Revenue & Tax - Senate
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Bills discussed (2)
| Bill | Title | Sponsor | Status |
|---|---|---|---|
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SB9
· 3 mentions in chapter, agenda, transcript
Matched: “SB9 G. Stubblefield TO AMEND THE LAW CONCERNING TAXES AND FEES…”
|
TO AMEND THE LAW CONCERNING TAXES AND FEES APPLICABLE TO CAR WASH OPERATORS; AND TO … | G. Stubblefield | Died in Senate Committee at Sine Die adjournment. |
|
SB576
Act 897
· 1 mention in transcript
Matched: “session, Senate Bill 576, that contained three different tax increases. I, for one,…”
|
TO REQUIRE A PUBLIC SCHOOL TO ADOPT ATTENDANCE POLICY REQUIREMENTS UNDER CERTAIN CIRCUMSTANCES FOR PUBLIC … | A. Clark | Notification that SB576 is now Act 897 |
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- October 7, 2026
Senator Larry Teague
Unverified
0:00
Mr. Chairman, okay, Senator T. Mr. Chairman, I just wondered if it looks like they put me as far away from everything as they could.
I wondered if you wanted me to sit back here
Speaker 6
0:36
in the corner and maybe that'd work out better.
Speaker 11
0:43
We got seats on the fourth floor. Thank you.
Senator Bill Sample
Unverified
0:50
You're welcome. Senator Dislane? You're good? Yes, sir. let's have the the committee members introduce themselves tell us about what district you represent and a little bit about yourself and senator johnson we're going to start with you
Senator Mark Johnson
Unverified
1:03
thank you mr chairman i'm mark johnson from senate district 15 which includes parts of Pulaski, Perry, Van Buren, Faulkner County, and all of Conway County. And this is the second session of my first term. Senator Hickey.
Senator Jimmy Hickey, Jr
Unverified
1:28
Yep, Jimmy Hickey, Senate District 11. I actually live in Texarkana.
My district includes Miller, Little River, part of Sevier, part of Hempstead, and all of Fayette. Thank you. Senator
Ronald Caldwell
Unverified
1:45
Caldwell. Thank you, Mr. Chair. My name is Ronald Caldwell. I represent District 23. I live in Wynn. I cover seven counties, including Jackson, Cross, Woodruff, Monroe, White, Lee, and St. Francis. I'm beginning my ninth year in the Senate.
Senator Jason Rapert
Unverified
2:04
Senator Rappert. Thank you, Mr. Chairman. I appreciate your leadership for the committee this time. um jason rapert i represent senate district 35 which uh after the last redistricting got shrunk my district from about seven counties i've got now a little bit of perry county all of the city of conway and most of central faulkner county and i was looking mr chairman the other day that this is my sixth general assembly so i started the 88th and uh much like senator caldwell
this is i guess my 10th 10th year really and actively serving so it's good to be here
and been on this committee for a few years so we appreciate the opportunity to work
Speaker 11
2:48
with you again sir thank you and senator teague
Speaker 29
2:53
larry teague i'm from nashville senate district 10 appreciate a
Senator Bill Sample
Unverified
3:01
good vote and i'm senator bill sample i represent district 14 which is part of garland and part of saline
and uh this is my second or second i guess second tour on revenue and tax and with that i would like to introduce our staff, Brandon Smith, he's our analyst, and then we, yeah, it was first. Carly Cooper
Speaker 31
3:40
and Ryan Owensley Where's Ryan at? Okay and now
Speaker 11
3:51
I'd like to call there you are Larry Walther up and ask him
Senator Bill Sample
Unverified
3:58
to introduce his staff for DFA Thank you Mr. Chairman I'm Larry Walker, Secretary of
Speaker 34
4:07
the Department of Environmental Administration. As we normally do, we will be up here to report this commission on a regular basis, maybe on a regular basis.
I wanted to introduce you to several people who would
Speaker 2
4:20
be able to see. I mean, some additional people come in that aren't here today. But to start off,
Speaker 34
4:28
we've got Alan McVey as Deputy Director and Chief of Staff at DFO. Charlie Thomas, who is Deputy Director, and the Revenue Commissioner, along with Paul Gary, who is the Assistant Revenue Commissioner. We'll have several others that will come along.
That's one of the questions to tell you who they are. Alicia Austin Smith and Senior Counsel will be accompanying Paul Gary. We have Deanna, Ron Smith, who is the sales and excess tax administrator, that's a new position for her. Elaine, you know what I'm doing here? Elaine Henderson is the new income tax administrator with all of them today because she's the assistant.
Senator Bill Sample
Unverified
5:27
Thank you. Members, as custom, in your folders, leave these folders here on the desk when we finish up, and we will meet, as most of you know, we will meet on Monday at 9.30 and on Wednesday
at 9.30 in this room. It takes five members to have a quorum, and we will take and try to do our business diligently Finally, it's my plans that we will not take a vote on any bill that has any tax implications on it until the end of, or getting toward the end of the session where we know how much
money that we can afford to do, to spend, and then we'll bring them back. We're going to hear every bill, but then at the end of, or getting toward the end of the session, we will take and bring them back in and we will take it here, the bills, and decide then what bills that we will carry forward to the full Senate to vote on. And so I guess right now the only bill that we have to hear today is
Senate Bill 9, I think that's the only one in your packet, and Senator Stubbathiel, if you will, take a seat there. State your name for the record and your bill number, and present your bill, please. Senate Bill 9
Senator Gary Stubblefield
Unverified
7:50
is the result of a bill that was ran a couple of years ago during the regular
session, Senate Bill 576, that contained three different tax increases. I, for one, have always been an individual that believed that whenever we run a bill that has a tax increase in it, we should run that bill as a standalone because some people were for a couple of these tax increases but they were against the others. But I think it sets just a bad precedent when we start combining tax increases into the same bill.
