Rezende eighty you have a question. Will under discussion I know we kinda let some discussion run or run committee just like normal Mr taking of both of the debate at the end where people make the discussion stuff or make it you know make a statement. Thank. Question Sir. Yes of the Mr former and Mr Leatherman leathers. So if if I history if my mind serves me correctly and Every time there has been a problem developed or come up with general with with the Medicaid Medicare. Disability funding is always been met by this body. Those both those bills that you spoke of that senator Huffman worked owned or a reaction to the situation that we had gone too far and I think we've learned our lesson since the whole. This is not true that this the legislative body has met the needs of the people that need the money. The the cancer from having worked in budget standpoint you know I would would agree with that and that come up a lot of needs of a lot of people deserving people out there and taking care of the the people in the field and that to that need. It may not have been to the amount but the effort was money to meet then the. Medicaid is always been a priority in the years that I dealt with it which is close to forty. Thank you thank you Mr thank sure. Representative McElroy. Thank you Mr chair. as dumb as a box of rocks with the only if the creation Mr leathers. Okay let me say we drop this tax police law and we're all worried about revenue flow. If if we got the knee later the general one code. Good is the legislature could we tax say medical marijuana code a shortfall. My mother does not smoke marijuana which he drank scope. I don't know how to answer that one. The it could tax anything you want and put it in the trust fund or fund to Medicaid important thing to know is that if you pass it and it goes in the budget is a order or whatever category then you maintain Appropriations everything sits over an if you put in the trust fund then they just drop down on that when they foresee a need within those appropriations so that's that's that's really the only difference in it if the money's going to be there in a category is going to be there then they'll be taking care of it but when that and. Essentially what happened they had a shortfall so they look for revenue and it just happened to be that that was a good target at the time. Yes Sir that's mine my recollection of what happened back then I don't think it may not be any big secret that did the FAA gets asked a lot by legislate orders in by governors suppose I needed to raise this amount of money water opportunities and what other states do. And there's always been that we are you know know what other states are doing the even they've been less developed back in the day that that I recall in discussions of those items and it goes into looking at how much money you want to race and I'm in on top of that it really ought to be what's the best tax policy what's good economically which the soft drink taxes not and what is good from the consumer standpoint which is soft drink taxes not and what's good tax policy if you look at all these tax policy public it publications a soft drink taxes not this was just a situation where it was on that list and even though it might have been bad tax policy we were only a few states stand now wrote one of only two states do that. that's why it was the checkpoint was chosen at that time thank you Mr welcome Sir. Tim I think we exhausted everybody. For body his here were moved over to the against and for some of first is Lou mantling just let everybody know that and we're gonna decide closed an hour we have ten people speaking for against so respectful everybody's time just kind of make your comments brief as possible but obviously get to your point as well. Five minutes Mr sure and conditions of please take a coke and employees. It's proctor. Good afternoon my name is Luke Mattingly CEO of curling I'm representing the Arkansas association of area agencies on aging we assist over seventy five thousand older cans every year an employee about two thousand or cans and working in every county of the state. I came today prepared to communicate all the talking points around this bill but there plenty of folks here they're in opposition and can handle that. I thought instead the my time would be better spent talking to you about the day the so legislation was passed. I'd like to start by saying that I'm one of those individuals that has deep respect for the legislative process and use this building as hell of Graham. The ability to vote is our most precious right as Americans and right behind that is the ability to come to the capitol to speak with our elected representatives to make that make the decisions that impact our lives. Those of you who served in a pre Covin nineteen legislature know what it's like when a bill with high visibility comes up for final vote the halls are packed with supporters on both sides so this beautiful building was full on that day back in ninety two when the sole bill came up for final vote. As you approach the building they were delivery trucks with prominent logos from the soda industry practically surrounding the capital taken up sixty eight parking spots each the drivers in the people came with them mostly young men were all carrying empty soda cans with Nichols inside the represented the tax one second in unison by the clamour snores. Supporters of the bill the made to trek to the capitol a lot older people from around the state and predominantly older females for me it was the first time that ever come to the capitol speak with representatives. The stores that day about some of the folks that came remember my grandmother she would probably call herself country and her calling grandpa worked a little farm outside Lepanto northeast Arkansas. Folks came because they saw the benefit of the Medicaid program helping their older neighbors and family that worked hard all their lives but never quite made it into the middle class or so they're less savings referee evaporate after an extended illness and needed help at the end of their lives. As it was coming time to vote these older people were trying to talk with legislators making their way to the chamber the man on the shoulder. The man and the soda industry uniforms began shaking their case. Sometimes just inches from the face of an old woman trying to speak with our legislative. The noise was so loud that four wow would prevent a governor Tucker from being heard at a press conference he was holding the returned. The corporate Nichols we're trying to silence the voice of older people that have come to speak with our elected officials however you know the outcome the voices were heard over the din of the clanking Nichols that day and the soul legislation passed ninety four the soda industry successfully got an initiative on the ballot under the legislation. But it filled the will of the people was to keep the tax. Hello nervous. The service centers are working every legislative since then to limit the tax and successfully got the tax reducing twenty seventeen. If this bill passes it will mute the voices of those older people that work to solidify the Medicare trust fund in ninety two and undo the vote will people in ninety four and who in this ring believes a can of coke is going to be reduced by two cents for a consumer if this passes. Eliminating the tax will only benefit a few corporations and their partners leaving future legislators holding the bag