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New fiscal year brings new laws, budget cuts Tuesday, Jul 1, 2008 By Rob Moritz Arkansas News Bureau LITTLE ROCK - The state sales tax that manufacturers pay for electricity and natural gas will decrease another notch and the slowing economy will take a bite out of the state budget today, the first day of the new fiscal year. The manufacturers sales tax reduction is among a number of new laws that go into effect, along with a campus-wide ban on tobacco use at the University of Arkansas in Fayetteville. State departments and agencies are having to work with $107 million less than expected for the 2008-09 fiscal year. The state Department of Finance and Administration announced the budget cuts in May due to declining tax revenue. "Most agencies have figured out ways to deal with that (the cut) without making cuts that citizens will notice because we gave them plenty of notice," DF&A Director Richard Weiss said Monday. The cut, which eliminated nearly half of the state's second-tier spending, is relatively small in the grand scheme of things, Weiss said. "If the economy continues to be in a slump and continues to go down, there will be a lot more cuts, I'm sure, that will be felt by residents," he said. Still, state government ended the 2007-08 fiscal year Monday with a surplus, though the exact amount won't be detailed until DF&A releases its end of the fiscal year report Wednesday, Weiss said. The surplus will be used for one-time projects, with the possibilities including the governor's quick-action closing fund for economic development. The reduction in the manufacturers sales tax on natural gas and electricity is part of the $319 million in tax cuts passed by the Legislature in 2007. A year ago, manufacturers saw their sales tax reduced to 4.5 percent. Beginning today, the tales tax drops to 4 percent. Rep. Allen Maxwell, D-Monticello, who sponsored Act 185 of 2007, said a cut in the sales tax on energy was needed so manufacturers in Arkansas could stay competitive. "Arkansas competes obviously for industry with all states surrounding us and we had the highest energy tax," Maxwell said. "I tried during my first session to get rid of the tax altogether, and I tried again last session but was able to cut it from 6 percent to 4 percent." Maxwell said he plans to file legislation next year that would eliminate the tax. He has doubts whether a total repeal would pass and said he would settle for another reduction. "Obviously we would like to get rid of it, but certainly the fiscal condition of the state plays a roll," he said. Also effective today is a $1,000 fine on employers who fail to check to see if their company's drivers are on an alcohol and drug test database. The penalty was part of Act 637 of 2007. UA-Fayetteville first announced its tobacco-free police in May 2007. Smoking has been banned from buildings on the campus since 2001 and several other colleges and universities have already banned tobacco campus-wide. Another law that goes into effect today is Act 169 of 2007, which creates a lifetime teaching license for already licensed public school teachers 65 years or older. Teachers with lifetime teaching licenses are not required to renew their teaching license and are not subject to annual professional development requirements. ------- Reporter Jason Wiest contributed to this report |