So what this bill does basically is just repeals the water part, the water tax that was put on car washes in that bill 576. But it also, it also, this bill brought a little confusion in regard to the different car washes, especially those who had one meter with multiple businesses hooked up on that car wash. Some guys had laundry mats, they had convenience stores, all hooked up on the same meter.
And whenever they contacted, and correct me if I'm wrong, Larry, whenever they contacted dfna and asked dfna how they were supposed to pay dfna told them we'll just estimate you just estimate well in my personal opinion that's not a good way of doing business is estimating a tax or the amount of water because there's no way and by the way this bill i think has a six hundred thousand dollar fiscal impact is that first year close around 600,000 and I don't know how that could be completely accurate
because you could have a car wash that has multiple businesses on one meter and you don't know how much water actually is going to the car wash how much is going to the laundry matter how much is going to so in order to solve all that I think that I think the best thing to do is repeal the car wash part and if someone wants to bring it back as a standalone bill so be it so that that's basically the bill but Mr. Chairman if I could I have a car wash owner
that has one of these car washes that has multiple businesses on the same meter and he has a few things that he could probably testify to that how how it's affected his business if you would allow
Senator Bill Sample
Unverified
10:21
As you well know, the normal procedure is to sign up to speak for a bill, but in this case, seeing not that many people in attendance, I will allow that, please. Okay. If you will, come on up.
Members, before the witness gets here, I failed to bring up that we need to adopt the rules, and so sometime after we pass this bill, if you will, look in your packet. There's a set of rules there, and if there's anything that you object to or like to have a comment about, now's the time to do it, and then we'll take a load on the rules. Yes, or state your name for the record. My name is Wade Dunn. Okay, Mr. Dunn, tell us about this bill, how it affects you.
Wade Dunn
Unverified
11:10
Well, I own a convenience store in Greenwood that's a convenience store, a deli, a laundry, three manual car wash bays, and one automatic car wash bay. So trying to come up with an accurate figure on how much water we use was, it really was just a guess, you know, at best. So, you know, Paul was very helpful, and we spent probably a month trying to come up with something.
And we came up with 50 gallons of wash. So, you know, I had to pull a report on the first of the month and the end of the month and figure out how many washes we washed. And then you take 80% of that gallons, and then you multiply that times .002, send that in to CPA, and then he inserts that into the tax calculation, special tax section of the sales tax payment.
Speaker 58
12:14
But, you know, it's just a guess at best.
Wade Dunn
Unverified
12:19
And, you know, it's just, you know. But prior to this, we were, you know, there was no calculation on it. You just paid the sales tax on the goods that you bought. And to be honest, this particular bill, the net result was it saved me money.
But it's when you're doing business based off of just a guess of what you're using. to me it's just bad
Senator Bill Sample
Unverified
13:02
business but that's my opinion you were very generous if when you said 50 gallons of water it for a wash because those pumps will only pump out about uh about three gallons a minute
Speaker 62
13:13
well good i'll look forward to the refund
Speaker 63
13:16
and that's between you and and those folks but yeah
Wade Dunn
Unverified
13:19
the no i mean we did we did paul and i both did due diligence and trying to you know here's
here's the thing there's four there's four uh washes there a four dollar wash five dollar wash eight dollar wash and a ten dollar wash so trying to come up with a what that was but you know that was that was the best we could come up with but again it's there's I like to do stuff fact-based not not guessing and uh you know my guess that there's a lot of folks that's in my situation that you've never heard from never filed a water use tax for automatic car wash.
So, I don't know. That's just, I
Speaker 66
14:03
would assume so, but maybe not. Like I say, my dealings
Senator Bill Sample
Unverified
14:08
with pumps like that, most of the pumps, the high-pressure pumps that you're dealing with, most of them have a three-gallon-a-minute capacity. And so if you're giving 50 gallons of wash per wash, I don't know how many minutes your self-wash timer is set at, but I dare say that it's set at 15 minutes, and so that would, per wash.
Speaker 67
14:33
If you take a, let's just take the $5 wash,
Wade Dunn
Unverified
14:37
you know, it passes, I think it passes four times, but only two of those times are high pressure. The rest of it is spot-free and soap and everything else. Yeah, and
Senator Bill Sample
Unverified
14:52
like I say, I mean, he could pass 10 times in two minutes and still just pump six gallons. Yeah, exactly.
Wade Dunn
Unverified
15:02
Like I said, it's not a financial thing
because the water use tax on a monthly basis is minute, very minute. But it's just, I don't know. it's just uh it needs to be something that's a little more fact-based than and and not everybody would be on a you know one business on or several businesses on one meter in my scenario you know if you have a standalone car wash then it's pretty simple but uh there's
Senator Bill Sample
Unverified
15:36
a lot of them out there that's like mine are you through yeah members uh senator dismayne you have
Senator Jonathan Dismang
Unverified
15:45
question. And so I'm just trying to make sure I understand, because there are a lot of moving parts, and then DFA may need to kind
of go through this with us. So kind of what I think you were saying is you used to pay sales tax on yours, so you must have, you know, there was this big debate, and again, it's pretty cloudy to me, but it's all about if you touch the vehicle, don't touch the vehicle. So if someone's putting on bug, you know, removal in the beginning, then that's a touch,
and that means it's subject to sales tax. If it's going through an automatic, There was a debate, kind of a ticking time bomb, of whether or not that includes touch or not touch. There was all these moving parts. But you're saying on your stuff, you paid just sales tax on everything, and that washes out with
what you're paying now. I was paying sales tax on supplies and equipment that I bought. Just supplies and equipment. So you didn't have anything that touched any vehicles then? No, I didn't touch vehicles, so therefore I didn't pay sales tax.