annually find forty million dollars and also in general revenue for the Medicare trust fund general revenue that could be used for schools prisons state parks and other pressing demands in their districts. The sons and daughters of these older people that came here ninety two were now about the age that they were when they probably came to the camp and we heard. These older people the most vulnerable to this code virus and cannot be here today cove nineteen is effectively the new nickel in a soda can trying to silence the voices. Sadly the older people from ninety two mostly no longer with us but if you quiet yourself and listen to your heart you can sue her other voices in the shadows and corners of these hallowed halls asking once again to be heard above the din of these corporate Nichols we appreciate with a vote on this bill. Thank you Sir. Next speaking for is Arkansas hospitality association I'm reading Mary Beth but I cannot make the last name out now. Mr chairman committee members my name is Mary Beth Ringgold of some of you may know we have had restaurants in Little Rock for quite some time like the previous Speaker I actually was here in nineteen ninety two and so I came to talk to but two parts one the historical perspective of this and how the tax got past and the other is. I think the of the emphasis seems to be on how much it has impacted a can of coke and I think that's not very much but how it's impacted small business is a little bit different store that I have been here here yet today. So back in nineteen ninety two. You all are all lawmakers and your job is to see the facts figure out the facts and make the best laws for the citizens of Arkansas I totally get that. And what you do a lot of time to get consensus is come the business owners I listen this is where this is going to be is going to be a sunset intact it's a one year is not going to kill you just live with it will make it happen in the year and it'll sunset off. We don't want to do our part I mean if you look at people who do charitable works I guarantee you Google me I do everything for charity and some the state of Arkansas the lot in central Arkansas and I am good in a litany of things that I participate in from a charitable standpoint cherub person by nature but the fax or this has been bad for small business and it is excise tax so how it affects my style of operation and I don't know if I told you I had Cajun's wharf copper grueling capers restaurant over my restaurants have also been the chairman of the Arkansas hospitality association of been the chairman of the Little Rock advertising promotion commission and I served on the national restaurant association board so if amending gauge misinform very engaged business operator so it's one of those that in there. So we receive an invoice so let's say we take Cajuns war for example now The Mazda sorry about that Twenty twenty to twenty two of bladder boxes come in our back door that's a two hundred twenty dollar line item bill on that invoice for ten dollars of tax that was for the years nineteen ninety three to nineteen so two thousand seventeen. Two thousand seventeen at reduced down L. six dollars and thirty cents acute until current days so we're six dollars and thirty cents a queue but still significant now now I just have one restaurant of soul the copper rule I no longer operating Cajuns we closed at nineteen two thousand nineteen. So the sum of its parts is not a huge number that I can't tolerate but we understand a couple of other things I've been here at the time when the liquor taxes changed and they would put four percent on spirits four of the fund ability at UAMS and it was designed to sunset when the building was paid for was going to be someone we didn't know exactly what will be with someone there is sixteen years of took a little longer a year prior to that four percent tax sunsetting About nine lobbyist flooded the capitol and came in here and got that tax turned into perpetuity four percent alcohol tax which makes for a spear District what do you drink or not is still part of my business thirty three percent tax on that drink and most people charge inclusively so which means that on that out the difference of that tax and when I take my top one I don't charge that exclusively which means I'll give you a ten dollar drinking charge thirty three cents on top of it I don't do that so M. and most operators must local independents don't do that. I'm giving a little quick story after the financial crisis of two thousand and eight there was a big unemployment security fund shortfall and so for three years in a row on the first day of January I received a bill for ten thousand dollars to supplement the unemployment security funds to we can build those back up and every year I go to my friend governor VVS I listen this is a killer for small business you wiped out all my problem for the month of December as in others can't we just can't keep doing that so visually took some surplus monies he bills that fund back up and we no longer had to pay that ten thousand surplus I say these things historically because this is a small tax on small business and want to get these invoices that come and I didn't raise my soft drink prices I mean I've reset some incrementally up percent here percent there over the years but I never said okay had a we recoup this money back it's just a line item of of expense for me as it is most business operators we don't pass a tax law we don't have a tax line for it. So that we can know the bottom line of what I what I think I'm here it's time for this thing to be away if you want to ask me the question of what it calls me and my business over the years I took I'm the queen of spreadsheets anybody who knows me will say so and I went in and and in that spreadsheet this is because many sixty thousand two hundred and thirty five dollars and I might be plus or minus a few dollars but then use that was over twenty seven and a half years or so I mean surely you can stomach that but I mean I would much rather have that money but it will invest that money and it's of a legitimate line item expense that I occurred over this period of time so historically I would say when the legislators come to us and say we need to get this done help us with this don't fight us for this I want to be want to go okay with that's really legitimately the way it's going to be I'm on your team but when you say something in the sunset and this tax did not sunset we turn it over to the voters a lot because the previous gentleman described governor Jim guy Tucker just the was not pleased with the way that thing panned out and it really was may be heavy handed but he's okay we'll take it to the voters and it was low hanging fruit that was easy and no one's thought any file from at the UAMS tax on spirits man that was supposed legitimately sunset off it did not sunset off the highway tactical supposed to sunset off no let's take it back to the voters we got ever highways but all this affects small business infects our ability to take price increases because when you go in you sign your credit or which most people don't pay cash anymore it's what is in front of you is all the taxes it's the the new city taxes a hot new highway taxes that's what you you see on your credit card has up a hundred dollars to eat out the night I'm not sure how often we can afford to do that but when you park your of the tax is what I have on my top line is significantly lower than that so. That may