Mike Beebe Prepares for His Last Regular Legislative Session

by Andrew DeMillo, The Associated Press  on Sunday, Jan. 13, 2013 2:01 pm  

Gov. Mike Beebe, speaking to reporters Jan. 7.  (Photo by Lance Turner)

"This is a joint effort. I'm a product of the Legislature," said Beebe who served 20 years in the state Senate. "I have a great deal of respect for the institution and its role."

Grocery Tax

The session also marks Beebe's last chance to follow through on his promise to phase out the state's sales tax on groceries, an idea he campaigned on in his 2006 bid for the state's top office. Beebe has successfully pushed for cutting the tax from 6 percent to 1.5 percent since taking office in 2007.

This year, Beebe has called for cutting the tax to 0.125 percent. The cut would eliminate all state sales tax on groceries except for a one-eighth cent tax for conservation approved by voters as part of a constitutional amendment.

Under the governor's plan, the tax cut, which officials estimate would cost the state $69 million, would be triggered if obligations in several key areas decline by at least $35 million for six consecutive months. They include payments the state must make to three Little Rock-area school districts as part of a desegregation settlement and some state bond payments.

Incoming House Speaker Davy Carter and Senate President Michael Lamoureux, both Republicans, won't say whether they support the grocery tax proposal and say they think there's room to look at other potential reductions. Carter has said there's interest among House members in income tax cuts, while Lamoureux has said the Senate wants to look at reducing the sales tax manufacturers pay for utilities and other cuts that he believes could help businesses.

Beebe said he's willing to talk with lawmakers about other cuts, but said it would require cuts in other areas of his budget. He said the Medicaid shortfall is a major challenge that lawmakers didn't face two years ago, when they reached a compromise on $35 million in tax cuts.

Beebe said tying his tax cut proposal the possibility of the desegregation payments or other obligations decreasing shows just how tight the state's budget is.

"If I didn't think it was a more difficult climate, I would have proposed a more specific and immediate reduction in my favorite tax reduction," Beebe said. "If I'm reluctant to do what is my top tax cut choice, that ought to tell you the seriousness with which I look at this total budget."

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