Wade Dunn
Unverified
16:34
If you were a tunnel where you actually had labor wax and washing and such as that,
I think. Now, I may be wrong with this. They can answer that, but I think those folks are paying
Senator Jonathan Dismang
Unverified
16:44
sales tax. Yeah, and that was part of the, I think that's where it was all headed, was at some point there was going to have to be some determination on what to find touch and not, and I think this was a whole attempt. So I'm wondering, I guess my question will be for DFA, is, I mean, I see the revenue impact, but there were also taxes that were taken away. Does this reinstate all of those? I mean, they were offsetting tax cuts and increases in the original bill.
And so does this offset those, or is this just, or if this were to pass, are we just saying all car washes are not subject to
sales tax anymore, forevermore, and we're just in the debate on touch, not touch, all that
Speaker 80
17:29
sort of thing? Mr. Chair, if I could go back. Yes. If
Senator Bill Sample
Unverified
17:45
you would introduce yourself for the record.
Speaker 83
17:49
Thank you, Mr. Chair. Paul Goering, Assistant Revenue Commissioner, Department of Finance and Administration. Senator Dismang, Mr. Vice Chair, the Senate bill as it's currently drafted only contemplates the car wash water usage fee that was enacted by Act 822 of 2019. That car wash water usage fee is subject to the automatic car washes and the car wash tunnels. Act 822 also provided a sales and use tax exemption for tangible personal property,
as well as services that would become exempt. Those services and tangible personal property had to have a connection to being used within the car wash. This bill only touches upon and removes the car wash water usage fee. I believe that we did have the revenue impact for the Act 822 legislation that quantified the sales tax loss attributable to that new exemption. I seem to recall it was in the
neighborhood of $2 to $3 million that we were going to be losing in sales tax revenue, but this particular piece
Senator Lance Eads
Unverified
18:59
of legislation would not affect that exemption. That exemption would continue if this, if Senate bill were to become
Senator Jonathan Dismang
Unverified
19:05
law. So in essence, then car washers moving forward, their products that they set, that they purchase to use are going to
be exempt from sales tax and their operations will be excluded from sales tax. And so they will have the most favorable tax treatment of any entity operating in
the state regarding sales tax. Would that be a fair
Speaker 83
19:24
statement? Their machinery and equipment would be continued to be exempt from sales tax, as well as the car washing chemicals, things of that nature, and also any of those ancillary services that were provided as a part of a car wash, such as vacuuming the vehicle, polishing the tires, things of that nature, where there were actually an attendant that would be performing a taxable service before Act Day 22. Act Day 22 exempted those specific services and tangible personal
Senator Jonathan Dismang
Unverified
19:55
property. So again, so just to make sure I understand, we'll restate it one
more time. So the services, the products they purchased, the equipment, everything would be no longer, I mean, stay a status quo right now, not subject to sales tax. And then the products and services that they
Speaker 90
20:14
provide would not be subject to sales tax either. That is correct. There was one clarification to that,
Speaker 83
20:21
and this was a part of our rulemaking that we promulgated in 2020, was that if they had services or products that they provided to customers that had no connection
whatsoever to a car wash, so if a car wash was selling candy bars, drinks, things of that nature, or maybe a car wash had a separate oil change business that they provided oil changes, those would continue to be under Act 822. Those are
Senator Jonathan Dismang
Unverified
20:47
still taxable transactions. Well, sure. Those are, I mean, yeah, that's understood, but that's the reason,
Speaker 90
20:53
yeah. But everything else, Senator, that you
Speaker 83
20:56
mentioned, this bill would not affect that exemption that was codified under Act 822 for car wash operators.
Speaker 83
21:04
bill then? We have prepared the revenue impact
for a full fiscal year of collections of car wash water usage fees would be a million. This bill would, I believe, impact eight months of collection so that the revenue impact was $670,000. DFA, in consultation with the governor's office, we're neutral on the bill. If we were asked to speak, we would provide the fiscal impact, but we are not here to speak either for or against Senate
Senator Jonathan Dismang
Unverified
21:34
Bill 9. Okay, is there any other business structure in the state that its inputs are not subject to sales tax
and its outputs are not subject to sales tax? Are
you aware of any besides service industry, but their inputs are subject
Speaker 83
21:48
to sales tax? That's not fair either. What immediately comes to mind, Mr. Vice Chair, is that manufacturing, they are able to purchase their manufacturing machinery and equipment exempt from sales tax. Their outputs generally are a sale for resale transaction. They sell the manufactured product. But eventually that product is, if sold in Arkansas, it's going to be subject to a retail sales tax.
Senator Jonathan Dismang
Unverified
22:11
Yeah, so that's not, that is about as apples and oranges as you can be in an example then because that's a manufacturing reselling for wholesale that's ultimately, I mean, the final product ultimately has sales tax. And so let me phrase it one more time. Is there any entity or business structure in the state that's inputs are not subject to sales tax and its ultimate output is never subject to sales tax? Is that a better way to word it? I
Senator Lance Eads
Unverified
22:39
would have to, I don't specifically recall something
that is treated equivalently to the car washes in Arkansas. All right, thank you. Senator
Senator Jason Rapert
Unverified
22:49
Rappert. Thank you, Mr. Chairman. I just wanted to ask, I remember the bill, of course, that bill, I actually looked the bill up, looked the bill up and
it was full of many different things. As Senator Stubblefield said, there was many different aspects, not some of which had nothing to do whatsoever with the car washes and I want to make sure I
was clear to you and Senator Dismay did a good job of it sounds like basically what I'm hearing that if a person wants to get into a completely sales tax-free business if you had a stand-alone car wash if this passes that's what
Speaker 83
23:28
what you would have is that correct? For a large part I would I would certainly agree that the inputs the manufacturer I'm sorry the machinery and equipment to basically have the car washing equipment on your premises, the car washing chemicals, the utilities, the water, the electricity,
if they have that connection to the car wash,
Speaker 91
23:47
those are not going to be subject to Arkansas sales and
Senator Jason Rapert
Unverified
23:51
use tax. And I want to make sure, because I'm trying to make sure to remember what we did in the past
and the implications, and Senator Dismayne's ferreted out that pretty well. I did want to ask again for my own clarification. From what I read in the bill, those exemptions offered a substantial amount of tax reduction on the one
side there for the car washes on the
exemptions. And if we now do this, because basically this was put in really as an alternative to the way it had been being taxed.