be more than one hour take more of your minutes I appreciate you listening and understanding kind of where I came from I was here up in operating businesses since nineteen eighty two actually I don't I'm like a hundred eight now in dog years and let's just say one little snippet about code so the absolute worst effect on restaurants and anything I can ever remember I mean two thousand they didn't cause us great strife we just we just buckled under would be a loss of money more weeks and we'll come back and we will have a stronger year. That probably didn't affect. All the population this particular thing code nineteen is affected every single person you've ever known a will ever know and so a business perspective we all have struggled and I'm very strategic in the way I run my business and every penny counts right now so that's one here it's not because I know it's going to bury method to convey this with but people should do the right thing and when you say something Sunset make it sunset or we won't trust you in the future so I believe you with that I'll answer any questions you might have. Thank you ma'am there was any questions. Thank you ma'am appreciate your testimony okay. UP next Against will be missed this crucial little are you in the audience. Please recognize your mail. Hello I'm Theresa Little I am the executive director of milestones in Conway I'm here representing our program programs like ours across the state as a board member of the developmental disabilities providers association I've been in the field helping adults and children who have developmental disabilities for over forty years and during that time fought for those people and was here in nineteen ninety two we brought children to the capital and letter legislators city who who it was we were talking about that was a very hard day I didn't like bringing the children in pride parading them through the capital's what I felt like we were doing but ACT seven passed and then again in nineteen ninety four we let the public know what exactly they were voting for. I'm trying to I'm trying to leave out some things because it's already been covered so I'm skipping them I would like to say that the soda pop tax soft drink tax whatever we want to column we usually column cokes here in Arkansas but regardless of that it is if it to me it is a fair tax it taxes a luxury not a necessity. Arkansas is number five in childhood obesity in the nation we are number three in the nation for obesity for adults we're number three in adults for diabetes and number three in the nation for adults with hypertension. It's not like creating the healthiest or drinking the healthiest in the nation as much as we like them. I think we can all agree that soft drinks are not in this Essity. And water is free mostly free providers like my peers and are constantly fighting for funding so we can support some of the most vulnerable children and adults in our communities day in and day out when facing pressures from inflation and minimum wage we have stepped up and we've done more with less we did these things not only because it was right but also because we've been told time and time again that Medicaid funding was limited and resources were not available it is frustrating and disheartening to now be battling a bill that seeks to tighten this funding even more. We don't need to fight over generate general revenue. And have to decide in lean years what gets cut jails schools nonprofits like milestones all of the state trying to keep their doors open I very respectfully ask that you please vote no on house bill fifteen forty six thank you. When we take the question yes the member yes ma'am. Thank you Mr chairman I'm sure you're aware that there is still over three thousand as a matter of fact the latest number I have is three thousand three hundred and eighty five people with disabilities who are on a waiting list for services yes ma'am can you help explain what those services are that the families are waiting years to get because they're told over and over again that there's no funding to meet that yes ma'am that is what typically pit people here es waiver services are Arkansas Arkansas community services it allows our people with developmental disabilities as adult and as children to remain in our communities and not have to go into residential care it helps them get out and go to stores do whatever you know all of this to but with some support this pay salaries for our hourly people who will come in and do that otherwise the families are burdened to the point where they might not be able to work and be taxpayers or they're put into our human development centers where it cost three but I don't have the numbers for you and your numbers people I don't have them in front of me but it cost three to four times what it would cost to have them still live at home or in an apartment and have support for that and you list that number and I know for a fact because I hear it every day there were a lot more out there that don't even get on the list because they say why go through all this paperwork I'm never going to get in so yes ma'am is that does that answer your question. Thank you membership testimony thank you up next we have Mister will conduct a blue for the Arkansas restaurant association. Hey thank you very much Just remember those here I think a two thousand eight and the we thought the milk taxing we won and I think it was a good idea in the state's done well without the milk tax so hopefully the second time the charm so my name's Ralph will can I started your competes in fatal twenty nine years ago this month and the Arkansas soft drink tax has been in existence as long as I've been in business which is interesting for temporary tax on the four present the Arkansas western Association so hopefully I can speak on behalf of my fellow restaurateurs you're certainly challenging time to be in the restaurant business in Arkansas my business only sells soft drinks in bottles which have a much lower profit margin if fountain drinks but the margins on fountain drinks have declined over the years in part because the bundle pricing self service machines and free refills and declining demand those as of January first the Arkansas minimum wage is eleven dollars an hour and that's been difficult on restaurants in the midst of the pandemic. So this tax has a little effect on encouraging healthy choices since diet drinks and unflavored sparkling waters like lacroix and topo Chico pay the same taxes a sugary soft drink I don't think that was the intention in nineteen ninety two and then Starbucks and similar businesses do not pay this tax despite being sellers of sweetened beverages did you guys though a mocha cookie frappuccino has eighty two grams of carbs to twenty seven grams of fat and they don't pay this tax. Now I know most of us would rather pay Arkansas income tax to live in Texas right. Here is you is amazing the sales tax we pay so I wasn't here at the state capitol in nineteen ninety two I was in favor will be the unpaid sales tax collector of my business and I collected six and a half percent sales tax in nineteen ninety two yeah I think the highest tax in the free world on Feb bill thanks to our hamburger tax on restaurants of federal we clicked eleven point seven five percent on a food it's unbelievable and you know it doesn't take much to be level we have to make three payments a month it's great to the folks in the FAA here because our policy when the money goes