Arkansas Republicans: No Rush on Tax Cut Proposals

by Andrew DeMillo, The Associated Press  on Sunday, Jan. 20, 2013 12:39 pm  

LITTLE ROCK, Ark. (AP) - Arkansas Republicans who won control of the Legislature partly on a vow to cut state taxes say they're in no rush to take up any proposed reductions yet, but a key legislative leader in the debate wants a tax relief package to be "substantially larger" than the $35 million that legislators cut in a compromise two years ago.

A week into the 2013 legislative session, House and Senate leaders say they want to resolve questions about the state's budget and potential cuts in Medicaid before taking up dozens of tax cut proposals that are expected. The chairmen of the Revenue and Taxation committees in both chambers say they're a long way from considering any tax cuts before getting a sense of how much the state can trim in a proposed $4.9 billion budget.

"It's going to be hard to get five votes in here on tax cuts without having a justification for where the revenue is going to come from," said Sen. Jake Files, R-Fort Smith, who chairs the Senate committee.

Republicans are well poised to push for tax cuts in this year's session after winning control of the House and Senate in the November election. The GOP holds a majority of seats on the Revenue and Taxation committees in both chambers, and GOP legislators chair both panels.

But Democratic Gov. Mike Beebe has warned that there's no room in his proposed budget for any other tax relief. In his State of the State address last week, he said that's why he's tied his proposal to again cut the state's grocery tax to a drop in certain budget obligations, including court-mandated desegregation payments to three school districts.

"With the challenges we face, I don't see room to cut this tax at this time without endangering needed services. But I still want a plan for it," Beebe told the House and Senate last week.

Beebe, who campaigned in 2006 and 2010 on a pledge to nearly eliminate the grocery tax, has pointed to that approach as a sign of how tight the state's budget is.

"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," he said this month.

So far, the leaders of the House and Senate aren't saying whether they support Beebe's grocery tax cut proposal and the idea of tying that reduction to certain budgetary triggers. Instead, they're looking at other tax cut proposals that they hope could be part of a compromise package on reductions.

Their aim is to have a package similar to one negotiated in the 2011 session, where legislative leaders and Beebe agreed on $35 million in reductions. That package include a cut in the grocery tax championed by Beebe, along with cuts in the taxes on manufacturers' utilities, single parents' income and used car sales.

"We gave tax cuts two years ago when nobody else was doing that and we balanced the budget. I would think we would be in that same shape again," said Sen. Larry Teague, D-Nashville, who co-chairs the Joint Budget Committee and is vice chairman of the Senate tax panel.

Though they praise the compromise package as a model for this year's negotiations, Republicans say they want to see more in tax relief.



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