Is that correct? That's correct, Senator. Okay. And so, all right. I think it's on my questions there for now. And obviously, I'm all for cutting taxes and being good for business. But I want to make sure we're clear that we did cut a substantial amount in the last bill, though this was a replacement alternative for that. So, all right. Thank you.
Speaker 22
24:46
Thank you, Senator Rayburn. Senator T, you have a question? Mr. Chairman,
Speaker 1
24:53
more a comment, but I'm never comfortable to
Senator Larry Teague
Unverified
24:55
start giving tax cuts early. I don't think it's a good policy. I think you wait
and kind of figure out how much money you're spending, and then you kind of come forward and do that. I'm receptive to their concern, but I probably won't vote for it just because I think it's too early to do that.
Speaker 14
25:19
Senator, we're not going to take a vote. We're not? Okay.
Senator Mark Johnson
Unverified
25:31
Thank you. Senator Johnson. Thank you, Mr. Chairman. And I've got a couple questions for Mr. Gehring. Paul, last session, as I recall, may have been two sessions ago, but General Assembly gave some concessions to manufacturers like about electricity and things like this.
I understand that a car wash today would be paying sales tax on their electricity. Is that correct?
Speaker 90
26:00
input that would be exempt by Act 822. Okay. Their water, their electricity, things
Senator Mark Johnson
Unverified
26:06
of that nature. So utilities, of course now, utilities, like my electric bill at my home, it's taxable. That's correct? That's correct. So a business like a car wash is treated like a manufacturer. or in the same manner as under current law.
Speaker 90
26:23
I agree that both a manufacturer and a car wash operator that is able to purchase
Speaker 83
26:30
their utilities for purposes of their operations are exempt. Now, if there is a car wash that has a separate unit that is not part of the car wash, If you have a separate laundromat or
Senator Lance Eads
Unverified
26:44
a retail store, that's not an input for the car wash. Well, I've
Senator Mark Johnson
Unverified
26:50
always noted that the general public obviously doesn't like paying more taxes than they have to.
On the other hand, the thing that really galls them and gets them upset is when things are complicated. And I know that Secretary Walther, though he was in a different agency, remembers when Governor Huckabee came up with some ways to streamline how you buy your car tags in Arkansas. And many of you here even were at the DF&A in a different capacity at that time. You probably were. And let's just say it made a lot of people happy that you didn't have to get five or six pieces of paper and go down to the office.
And then if you've lost one of them or it wasn't up to date, then you'd go back home and then come back and get at the end of the line again. So anything that can simplify things and do away with some of the complexity. I mean, I understand the intent of the bill that, you know, the idea that you're just going to estimate something when, you know, it should be crystal clear when it related to tax liability because, and I agree with Senator Sample, 50 gallons sounds like an awful inefficient way to wash a car.
I mean, I might want to come to your car wash because you'd probably do a better job with all that extra water. But it's just the idea that, you know, we're kind of pulling numbers out of thin air. And I would, regardless of the outcome on this legislation, I would hope that the department
would look at some way to simplify this for the business people and the
Speaker 83
28:33
consumers, if that's possible. Mr. Chair, I could address Senator Johnson. When we had our conversations back after Act 822
became effective, this specific provision, we did get those calls about, and we issued a number of revenue legal opinions. I think that the big challenge was, is for an operator that does have multiple business units under their one meter, what we had recommended in our rulemaking is that what would be ideal is that a separate meter be installed for purposes of that car wash, but we did not want to require that as a part of our rulemaking.
We said this is our best practices. And if that was not financially possible for the taxpayer, then we would always work out a methodology that we could figure out. But certainly the way many car washes that we have dealt with are a, they're a standalone business, they're a car wash, that's all that they do. They don't have any other ancillary businesses on their location. So that really, in fashioning a fix to that, that's what we came up with in our rulemaking.
But even, we understand that we aren't fully acquainted with every type of business model in Arkansas that does offer a car wash that is subject to the car wash water usage fee. we will continue to get these questions and we'll do our very best to either recommend legislation or also improve upon our rulemaking to make the impact
Senator Lance Eads
Unverified
30:02
upon the businesses affected the least burdensome. If
Senator Mark Johnson
Unverified
30:06
I could, Mr. Chairman, one quick question. I seem to remember years ago that
this came up like with vending machines. So how do you, if you're buying a Snickers bar out of a vending machine how you're covering the sales tax and there's a permit for the machine as a compensating tax for for that particular what would be sales tax if you walked into the counter and picked it up and took it up to the clerk so I'm wondering if maybe there should be the equipment should have a similar way to I mean I'm just trying to come up with something that's
simple and equitable as opposed to something that's potentially inequitable and clearly complicated. So that's really all I have.