so good to see you guys but did you know two three payments a month and one of those payments I don't have the money to pay sales tax in advance I have to pay like two and a half percent on credit card fees in order to submit so I'm paid to not present to collect the money for the state and if anybody starlight could some imported steel for me if funds from boulder Roberts it has happened occasionally they don't steal the state's money right the steel you know my money so my friend and fellow puts compel you represented Garner you called it a double tax and I think that's all it comes down to you know it's a double tax let's not have a double tax sales tax collection we have the highest sales tax in the country. The commission either once they get to New York in the holy cow I'm paying like. Thirty fifty percent of sales tax you know when I when I dine at a restaurant so. Restaurants to break and let's get rid of the softer tax once and for all thank you. Thank you Sir. Both hello you looking for doing this. Thank you Mr chairman of the rile CEO of the Arkansas hospital association Preciado opportunity to to remark on this bill I'll be brief also I have a role as chairman of the healthcare provider's forum which is a loosely affiliated group and I say loosely because generally we can't agree on anything but on this bill we unanimously agree that we need to retain the soft drink taxes general revenue we sent a letter of that most of you probably have received if you have an open your email yet which outlines our opposition but I want to just list those groups quickly the Arkansas association of area agencies on aging the Arkansas chapter American academy of pediatrics Arkansas developmental disabilities providers association the Arkansas health care association Arkansas hospital association Arkansas medical society Arkansas pharmacists association Arkansas state dental association in the home care association of Arkansas. We all are in opposition to House Bill fifteen forty six as has been noted and testified many times here that it repeals the soft drink tax which goes into the Medicaid trust fund and funds Medicaid we've all heard that history of the nineteen ninety two legislation nineteen ninety four vote of the people which passed at fifty five percent to retain the tax and that's why propri requires a change to change the tax a two thirds vote of the legislature. Neither the legislation or the referred vote had any type of Any type of language stating that it was a temporary tax so we're certainly worried that this is going to undo the vote of the people give a tax break to a handful of taxpayers well using general revenue. The legislation seeks to transfer to the four point one million dollars in twenty twenty two but attempts to bind other governors and legislatures to this agreement in the future we have no guarantees that future governors or legislatures will honor this legislation that would then take a simple majority vote to change general revenue spending as we all know is re prioritized every year to the revenue stabilization act. And the amounts transferred to the Medicaid trust fund could end in twenty twenty five with no money to support Medicaid us are doing the will of the people this is certainly a concern of ours because we have no guarantees moving forward we don't know where this could be with future legislatures and governor at this scenario were to happen then we're looking at the forty million dollars that would disappear plus the as as has been testified to the federal match which goes along with it which could rise at two hundred and thirty million dollars. And looking at the Legislative Tax handbook prepared by the bureau of legislative research the only significant decline was a result of legislative change in twenty seventeen which has been testified to by the FNA which is five point nine million yearly so we're pretty steady right now the forty million dollars thirty nine million dollars. In conclusion the result of this legislation passed will provide a text tax benefit to a few while jeopardizing Medicaid funding an overriding a fifty five percent of the people of Arkansas and ultimately not reducing the price of soft drink thank you very much. Though you take a question. I'll try present wouldn't you're recognized. Strouse exactly how much money will hospitals lose. The hospitals will lose money when we have a downturn in the economy how much how many just give me a dollar amount I don't know where it's coming from give me a dollar amount of how much the hospitals will lose as a result of this bill. Our opposition is based upon the guarantee that that money will be there in the future so are we gonna lose money today no we're not gonna lose money today we see a map of downturn in the economy we certainly would be jeopardized follow the. Yes Sir. Are we guaranteed to mark. We're not guaranteed tomorrow but certainly feel better with a two thirds vote of the legislature in the will of the people that pass this with fifty five percent I fully understand that and everyone else does in here. The hospitals are not going to be adversely impacted if this bill is defeated other than. What they may receive from the people that are coming in. The receiving the sales tax but how can we say how can you sit there and say that you're gonna lose money when the governor has said he'll Fund now don't give me the the future legislatures and all that we're talking about today we're talking about here we're talking about right now. Well the first reduction in the in the softer Tax Court in this legislation I believe it's four point nine million in twenty twenty two so that's what's being replaced now that's what's that's what could be guaranteed but in the future we don't know what dismiss. The word is replaced I'm sure you know understand what everybody Sabin this long life really agree with you. This Mayberry I totally agree with you. But nobody's losing any money right now. And now is where we are. Tomorrow is a whole different thing is that not true that's my question. Tomorrow is a different day I agree okay so. Do you do you consider this legislation of bait and switch. I consider it an unknown no I didn't ask you that. Because so you people made the comment to me in an email it's a bait and switch and. And I consider that an insult. I invaded anybody I hadn't tried to switch I support and love the people that you the members talking about. So I don't I don't appreciate we did it do you consider this somebody's wit is there a question no Sir I consider it an unknown for the future that's what I consider. But it is being funded currently yes Sir thank you Mr chairman thank you. Mayberry recognized. Thank you Mr chair I guess I'm just trying to to hammer down the point that we have a lot of needs that are not being met right now and so the future going forward is scarier if we are removing some of that general revenue that could be used if we have lots of money then why are we not meeting needs that need to be met right now for example forget the disability waiver waiting list that I I constantly but talking about year after year after year I just recently became aware in this deals with hospitals that we have pediatric the kids who are in need of dental care and need of surgery to take care of their dental care and right now on the Medicaid funding the hospital gets zero to open up their operating room to a dentist so that they can put the child to sleep to take care of their their