LITTLE ROCK – Arkansas’ trucking industry will likely be able to enjoy a $4 million tax break beginning in July, after state senators declined Monday to take up a measure that would have repealed it.
Legislators had hoped to rescind the tax break after the trucking lobby withdrew support for a diesel tax increase for road repairs. Voters last year reauthorized a $575 million road-work plan, making the diesel tax increase unnecessary, but left in place was the Legislature’s commitment to cut taxes on the sales of commercial trucks beginning July 1.
With legislators hoping to go home Friday, the Senate’s deadline to introduce the bill was Monday. No effort was made during the chamber’s brief session, leaving the measure effectively dead.
"We’ve worked over the weekend and tirelessly to see if we could garner support, and it’s just not there unless some senators change their mind. Right now I’m not aware of anything like that," said Senate President Pro Tem Paul Bookout, D-Jonesboro.
Bookout said repealing the tax break this session would now be extremely difficult, but not impossible, to do.
In even-numbered years, legislators can only take up budget-related matters if both chambers on a two-thirds vote agree to broaden the agenda. House members voted 81-15 to take up the tax repeal, but Bookout said the Senate was two or three votes short of the 24 needed.
With the failure to repeal the tax break, the Arkansas Highway and Transportation Department will have $4 million less to work with for their 2013 budget, spokesman Randy Ort said.
"We’re stretched very thin as it is, and to lose $4 million a year makes it that much more challenging," Ort said.
Ort said he was unsure which transportation projects the tax break might affect.
Arkansas Trucking Association President Lane Kidd said the trucking industry deserves and welcomes the sales tax exemption. He said the tax break removes a competitive advantage held by trucking industries in other states.
"Obviously, even though repealing the exemption was an agreed to policy of the association based on our legislative package last January, the association has always supported a full exemption on equipment purchases," Kidd said.
House Speaker Robert Moore, D-Arkansas City, said he was disappointed the Senate did not take up the tax break repeal and said the loss of revenue will be "substantial" for state highways.
Moore said it will be even more difficult to repeal the tax exemption after it takes effect, considering the anti-tax environment that might have helped defeat the effort in this year’s session.
"The people of the state of Arkansas are the losers in this," Moore said.
The tax exemption was one of two nonbudget matters that effectively died Monday, the last day lawmakers could introduce legislation during the session. Also dead is a bill that would have given the state Parole Board authority to deny parole to people convicted of felony sex crimes. The Senate last week approved a resolution that would have allowed the measure to be introduced, but the House did not take any action on it.
Moore said he believes the issue should be studied after the fiscal session and addressed when the Legislature returns for its regular session in January.
Legislative leaders say they believe they’re still on track to wrap up the session by Friday. The Joint Budget Committee on Tuesday plans to vote on the state’s $4.7 billion budget for the coming year, with the legislation expected to go before the House and Senate as soon as Wednesday.
The panel was expected to consider a proposal to set aside up to $100 million in surplus funds for a Medicaid shortfall Arkansas is expected to face in 2013. Sen. Jonathan Dismang, R-Searcy, said he wanted to discuss the proposal more with Gov. Mike Beebe.
Dismang’s proposal would set aside $40 million from the state’s current surplus and up to $100 million from any surplus it has in 2013 to pay for the Medicaid deficit. Department of Human Services officials last week said the shortfall in 2013 could be as high as $400 million, higher than the $250 million they originally projected.
"We have a crisis that is just on the horizon, something we need to take charge of today," Dismang, R-Searcy, told the panel.
Arkansas Department of Finance and Administration Director Richard Weiss told the panel that the governor is opposed to setting aside the money now. Weiss said the surplus money will be there when the Legislature convenes in January for its regular session.
Weiss said the surplus money might also be needed if other financial problems arise before the 2013 session.
"There may well be other crises that come up between now and then," Weiss said.
(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, rewritten, broadcast or distributed.)