Speaker 108
30:48
Thank you, Mr. Chair. And to that point, Senator Johnson, when the draft
Speaker 83
30:54
bill was originally filed, if I recall correctly, or if it was in its before filing drafts, there was a fee that was going to be levied based upon the number of bays, car wash bays, as opposed to a water usage fee. That got amended in the bill. So instead of
but you just paying a flat fee without any concern for the water that was used by that car wash. That way, a car wash operator would be able to know, okay, I have this many bays, this is the amount of the fee I'm going to be paying on an annual basis, but then it was converted to a water usage fee. So that's what the General Assembly ultimately landed upon in the legislation, but that would be an alternative method that would have no concern whatsoever
with this particular problem posed by businesses that don't have a separate meter for their car washes. Senator Rupert. Yes, sir, thank
Senator Jason Rapert
Unverified
31:58
you. And Mr. Dunn, what would it cost to put in a meter just so you could actually have an accurate count?
Wade Dunn
Unverified
32:08
Those meters are about $200 a piece plus installation. Okay. And here's the complicated part, and I was going to add some stuff,
but that's a great lead-in to these questions, and I think I'm going to get to the complication of that. When you say car wash water usage, you're only talking about the automatic bay. You're not talking about, in my case, the manual bay. So many, many, many car washes have an automatic bay and manual bays. And the water usage is off of only the manual bays. Isn't that correct? That's correct. It's the automatic car wash. So that twist.
Senator Jason Rapert
Unverified
32:52
Well, I want to make sure I'm asking questions like I need them to answer. So
you said $200 to put in a water meter. Okay, but you're saying the problem is that there's a difference that the manual bays are not calculated in this? That's correct, sir. And it's only the automatic? Automatic in a tunnel. So then you would have to have a system by which, for instance, if a lot of these, I can see them in my mind's eye, you've got the building and the structure, and over here you've got all the manual bays,
and over here you've got all the automatic bays. You basically would have to put in a meter that only gauges water going to the automatic. Is that what I'm hearing? Yeah,
Speaker 120
33:29
and that's what I was saying. let's go into the car washroom inside the
Wade Dunn
Unverified
33:33
car washroom you've got big hot water heaters right and you got a pipe coming out over here going to the manual you got pipe going over here to the automatic so there's a water meter you got a reverse osmosis system that sends water over here sends water over here so there's another one and you get all these pipes in that go into the chemical vats right eight or ten it's just an impossibility it's not an impossibility but it's
Senator Jason Rapert
Unverified
33:56
it's not feasible well i'm not a plumber but i
know that a water source has got to come in one pipe somewhere yeah and so i you know and i know if it's coming in and then you're splitting it out but i just wondered you know why i
Wade Dunn
Unverified
34:13
could not you could have a meter there yeah no it's a good question and we discussed that originally uh and and i want to be very very clear i'm not here to try to not pay tax. This bill saved me money, but we're talking, you know, 10 bucks a month
or 20 bucks a month or 30 bucks a month. It's not about that. If it reverted back to me paying sales tax on the goods and supplies that I bought, that's fine. I'm not here to tried to not pay taxes i'm just saying that the bill and i and i understand you know you didn't you didn't have someone here that could explain it in in my scenario which my scenario is not unique my scenario is is very
Speaker 70
35:00
common it just is just not workable i mean you know well i appreciate
Senator Jason Rapert
Unverified
35:07
your answers on that. I just again there
was a two to three million dollar exemption or you know impact when we did it. So on this one item it was a net decrease. Correct. Okay so I want to make sure that's clear because I remember the debate on this. You know I don't know what the committee is going to do sir but you know to me this is not an impossible problem to solve this is a meter if it ends up there
it's it's a meter and so anyway thank you for your your response yes thank
Senator Jonathan Dismang
Unverified
35:51
you senator dismay no thank you and i think you responded i mean i was
curious a little bit about what the ultimate impact it was to you of this bill it sounds like it was a
Wade Dunn
Unverified
36:03
net positive as far as revenue going back into your pocket. And, again, it's very, very minute. It's a complication. And the complication isn't that difficult.
But it's the fact that it's a guess. So, for instance,
Senator Jonathan Dismang
Unverified
36:15
and, again, this is, it was new to me or I wasn't even thinking about the utility inputs being not subject to sales tax. uh but we'll just i mean again that's not all folks that
are you know have an ultimate sales tax are afforded that same opportunity either uh but i guess what i'd ask is so like on your electric meter i'm a guess i mean how is that do they so you don't pay sales tax on your electric
meter is that separately metered between the building and the car wash or no i pay sales tax on my meter because my meter is powering your whole place. I was curious about how that was structured there.
Wade Dunn
Unverified
36:57
I mean, I can't go to them and say, hey, don't charge your sales tax on the meter because my electric bill is $2,500 a month, and how much of that is car wash again? Thank you.
Senator Jonathan Dismang
Unverified
37:08
Mr. Chairman, one thing I'd like to
do, and this doesn't involve you, but we were pretty straightforward with what we were laying out to be the ground rules
and how we were going to consider bills and, you know, consider those at the end. One thing I do want to understand is maybe in another business at the conclusion of this discussion, have DFA come up and talk about the way that they're viewing bills because I'm a little bit surprised on the position on this particular bill and I want to understand if that's just independent for this one particular issue or we're going to apply this to all issues or, you know, I mean, that sort of thing. But if we could discuss that in other business, I think it would be good for us all to
Senator Bill Sample
Unverified
37:46
get on the same page. As soon as we take care of our business, we will ask you if you need to come back up and explain that very fact.
Speaker 134
37:54
Is there any more questions for Mr. Gary? I do need
Wade Dunn
Unverified
37:58
to clarify one thing. I told you I'm not paying sales tax on electric. The automatic car wash is on its separate meter. And at one point I asked my wife to contact them and tell them to take the tax off. And Paul had shared with me how to get them to do that. So I may not be paying sales tax on the electric that goes to the automatic because it's on its separate meter. But other than that, the water and everything else,
Speaker 134
38:25
we're paying sales tax on everything. Okay.