teeth for example that the exact example I was given a child with autism who has to have several teeth removed or a lot of dental work you cannot work on that child which is conscious sedation you have to give them generate a station right now Medicaid pays zero to the hospital and because of coveted where is the hospital might have been a little bit generous in the past to say okay you can use our facility they're not doing that now so can you give me an example is or are there other needs that currently aren't being met that this money could actually be used for to really make sure we're taking care of kids and adults who need it most. That's a great example I think there there's other services out there that could be provided in hospitals the hospital's Burke on a tight margin as you've as you've identified here and so in the future we would certainly like to see more more funding go to Medicaid to help fund those services so hopefully hopefully we'll see that in the future. Preserve what you're recognized her. The Medicaid will miss Mayberry speaks of is not the we can't control that. We don't control what you get but. But are you not going to the then the beneficiary the rural hospitals if Arkansas home passes in the Medicare expansion discussion what were rule hospital. Be a benefit. Do we set the rules relative to what the hospitals do and get paid for. This legislature you get the money to Medicaid Medicaid has a regulation that sets that sets the question. My question is do we set the rules of the hospitals and the way they operate. The way they operate now you don't provide what services no so there's really may refer is that what services they are paid for that is correct you do not tell us how to run services at a hospital think that's merely an example of what we could do with more Medicaid funding. Thank you Mr welcome Sir. Original questions. Thank you bill thank you Mr chairman welcome. Dennis farmer you'll speak for the bill. Okay you say pension plans. Is the doctor strong. yes you'll speak against the bill. Dr if you don't care please recognize yourself in and you get ready situated C.. Yes service chairman my name's Tucker and strong and I'm a. General pediatrician here in Little Rock and thank you for giving me a few minutes today I'll try to be brief but I'm testifying today on behalf of a partly foreign thirty pediatricians across the state of Arkansas members of the Arkansas chapter of the American academy of pediatrics and pediatricians would ask that you vote no on house bill fifteen forty six to repeal soft drink tax in Arkansas. as a pediatrician I feel that Medicaid in general is a lifeline for the children that we serve every day in terms of children of our state two thirds or more are covered by Medicaid and this provides coverage for. Checkups Injury related visits preventive health care as well as other services including as came up dental coverage developmental services at cetera. coverage for most of our preterm babies that are born in Arkansas every year. And for many of us are. Arkansas Medicaid helps ensure that our small businesses rural clinics also able to keep the doors open and employer staff our staff that the clinic where I'm a partner I personally of a patient base that is about fifty percent Medicaid patients and therefore Medicaid represents our largest source of business income. So this keeps our doors open and keeps my staff paid we employee folks from here in Little Rock areas around as well as surrounding areas such as then Conway bring Greenbrier and I know that I can't speak for them but some of our rural colleagues may have practices this the as much as eighty percent or more Medicaid patients so this is a significant issue related to the kids that they serve and them as business owners so I can tell you that I was not in practice and ninety two when this a past initially but I've certainly seen day today what happens when folks do not have adequate healthcare coverage when it comes to inability to pay for medications and ability for kids to get dental coverage or developmental services this has a really dramatic impact on the lives of many people in our state I won't go back over kind of what's been said previously about the prior kind of creation of this tax or the fact that it was supported by the voters when it was a time to be overturned at the ballot box ninety four but I would ask that you vote no on this bill all right to ensure that special revenue the tax generates continues to be a credit or critical source of funding for the Medicaid tries Trust Fund a general revenues as we know it ebbs and flows and it fluctuates based on the state's priorities and it's not a sufficient replacement for these funds especially since Medicaid enrollment we know increases in times of economic downturn. it's vital the soft drink tax special revenue continues to support our children who need consistent access to comprehensive health care and I hope that you all will vote no on this bill thank you thank you Sir. Steiger union audience. Please recognize yourself Sir. Good afternoon Mr chairman members of the committee my name is Steve good on the executive director for the Arkansas grocers and retail merchants association I'll be very brief because most of what I was gonna say is already been covered but or thank you for allowing me to speak on this issue today this is a competitive issue for small businesses especially border stores stores that are you know on the border Marion West Memphis Texarkana Bellavista the stores across the northern border where they those retail stores restaurants and C. stores are paying this tax in their competitors across the line or not consumers drive to pass a soft drinks at a cheaper price somebody talked about House soft drinks had gone away as a competitive OR is a the amount of soft drinks being sold today were less today I can remember back in the early nineties if you open one of my grocery store ads the front page featured coca Cola or Pepsi as the lead item that's what we used to drive business we no longer can do that today because of the process it's no longer in a trek a tract of driver to generate business C. only grocery store item that has an excise tax on it in the stores today. And frankly small businesses like myself because I not only do I am at your service exec executive director for the grocers and merchants association also on two small supermarkets we have two ways that we can eat this tax we can eat it are we can pass it to our consumers. that that cost can't go anywhere else you know everybody keeps talking about it's two dollars or two cents again. Most people don't buy soft drinks in a supermarket by the king and the bomb by the twelve pack for the twenty four pack so just imagine every twelve thank you bye every time you buy one it cost you twenty three cents more that's not a lot but it adds up over the course of the year your two liter fan it's about eight cents a two later that it cost you more today then it would somewhere else outside of the state. This tax along with the minimum wage are huge huge impacts on small stores and restaurants they can't share their cost call share it with other stores that are out of state you know the bigger stores a chain stores I can spread their cost out across the nation a small stores and small restaurants we don't have that luxury. Finally today I would say that those that have a pot have opposed this tax reduction today have talked about what this bill