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.
“I’m very bullish that we can have something substantially larger,” said Rep. Charlie Collins, R-Fayetteville, chairman of the House tax committee.
House Republicans are expected to push for a cut in the state’s income taxes, and Collins said one option would be to phase in the reduction over time. Collins declined to offer specifics on the time period for a phased-in cut or the estimate on how much it would cost the state in revenue.
Collins said he views the coming weeks as “learning periods” for members to catch up on the state’s budget process and revenue picture before tackling some of the proposals expected.
“I do look at it as more of a comprehensive picture than the wisest thing for us to do is hurry up and put a bunch of bills on the floor without understanding how all these pieces fit together,” Collins said.
Senate Republicans say they’re more interested in pursuing tax cuts that they believe would help attract businesses to the state. Senate President Michael Lamoureux has said cutting taxes on manufacturers’ utilities and on replacement parts are two options they may consider.
“It’s not a foregone conclusion, but I’d be surprised if there were not any tax cuts,” Lamoureux, R-Russellville said. “I’d be surprised if we didn’t do something on the grocery tax, I’d be surprised if we didn’t do something in addition to that, but how big and what that is remains to be determined.”
(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, rewritten, broadcast or distributed.)
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