Speaker 22
38:30
Are there other questions? Mr. Green, thank you. Senator Steppenfield, do you want to come back and
Senator Gary Stubblefield
Unverified
38:45
close for your bill? Thank you, Mr. Chairman. Senator Disomane was talking about similar taxes such as this. We have a very convoluted tax system, as most states do, in the federal government.
And as a farmer, and I know Senator Raper may know this, you can go into your local farm store, Senator Raper, you can buy a fly tag to put in your cattle, or you can buy an identification tag to put in your cattle. One is tax-exempt, one is not. And I can go through a whole litany of products you can buy in that store pertaining to livestock and farming that are tax-exempt, taxable. Makes absolutely no sense at all. And we can go back to candy bars, how they have to separate candy based on the ingredients.
I mean, it's so convoluted it could be simplified so much easier. But the main point I'm trying to point out here is, and this committee deals with this, let's get back to passing. If we're going to have a tax increase, let's just run it as a single stand-alone tax increase where the other bills that are put in don't influence the outcome of that one bill. And that's what I think we need to do. Taxes are a big deal to people. And when they look at us down here, we put in three in one bill,
and we're always talking about Washington politics, Mr. Chairman, about not doing Washington politics, and yet in Washington, they will appropriate money for 50 tanks for the military, and then somebody wants to stick a golf cart, a course in on it, or some other things for their Senate or House districts, and then they all get voted together. And if you vote against the bill, it's like you're voting against the military. We need to simplify this. Just make it simple. That's all I'm asking. I appreciate, I know you're not going to vote, but I appreciate you considering this bill.
Speaker 137
40:42
Thank you. And you do understand that we will call you back to vote on your
Senator Bill Sample
Unverified
40:51
bill. Members, I think we're finished on this bill. Thank you. Thank you. Mr. Dunn, thank you for coming in and enlightening us. Yes, I need that motion. I was about to call for it.
Senator Mark Johnson
Unverified
41:14
Senator Johnson. Thank you, Mr. Chairman. I just want to clarify the rule. I think it's a good rule. but I'm hoping we're limiting this to general revenues that we could consider things that were special revenues or other things that would not affect RSA or anything else. Would that be something we could fall outside this and therefore could be considered by the committee? That's correct. Okay, so thank you. Thank you.
Senator Bill Sample
Unverified
41:44
And we have a motion to accept the rules and a second. All in favor say aye. Thank you, members. And now we will take and invite Daphne back up to answer some of the questions and enlighten us on some questions from Senator Dismay. Senator Raper, do you have a... I just
Senator Jason Rapert
Unverified
42:09
have a quick question to make sure, since we're doing it this way, will staff be
keeping all of our data in this green?
Because I've made a few notes here, at least for myself, because if we're going to be doing this, it's going to be important that we are able to dial back in on
some of the discussion. So I just ask that they not get rid of our notes, we're going to leave it there. So thank you. That's our intentions. All
Speaker 134
42:37
right. Thank you. Mr. Gehring, would you state your name for the record,
Speaker 82
42:40
please? Thank you, Mr. Chair. Paul Gehring, DFA. Senator Dismayne. Hi, thank you.
Senator Jonathan Dismang
Unverified
42:45
Yeah, I was a little bit curious about the position that DFA took that they were going to be neutral on this bill? I mean, typically, at least, I mean, I think
in the past, DFA has always taken a position of being opposed to a bill that impacted general revenue because it impacts the governor's balanced budget proposal that it made back in November. And so I'm really a little bit curious how you came to that determination that you would be neutral on a revenue loss for the state. And is that something you're going to utilize in the future? or I mean, do you have a hard and fast rule? Or is it just kind of we're just gonna do what we need to do? Thank you, thank you, Mr.
Speaker 83
43:23
Vice Chair. Certainly when we looked at and scored Senate Bill 9
and saw the collections that we had seen for a full year of collections after the effective date of Act 822, this was approximately $1 million in collections for a fee that we administer at DFA. So we recognize that we have our own administrative costs that are associated with this one unique fee that was enacted by the General Assembly in 2019. We also recognize that there is administrative costs
for businesses to comply with this requirement. So for this specific circumstance, for this bill, we did not see a strong motivation for DFA to oppose, given that we have our resource costs for this specific fee that we would have to continue. You're spending a million dollars to collect this fee? No, I would not
Speaker 90
44:18
say that we're spending a million dollars. I mean, I'm just gonna say that the,
Senator Jonathan Dismang
Unverified
44:27
I've seen us oppose or DFA oppose before bills that had maybe $100,000 revenue impact to the state of Arkansas because it was outside the governor's budget. I am still a little bit curious of why we've taken the position that we have on this particular bill because it is a revenue loss. Now, if you're wading into policy as DFA, then I just think that we need to state that. If you don't believe that car washes should pay taxes on their inputs or outputs, then this needs to be stated from DFA and that DFA has a policy position.
But if y'all don't utilize a hard and fast rule in what you oppose and what you don't, I mean, I'm not sure how we move forward besides we'll be the ones that are reviewing and examining and understanding the impact that this has on the governor's balanced budget and any future RSA proposal. but that used to be a job that was you know done by DFA and was stated essentially on any bill that
had a revenue impact so I'm not following what you're saying and I'm not sure that that what you're giving me is an actual accurate reflection of how you came to the decision to be neutral because being neutral in this situation is policy but with that I'll turn it over to any other members a
Speaker 57
45:53
question. Senator Johnson, thank you. And then Senator Teague. Thank you, Mr. Chairman. This is
Senator Mark Johnson
Unverified
46:00
kind of a, I won't call it a response, more a follow-up to Senator Dismang's comment.