may do I can tell you what this bill will do this bill will keep hometown grocers C. stores and restaurants in business. Any questions. There was any questions. Thank you Sir thank you Mr chair for time you're welcome the last on the list is Charlie Martin I'm assuming Mr Martin and the billing. The strong Martin. Care about so far are they know is what we'll pass thank you were most we appreciate respect our time Sir. All right members SO we got signed up kitchen fight you will go close for your bill Sir. Thank you Mr chairman. I had to get myself situated there I apologize. we've heard conversations today as though we were cutting this tax and not replacing this tax in the in the argument we don't know about what happened tomorrow. If that be the case would never cut the income tax we never cut the grocery tax the we would never cut any tax and we've been cutting taxes for the last several years again we don't know what happens tomorrow but there's not a person in this room right here my colleagues I know you all I know you will that would not support funding Medicaid to its fullest. And the governor will be that way the next governor be that way and the next general simply will be that way. they did it ninety four the I think they made a mistake in ninety four they targeted one industry and that was wrong if we have to come back in years down the road to do this that we need to do it right where it's fair for everyone not just one industry. and with that the Mr chairman closed thank sure members once again when I will take a vote just because this bill is highly controversial letter but lot information under floating around when everybody do the due diligence will let this rest and talk to people back home we'll come back and take the vote at a later date with that being said this is for not taking a motion I understand there's a few members want to have a debate on the bill so with that does anybody wanna make a statement representatives you're recognized Patrick Representative fight kind of. I took what I was gonna say aye aye I am concerned about the future the Medicaid trust fund but what he and represent it wouldn't have expressed I do agree with that I don't think there's any General Assembly that wouldn't support fully funding the Medicaid trust fund I also think. that it is very unfair to target one industry to fund a program like that if we're going to fund it with. I guess special revenue I think it needs to be more broad than one industry I do think that That that it would be it would be more fair that way I guess is a better way saying that and I do agree that. And I think you all agree that we do wonder what we can to make sure that we're protecting the Medicaid trust fund so with that that's it. Members your body else. Prison would. Thank you Mr chairman. Two or three things of the. The the the first thing as I stated earlier home. When I was first contacted about this bill and this so the tax I indicated. The I would not support the bill as long as it was the firm that although that I wanted the funding made up somewhere somehow. And since then I have been told. And it's been verified by DFA by Mister five. The. The governor is in support of this. I agree with the Representative the Hughes it's targeted here mark targeted to women in this industry. But only two other points. Not one word. Did we hear. For many of the folks in here today that are against this bill not one time did you attend the budget here and. With several of us and German James. Not one time. The one of you attended ask for an increase in Medicaid Medicare disability fund we didn't hear from anybody. I will make one more point Mr. Not one time. Did not hear from anybody. About this bill. Until last Friday. No one no one of you this for. Contacted me. And I dealt from what I have gathered from any of my colleagues. So. What I'm saying is I don't understand if the funding is being provided. And you know how we feel and several of the members that are here have expressed their opinion. And you say what U. K. but in future so legislatures thanks for. But Hey. Their goal of you just like out of the. If you can't replace the funding. I will vote for the bill. The funding is been replaced is there it may not be in the amount you won't it. And it may not be the math. But the thing is nobody's been cut. At this point no one's being hurt. If the if the general revenues go self I promise you the soul of bill so the tax will go sale to because of the total economy will be suffering. The whole economy. So the soda tax stands the three a. Of being reduced regardless of what we do. And we all have learned for the past twelve months. How quickly things can change. Well this be blessed that we as a state have a four hundred billion dollar surplus. We were able to come back and re do our late forecast to change the budget. So what I'm what I'm pledging to you and I'm sure a whole group of speak for my colleagues we're not gonna let you down. We're not goalie impact. Your. People we are not. We're foreign we support. Meyer is only G. by a hospital administrator of taught all levels. Sure. We're here to protect. We're here to care for the less fortunate. We're all in this room we've been blessed. But we have a multitude out there that are not. And we have a responsibility to take care of all and the point being. We're doing the best we could. One point seven billion dollars. One point three of sort one point three billion. Of where I come from that's a lot of money. So Mister chairman I thank you for your indulgence you're welcome Sir. Members your by else. Remember. I appreciate the conversation and and you know I understand you know it's hard for me to be against taking away tax okay But what this taxes is that security. It's security for or we could send our most vulnerable. Who are constantly told there's no money here for you. I can't even begin to tell you the number of people I talked to each month who tell me that they again are being denied X. Y. Z. medication service procedure what have you because Medicaid won't pay for it because there's no money. We've talked about this year after year after year. Three thousand plus people. Individuals with disabilities who are on a waiting list. For years. To get services I know several who have died in that time frame because they've been waiting ten years to get those services. In here we have this little piece of security. That was voted on by the people. To make sure that we don't have the shortfall that apparently existed and ninety two or ninety four. So how do we address that security by then using general revenue and you know what we can make all the promises in the world that we want to make its legislators. But we're here for two years we are only guaranteed these two years. And our governor is also going to be gone in two years. And many of the staff no one's guaranteed. Someone tell we have a true guarantee I just can't do this. And I don't believe like I said I love Representative fight we have a long history together I know he's got a big heart and I know he cares I know he cares about the people that I'm talking about and I know that I've had conversations with coca Cola you know where my heart is on this you knew that ahead of time. I'm all for getting better taxes. But I'm not convinced that this is the tax that we need to touch we have plenty of other ideas out there I'm looking forward to continuing to hear about the used car sales tax getting rid of that helping