Highlights from Week 9 - Highway Funding WinsOn Tuesday, Mar. 12, Governor Hutchinson signed part of the largest road funding package in state history into law. Legislators, highway funding proponents and others gathered to watch the Governor sign SB 336, which imposes a fuel tax at the wholesale level (six-cents on diesel and three cents on gas); creates a registration fee for hybrid and electric vehicles, and allocates some anticipated casino revenue to generate roughly $95 million annually for Arkansas roads. The second part of the plan, HJR 1018, refers a proposed constitutional amendment to voters, allowing them to permanently extend the half-cent sales tax, which would bring in $205 million every year for state highways, and $44 million each for counties and cities. Road funding has been one of the highest profile issues of the session.
Meanwhile, the long-awaited, massive plan to reorganize state government finally began moving through the legislative process this week. Referred to as the “government transformation bill,” the roughly 2,000 page measure cleared the House floor on Thursday. It would reduce cabinet-level agencies from 42-to-15. Legislators have been hearing discussion on the Governor's transformation plan at committee meetings all session. If it passes, this would be the most comprehensive reorganization of state government since then-Governor Dale Bumpers reduced departments down to 13 in 1971. The Senate State Agencies committee will take up the bill on Tuesday.
Meanwhile, on Thursday, Senate President Pro Tempore Jim Hendren announced a bi-partisan measure that would amount to $100 million a year in tax cuts for low and mid-income families, to be funded through a privilege tax and special excise tax on cigarettes. The measure would create a state level earned income tax credit equal to at least 5 percent of the federal tax credit, which would save working families an estimated $40 million a year. It would also increase the standard deduction from $2,000 to $3,300 a year.
Rounding out the week, today, Senator Bart Hester filed a bill with several anticipated corporate tax reforms, including a provision to require internet retailers to collect and remit sales tax. The bill also phases in an extension of the net operating loss carry-forward period, changes the way corporate income taxes are computed, and repeals the “throwback rule” for business income. It also includes reforms for the way certain car washes in the state are taxed.
Governor Hutchinson has said he expects to begin work next week on the Revenue Stabilization Act, which distributes general revenue to various state agencies and programs. It's typically one of the final measures of the session. The proposed general revenue budget for 2020 totals $5.75 billion. Legislators meet back Monday for a short spring break week, with both houses recessing Thursday and Friday of next week.