While I'm new on this committee, I spent many hours in both House and Senate committee years ago as I worked on different issues for clients. And I have to admit, when I saw the commercial where the young man's working out of the cubicle and his answer to everything, I think it was a credit card company, was no, no, no. And I turned to a friend and I said, that reminds me of the DF&A people at that time. It was Mr. Weiss and Mr. Leathers, but they would, whatever you came up
with on a tax bill, the answer was no. And I like the idea that perhaps there is a neutrality. I mean, I'm not saying that there's not things you shouldn't jump out and say, look, this is going to have a serious impact and we need to rethink this. But as far as this being an automatic, if it affects revenue at all, then we jump out and we oppose it as opposed to something that has a positive impact on revenue in other words it raises taxes that that the department would
automatically be for it and I'm it's actually a little bit refreshing to me Mr. Chairman to hear that perhaps they would leave those kinds of decisions not the information of course but the decision to the General Assembly as we're trying to to come up with both a balanced budget and meeting all of our needs of the appropriate needs of state agencies because we're at the point now in time that as a percentage of per capita income in this state as a percentage we are the highest
tax state on state and local taxes and that is bothersome to me and I one of the reasons I wanted to to serve on this committee was to maybe have an impact on it that doesn't mean we're going to start cutting taxes crazy and all that, but I think we have to look at our situation through the years, and it's kind of like how I weigh about 50 pounds more than I did when I got out of high school. It didn't happen all at once. It was kind of gradual, and you look up and see, you know,
how did we get here, and maybe we need to think about a way we can kind of shave a few pounds off, But I appreciate this attitude very much, Mr. Gehring and Mr. Secretary. But I also appreciate Senator Disbank's situation that, you know, he's our budget chair. He's looking at these things to like, oh, my Lord, how are we going to make this thing balanced? So I just want us to look at both sides of that equation because things that come through this committee are a big part of that.
and I think in the long run has a lot to do with the economic growth of this state as we see some of our neighbors cutting taxes, eliminating income tax like they've done in Tennessee and that the governor of Mississippi has set as his goal, seeing some of the successes our neighboring states have had. We don't want to be known as the highest tax state per capita in the country. So that's, and I appreciate everything everyone said on this, but I just
want to bring that into the discussion as we move
Senator Bill Sample
Unverified
49:28
forward. Thank you, Mr. Chairman. Yes, sir. And Senator, I do tell people that if you haven't got the word no in your vocabulary, you don't really need to be on revenue and tax. And with that said, Senator
Senator Jonathan Dismang
Unverified
49:41
Dismay. Thank you, Mr. Chairman. And so just to, I just want to kind of circle back. So kind of
the reason that you have a neutral position is because it's only $670,000
in one year and a million dollars in the next, and there's offsetting expenses that DFA has to pay to be able to allow these collections to happen. That's
Speaker 83
50:02
generally, is that what I'm understanding? Yes, Mr. Vicer. There are administrative costs that are associated with administering a tax. There are, of course, personnel. There's computer changes that are required of our tax system and ongoing maintenance costs for the tax system and since this is a fee that we're only collecting and estimating about a million dollars a year and I certainly agree I do not I don't have a figure exactly of what we have dedicated to this cost I'd be happy to check with miscellaneous tax to see what what their personnel and their their
programming costs are associated with it but from our perspective and I did want to address this is not a policy statement on the car wash water usage fee. It's purely from the perspective of when we prepare a fiscal impact statement, you know, we have to look at the resources that are required. And in that, making that determination on when we are asked to speak about a bill, this one, the determination was that we would be neutral and allow the General Assembly that we would not provide a thumbs up or a thumbs down. Yeah. And that's going to play
Senator Jonathan Dismang
Unverified
51:09
into my decision on the bill. And so what if you could, and we could move this to the other business next week, but could you give me a list of the positions that would be eliminated if we eliminated this tax and the savings that would then be generated, kind of what you're talking about and how you came to your decision. So if you could give me the specific positions that we're going to eliminate if we were able to pass this bill, I think that'd be valuable for us to know, especially if it's to the tune of $670,000 or a million dollars that has to be put in place understand there's some programming issues and maybe you just shift that resources somewhere
else but I'd like to know where those are shifted to because again if we're going to have that then I'd like to know and then the difference between those two things so that we're going to have a loss in revenue and we're going to have some savings by eliminated positions at DFA and then there's a another amount out there which is what would have to come out of the governor's balanced budget and if you could go ahead and let us know what that amount is going to be and what what line item in his proposed balanced budget we would be removing that from. I think that would be helpful so we understand the full grasp of how
y'all came to the decision to be neutral.
Senator Bill Sample
Unverified
52:19
Thank you. Senator T, I apologize for passing over you.
Senator Larry Teague
Unverified
52:24
That's all right. Mr. Chairman, an observation. This is my 19th year on revenue tax. And every time I've seen the department not care somebody bigger than him has been involved you know it's just that simple somebody bigger than
them has gotten their attention and said said that so I'm not going to ask him if
somebody got involved but I would bet money somebody's been involved in it besides their decision. Thank
Senator Jason Rapert
Unverified
53:02
you. Senator Raypert. Thank you Mr. Chairman and I guess in some of the general
discussion here I really appreciated Senator Johnson's comments on the status of our overall tax burden, sales and tax use burden. Given that we're delaying a lot of this I would ask
does the department have any kind of recent report that you've done on that issue that might be available to us as a refresher on the committee of what that is? Because I will just say that I was visiting in another part of the state here recently and it was a discussion, trying not to specify, so I'm really wanting to talk about the impact rather than the location, but they were
talking about significant, you know, concessions been made on things, and of course the state has cut taxes, etc., but yet they seemed, they were telling me that people in their community still go outside of the community because their local tax is so high that they could literally go five or ten minutes and buy things cheaper. And so I feel like that as we have made efforts as a state to continue to provide relief, that some of the local communities have basically diminished
that effect by raising their own local taxes. And so I don't know if there is a report that's available from our perspective at DFNA rather than some outside entity just looking at which those are valuable. But I just wonder, is there something available to us that would give us some reality? Because I'm wondering if we don't need to cap what some of the, take a look at the caps on what some of these taxes are being charged by municipalities and counties.