people get to and from work a little easier. That's just where I stand in Intel we we can guarantee that the needs are being met the current needs that we have I I just can't. Thank members. With regard. Thank you I'll be short and sweet I to do not agree with regressive taxes I hate regressive taxes we have restaurants we have restaurants that sells coke products and don't like to pay that tax anymore than anybody else does but as a nurse practitioner for forty years as a nonprofit worker for forty years I've seen the same people that Ulysses waiting a lifetime for services that we cannot give them. I am I to feel like this is the only way at this point in time that we can get the services that we need guaranteed for these folks add services if there's a surplus I'd love to do that but I'm also feeling like this isn't quite fair I understand that is not fair we had a liquor store as well so you know I I know what the but the liquor taxes are I am certainly willing to work with anybody to try to figure out a way to add other taxes to this so with so that is not just one person or that it's not just one industry or if there's some way that we can look at doing something different I'm all for that but I just can't vote for this now and so thank you for for all of the folks that have been here and and talk to us about this legislation. Thank you Mr chair welcome everybody else. Okay like I said we're gonna come back and we'll addresses a later date everybody kind of guy Justice little body know that we're not trying to do this in a dark room behind an alley someplace we're trying to operate in a for an open honest manner I think somebody reference while ago that corporate America's criminals down this committee stroke not sure everybody that this not taking place we were to vote today it would come out of committee today so slurred body know that with that being said we get one more bill should be a quick bill everybody throughout the room I don't want to hear the DFA bill in line if you don't care come up and run as members will be to House Bill ten forty four this last all about five minutes ten forty four. Thank you John. There's. In order to. All right members of riveted Jett. You're free to present your bill thank Mr Allen resumed Jett I have a DFA bill in the house let politics plan to you really quick all this kind of stuff around to too much time the policy don't care. Thank you Mr chairman of the members of the committee Paul gearing with DFA what you have before you is house bill ten forty four and I like to explain to you a first check how the law operates currently with requesting records in issuing an estimated assessment of tax under existing law the department of finance and administration has the ability to request a taxpayer provide their records whether their personal records of their business records that are in support of whatever return that they have filed with us whether it's an income tax return or sales tax return or other type of of tax that is reported to the FAA likewise the taxpayer has a legal duty to maintain their appropriate records in support of the returns that they file with our agency now under current law DFA is authorized to make what's known as an estimated assessment of tax so if there if we go to that taxpayer and that taxpayer states to us in in a in a request to perform an audit and we would like to take review your records so that we can determine if you're at the return that you filed with D. F. A. correctly reflects the amount of. I'm currently if that taxpayer tells us DFA I apologize I don't keep any records I had I had the records but they have since been destroyed we have the legal ability to to issue that taxpayer an estimated assessment based upon the information that we can obtain and generally what an estimated assessment results from is four independent records that we might have such as a bank statement that would show the business's deposits or maybe that individual might have had an income tax return that they filed with us that reported their sales in their schedule see or their cost of goods sold in their in their schedule see. We would prefer to make assessments of tax based upon actual records boat as it exists right now a taxpayer is only subject to the estimated assessment if there is if that tax payer represents to us that DFA I did not keep records. For the records have been I had them but they have been destroyed so what we would like to do in house bill ten forty four is also clarified that if DFA makes that legal requests for records or if we have to after we make that lawful requests for records administratively and we go to court and have to get a court order to compel that taxpayer to provide records and at that point the taxpayer still says no DFA I'm not going to let you look at the records we would like to have the lawful ability to issue an estimated assessment because at that point we have all exhausted all of our lawful means to review those taxpayers records now if we do issue an estimated assessment at that point that taxpayer still has the ability to refute the assessment just like they would if if we issued an estimated settlement and they didn't keep records that taxpayer might go back and maybe try to locate those records that they couldn't find it the audit stage or or but in this bill what they would be doing is they would actually come to a point and furnish the records to DFA but how an estimated assessment works is if the taxpayer after we've exhausted all of our ability to get the records on which to base in assessment and we issue an estimate assessment the taxpayer that has to review the assessment so I'd be happy to answer any questions about House Bill ten forty four and we just really would like to treat a taxpayer that doesn't keep records the same as a taxpayer that refuses to provide the records to us when we make a lawful requests or court directs them to produce the records and still fails to do so. Maturing a disturbing informational question how long or people for couples to keep records in the state of Arkansas for DNA purposes not federal purposes how how many years are we both keep records generally speaking a taxpayers should keep records for about six actually six years we have the ability to look at a taxpayer's records and but only the legal ability to make an assessment if there was uh for a three year period unless the taxpayer understates their income or tax owed by greater than than twenty five percent so a six year window is the is what we are consultant legally what a taxpayer should maintain the records for the return this bill would be dealing with with the six years that that y'all can clearly go back in and check check records now of course of Mr chairman there are there are provisions in Arkansas law that there is a unlimited ability look at records when we see when there is fraud so but generally speaking most taxpayers are going to maintain records if they filed a return. I'd like to deal with fraud separately but generally speaking with the taxpayer's filing your return and they keeping their appropriate supporting documentation it's a six year window. Members any questions not just that Mister chairman that hypothetically if we had a colleague for example that refused to give the FAA records these want to be treated as of somebody who's lost her records as opposed to saying I'm not gonna give you my records. Revision Garner your represent you're recognized for a question I just have