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Committee endorses homestead exemption, nixes break for local governments Wednesday, Jan 31, 2007 By Rob Moritz Arkansas News Bureau LITTLE ROCK - The House Revenue and Taxation Committee endorsed legislation Tuesday that would raise the state's homestead exemption on property by $50, from $300 to $350. Without discussion, the committee unanimously sent House Bill 1030 by Rep. Scott Sullivan, D-De Queen, to the House for a vote as early as today. However, committee balked at a measure that would grant cities and counties a sales tax exemption on the purchase of new radio equipment after some lawmakers cautioned that bills that would take money from general revenues should be viewed together. Among those, Senate Bill 185, which would cut the state sales tax on groceries in half, is expected to be on the committee's agenda Thursday. Sullivan said the cost of increasing the homestead exemption would be borne by the state's property tax relief fund, which was created in 2000 and financed by a half-cent state sales tax. Gov. Mike Beebe proposed the property tax break during his gubernatorial run last year. During the campaign, Beebe said the fund had about $57 million and that increasing the exemption would cost the state about $22.4 million. Though eager to increase an exemption that would not affect general revenues, the committee balked at a measure that could cost the state. HB 1296 by Rep. Frank Glidewell, R-Fort Smith, failed to get a recommendation after lengthy discussion. The measure would exempt cities and counties from paying the state sales tax on new equipment needed to access the Arkansas Wireless Information Network (AWIN). Glidewell said Fort Smith is about to purchase new radio equipment and install three radio towers so it can be part of the statewide system, which allows sheriff's offices, police departments, state agencies and emergency management officials to communicate with each other. Fort Smith City Administrator Randy Reed told the committee that the city's project is estimated at $11 million and, when completed, would enable Sebastian County emergency service providers to communicate with each other and agencies statewide. Three new radio towers - each costing at least $250,000 - are to be built in the county, Reed said, adding the city planned to move forward with the project regardless of whether Glidewell's bill succeeds. A fiscal impact report found that the sales tax break for Fort Smith alone would cost the state about $800,000. Rep. Lindsley Smith, D-Fayetteville, urged the committee to hold off on considering any bills affecting the state's general revenue. "There will be one such as child care tax credits, used car credits, homestead exemption credits, income tax relief, grocery tax relief," Smith said. "We're looking at several things here. "So with this one, if the committee voted to proceed with the first one out of the hopper, that would mean down the line there would be several that will be denied." Richard Hutchinson, director of governmental relations with the Arkansas Education Association, urged the panel not to start passing bills that cost money before members get an idea of the extend of proposed tax cuts or whether service cuts would be necessary to balance the state budget. |