Speaker 83
55:03
Senator Raper, if I understand your question correctly, are you referring to the local tax, the city and county taxes, sales taxes that are levied at the? To
Senator Jason Rapert
Unverified
55:13
play off of his point, which is the overall tax burden seems to be very high, relatively speaking. I would like to figure out a way for us to address all of that. And if it's a matter of, because we have cut taxes since I've been here in the last 10 years, and Senator Teague's been along for that ride, we've cut taxes here more than any other time in the state of Arkansas' history.
hundreds of millions of dollars. It's approaching maybe even 800 million now, not to mention that I carried the sales tax reduction on grocery items. 65 million dollars a year is what your department said was staying in pockets of people because of that effort that we did. So, and then here we are and we still have this burden. So I would love, Mr. Chairman, what I'm saying to them is if they don't have a report, I think it would be beneficial to all of us to get an idea of what that is and and so that's what I was asking for
Speaker 83
56:15
that we routinely provide to the public as to the city and county sales taxes that have been enacted by those local jurisdictions but if you're asking if there's a comparison to those cities to local jurisdictions or to states outside the state of Arkansas I would have to go back and see if there's anything internal that we have generated to make a comparison, but we certainly keep track of and make available all of the local
Senator Jason Rapert
Unverified
56:42
sales tax rates in our state. Well, for the
purposes of some of the folks and some of those entities that track such things and do those reports, if they're watching any of this at all, I'd appreciate them reach out because I'd like to begin to pull that in. We need to take a look at it because it's really difficult for us to put Arkansas in a more competitive position when every time we make these changes, it suddenly gets taken away and diminished by something that's happened at the local level. I'd appreciate that. Mr. Chairman, the other thing I would say is that I have found a whole new approach to doing bills
in here, which is if we can find out how much we save by getting rid of some taxes of what it costs the state to administer that, I guess we could just get on a good honor system and we could cut out a lot of fat. We just everybody send in a little. It's been very interesting to hear the approach on this and that's just an editorial comment because obviously if that's the way we're going to look at it it's given us a whole new line of attack. So thank
Senator Bill Sample
Unverified
57:45
you Mr. Chairman. I think we tried that with internet sales tax if I'm not mistaken and you can see how much out of that
well that worked uh simply you have one final question yes and that
Senator Larry Teague
Unverified
57:57
is that maybe another comment our state and local taxes are too high i think everybody understands that they're too high
but cities and counties are barely getting by in most cases uh at least the small ones in rural arkansas that i represent are barely able to do their business anyway okay Maybe you can cap them, but you can't talk about making them cut them
because you've got to replace that revenue somewhere. Anyway, just a thought. Thank
Senator Bill Sample
Unverified
58:30
you, sir. Well, and there's always varied reasons for local taxes. I mean, Garland County does not have a millage. So to make that up, there's higher sales tax. And there's always some sort of different idea about that with the locals. and I think it's always proper to have the locals control their own communities.
Seeing no other business? We are at... Hold on. Mr. Collins. I just wanted to be able to go down in the state and I have my folks in the waiting room and so on. Secretary Walker introduced me to work here, and so I've got a seat in here, and I'd just like the idea of you. If you would, I was going to ask if you would introduce them so that we'll know what their name to a face.
Speaker 40
59:46
senior legal counsel. She works for Paul. Next to Alicia is Lynn, and Lynn is our field audit administrator. She also has a collections unit in her shop. Formerly, she was the income tax administrator. One of the things that we've done at DFA is to give our administrators the opportunity to see some of the other sections, so Lynn has moved from income tax over to field audit. In the back here is Deanna Munn-Smith, and she's over sales tax and all the excise taxes,
so things like power wash and cigarettes and all the numerous taxes are in Deanna's shop. And then on the end is Sandra Collier, and she is our ACV director. She just started recently, several months ago. ago, the group that works with the counties when it comes to property taxes. So the counties manage that, they get guidelines on the ACB. So I appreciate you acknowledging that.
Senator Bill Sample
Unverified
1:00:48
Okay, seeing no other business, we are adjourned.
Agenda
CALL TO ORDER
ORGANIZATIONAL MEETING
REGULAR AGENDA
SB9 G. Stubblefield TO AMEND THE LAW CONCERNING TAXES AND FEES APPLICABLE TO CAR WASH OPERATORS; AND TO REPEAL THE FEE LEVIED ON CAR WASH OPERATORS BASED ON WATER USAGE.
RULES
DFA POSITIONS ON BILLS WITH REVENUE CHANGES
ADJOURNMENT
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — REVENUE & TAX - SENATE, Jan 20, 2021 | Agenda | 1 | Official source ↗ |
Speakers
Senator Larry Teague
Unverified
Speaker 6
Speaker 11
Senator Bill Sample
Unverified
Senator Mark Johnson
Unverified
Senator Jimmy Hickey, Jr
Unverified
Ronald Caldwell
Unverified
Senator Jason Rapert
Unverified
Speaker 29
Speaker 31
Speaker 34
Speaker 2
Senator Gary Stubblefield
Unverified
Wade Dunn
Unverified
Speaker 58
Speaker 62
Speaker 63
Speaker 66
Speaker 67
Senator Jonathan Dismang
Unverified
Speaker 80
Speaker 83
Senator Lance Eads
Unverified
Speaker 90
Speaker 95
Speaker 91
Speaker 22
Speaker 1
Speaker 14
Speaker 108
Speaker 120
Speaker 70
Speaker 134
Speaker 137
Speaker 82
Speaker 57
Speaker 144
Speaker 40