LITTLE ROCK — The state House and Senate adjourned Thursday with plans to return to the Capitol on Tuesday for the second week of the legislative session, a week that is expected to include action on Gov. Asa Hutchinson’s proposed income tax cut for low-income Arkansans.
Legislators said they were taking Friday off because few bills are ready for votes and said they will not meet Monday because of the state’s dual holiday honoring the Rev. Martin Luther King Jr. and Robert E. Lee, a tradition Hutchinson has said he wants lawmakers to end.
Senate Majority Leader Jim Hendren, R-Sulphur Springs, and House Majority Leader Mathew Pitsch, R-Fort Smith, are sponsoring matching bills containing Hutchinson’s proposed $50 million income tax cut for Arkansans earning less than $21,000 a year. The tax cut would take effect in the 2019 tax year.
The bills also call for creation of the Arkansas Tax Reform and Relief Legislative Task Force. The task force would have 16 members, including the House speaker, the Senate president pro tem and the majority and minority leaders in each chamber, or their designates; and five members of each chamber, to be chosen by the House speaker and the Senate president pro tem.
The task force would be charged with presenting recommendations for future tax reforms to the governor by Dec. 1.
“I think it’s addressed a lot of the concerns that people on both ends had, and I think we’ll run it (in Senate and House committees) next week,” Hendren said Thursday of the proposal.
Rep. Charlene Fite, R-Van Buren and Sen. Jane English, R-North Little Rock, filed matching bills Thursday containing another part of the governor’s tax plan.
Their bills would exempt military retirement benefits from the state income tax and would offset the expected $13 million cost of the exemption by repealing a state income tax exemption on unemployment compensation, applying the state sales tax to 100 percent of the cost of manufactured housing instead of the current 62 percent, and applying the full state sales tax to candy and soft drinks instead of the current 1.5 percent rate for groceries.
Hendren said Thursday there is some “resistance” to raising the sales tax on manufactured homes.
“Any time you close a loophole, the people getting the loophole closed aren’t going to be very happy about that. So yeah, there’s people who aren’t very satisfied about that,” he said.
But Hendren said he believes there is “overall broad support for removing the income tax on military retired pensions.”
“So far there’s not been anyone else bring a real proposal to replace the (provision on) manufactured homes with something else. Right now I think there’s support to pass it,” he said.
Rep. Warwick Sabin, D-Little Rock, and Sen. Jake Files, R-Fort Smith, chairman of the Senate Revenue and Tax Committee, filed matching bills Thursday to create the Working Families Opportunity Credit, an earned income tax credit that would be available to working families who qualify for the federal earned income tax credit.
The state credit would be equal to 5 percent of the federal credit the taxpayer qualified for as of Jan. 1 of this year.
Sabin said Thursday that although the proposal is not part of the governor’s tax plan, it deserves a hearing because earned income tax credits have a proven track record of being able to “move people out of poverty, reduce dependency on social services and stimulate the economy.”
As of Thursday, no bill had been filed to make Martin Luther King Jr. Day a stand-alone state holiday, but Hutchinson has said it is “the right thing to do.” The governor has said he favors creating a day of recognition — not a state holiday — for Lee in October.
Rep. Fred Love, D-Little Rock, who sponsored a bill in 2015 to separate the King and Lee commemorations, said Thursday he is not planning to file a similar bill this session because he has not been included in the governor’s talks with legislators on the topic.
Love said that although in 2015 he proposed creating a day of recognition for Lee, “in retrospect I think that’s the wrong thing to do.”
“I think that we should just separate the holidays and Robert E. Lee Day should go away,” he said. “To memorialize someone who stood for the Confederacy, someone who stood for slavery, that’s just not the thing that we should be doing in 2017.”