Arkansas lawmakers taking up tax cuts in special session

(Source: KARK-TV)
Published: Aug. 8, 2022 at 3:02 PM CDT
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LITTLE ROCK, Ark. (AP) — Arkansas lawmakers are meeting this week for a special session on tax cuts and school safety grants that’s been spurred by the state sitting on a $1.6 billion surplus.

Leading up to the session, Democratic lawmakers have been calling for a raise in teacher salaries but face resistance from GOP leaders who say that proposal needs to wait until next year. The tax cut plan has also raised questions about whether such a reduction could jeopardize some of the state’s federal COVID-19 aid.

The House and Senate are set to convene Tuesday.

TAX CUTS

The top agenda item is a tax cut package Gov. Asa Hutchinson and other Republicans are backing that would accelerate individual and corporate income tax cuts lawmakers approved last year.

The package calls for cutting the top individual rate from 5.5% to 4.9%, starting retroactively in January. It would also cut the top corporate income tax rate from 5.9% to 5.3% in January 2023.

Hutchinson, who leaves office in January due to term limits, cites inflation and the surplus as reasons for seeking the cuts now.

“We want to provide relief now that will help our families get through this tough time with high prices,” Hutchinson told The Associated Press last week. “If you wait until next January for this, then you’re not going to be able to provide the relief in 2022.”

The package also includes a temporary $150 tax credit for individuals making up to $87,000 a year.

The tax cut push has raised questions about whether the federal government could try to recoup some of the coronavirus money Arkansas has received.

Hutchinson and GOP leaders have said they’re not worried about that happening, saying the tax cuts aren’t being funded by the relief money. They’ve also pointed to a federal judge’s ruling that struck down a Biden administration rule preventing states from using the funds to offset tax cuts.

Senate President Jimmy Hickey supports moving forward with the tax cuts, but has said the Legislature should look at pausing spending more of those funds while the litigation is on appeal.

TEACHER RAISES

Hutchinson against putting his proposal to raise teacher salaries on the special session agenda because of a lack of support in the majority-Republican Legislature.

GOP leaders have said the special session isn’t the right time to take up the proposal since a required annual review of education funding by the Legislature hasn’t been completed.

“We know our teachers have a difficult job, we know our districts have a difficult job and hopefully we can work through all of those things so when we come back in January we can make some improvements that will be sustainable and be in the best interest of our education system in Arkansas,” Republican House Speaker Matthew Shepherd said.

A legislative panel also called on districts to use federal COVID-19 funds to pay for one-time bonuses for teachers and staff.

Democratic lawmakers have urged Hutchinson and other Republicans to reconsider, saying raises are needed to help districts retain teachers and be competitive with surrounding states.

“The 93rd General Assembly, if we raise teacher salaries and make them leaders in our surrounding states, then I think that would be remembered as a tremendous legacy,” Senate Minority Leader Keith Ingram said.

Democrats would need need two-thirds support from both chambers of the Legislature to take up the issue since it’s not on the special session agenda.

SCHOOL SAFETY

The other item on the session agenda is Hutchinson’s proposal to set aside $50 million from the surplus for a grant program for school safety needs.

Hutchinson called for the program following the May shooting at a Uvalde, Texas, elementary school that killed 19 students and two teachers. Many of the details for how the money will be distributed will be hashed out later in rules if the Legislature approves the program.

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