a quick question what do you do now. Certainly hello we the farm Jordy of our taxpayers keep and maintain records and so when we we we take the we have generally we have to do is we contact taxpayer in schedule not appointment send them a confirmation of that audit in writing and then we have a meeting to go over what is what we're going to need to look at and we can we conduct the audit now of course in non Kobe times of four course things are much differently taxpayers had to be much more protective about. D. if the auditors coming to their location and but certainly if a taxpayer says no I don't I'm going to resist the request for records we do have a legal ability to issue a subpoena DFA issued subpoena we do have the ability to go to court and get a court order to compel the records but currently the way the law speaks to estimate assessments is speaks to what taxpayers that do not keep records and so we want to clarify that there really should be no distinction between a taxpayer that doesn't keep their records or maybe is more up front with us and says I don't I didn't keep the records because there is certain that taxpayer to didn't keep records that might be telling us just only allowing us and not even telling us anything about the records so at this point we would like to exhaust all of lawful means we would preferred that this be a a voluntary process but from time to time we might have a taxpayer that is is very reluctant or unwilling or just does not even communicate. Yes ma'am. The fifth of March. Remember you're recognized for what. And I guess kind of follow up on that same question. What are you because you have the distinction he kind of said you have distinction between someone who is absolutely just Stonewall you and someone who may have lost theirs so what do you currently currently doing we have someone this loss and to you go ahead and come up with an estimate wonder how are you handling that we we certainly want to provide an assessment that's based upon the best available information so there are he comes up some certain types of businesses are are very very bad at keeping records and so we just have to go on what we think we can attain that are third party records that are actually kept such as a a bank record we might have to subpoena bank records we might have to subpoena or request vendor records went left there's a but let's say for example there's a a restaurant business that that obviously has been buying food to be resold in the business we will go and look at those other areas where we can see that they made these actual purchases for resale in a in a prepared form and then go look at their and banking records to see what the deposits were of the business as well so we. The last thing we want is make an assessment on the least accurate information but I do know that our auditors that a very important job to do our assessments will have to be based upon some information and generally that's the information if we have somebody that completely will not cooperate with us we have to go to other areas to look for the information. Follow. I understand that but currently are you treating them differently the one system rolling in the wanted to feel alive because this is saying you want to treat them the same are you treating them differently now right now our ability to issue an estimated assessment for a taxpayer that just does not furnish records we're not able to issue an estimated assessment in that circumstance so what do you do. Well we have to use the lawful means we have to go to court and that's it that's an expensive and lengthy process but that's we have to go obtain out comply for a court order and even at that point is at a certain taxpayers may even maybe they're not located in the state of Arkansas maybe they. Maybe that they don't recognize the the jurisdiction of our Arkansas courts we we want to be sure that we have the ability to treat our Arkansas taxpayers is the same as anyone else that has an obligation to keep their records one last phone of Coolio so currently. This is to allow you instead of doing that legal and to paint is in there you just go ahead and come up with the way that you say what at instead of instead of doing the other if if we if we've met the legal requirements of the bill made a lawful request the taxpayer or going to court and they've disregarded the court's order at that point we would be able to issue the assessed S. the mater Cessna thank you very much thank you. Resume to you're recognized. Currently have many active cases do you have opened this would be beneficial to the FAA to pursue this estimated tax calculation. Represent a out I wouldn't know how many open audits that we have but I would certainly have the I'm not asking open all the time asking specifically that this bill would would assist you with how many is there any estimate how many I'll be happy to reach out to the office of field audit represent Beatty and seat how many what with the scope of the of these requests are currently we do have a number of different audit districts we are central AR district and and different had audit districts throughout the state of Arkansas but I'd be happy to request to see if they have a number that they could provide of the number of the amount of taxpayers that are in this position that are not furnishing the records as requested any follow up you mentioned earlier the the legal process and and going through the courts allowing you to providing calculate this estimate the the taxpayer we still have the availability to take this to a court issue would your your estimate be binding upon that person they would still have the opportunity to to avail of court and the cost the associate with the FAA of pursuing confirmation of your estimate through adjudication that that is absolutely correct the taxpayer what if they have been issued estimated assessment they can request an administrative hearing before DFA they can they can also skip that process and go straight to court is wealth to challenge the estimate assessment but if the taxpayer wants to work through the administrative process they can do that and what that is final they can then appeal to the Arkansas circuit court and then up to court of appeals in Arkansas Supreme Court. Thank you thank you Sir riveted moving you're recognized. Thank you Mr chairman of others will miss your understanding SS men. If they if they don't give you anything you work with the vendors that supply that location come up with what you think. Is a sales number. The for that store for that location and then you extrapolate that into gross margin over net margin of what they may have made is that how you do that that that's a very that's a very good summary of represent lunatic exactly what occurs when a taxpayer hasn't kept their records or or haven't hasn't really kept up records to the point that they are auditable records that sometimes records art are kept in. Very for lack of not very understandable or ability to be reviewed okay thank you Mr chairman. Thank you see in lieu of the questions I don't think you by signed up anybody more speak for against this bill. Repudiate you want clothes closed workload you will make a motion. I have a motion to pass be any discussion all in favor say aye opposed graduation reviewed if you pack your bill thank members real quick Thursday one to House Bill twelve oh nine and house bill ten fifty this coming Thursday twelve or nine at ten fifty thank you guys.