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Wednesday, February 16, 2011

Beebe will continue fight against tax cuts

Posted By on Wed, Feb 16, 2011 at 4:30 PM

CAN WE MAKE A DEAL?: Gov. Beebes hopes of stopping a big tax cut may depend on his success lobbying in his old stomping grounds in the Senate.
  • CAN WE MAKE A DEAL?: Gov. Beebe's hopes of stopping a big tax cut may depend on his success lobbying in his old stomping grounds in the Senate.

Gov. Mike Beebe will continue his fight against the three tax cuts approved in the House today and sent to the Senate.

Said spokesman Matt DeCample: "In a different year, he'd be for two of them." That would be the tax break on manufacturers' utility bills and more of an income tax break for lower-income single heads of household. But Beebe thinks the budget is too tight and the future too uncertain to be carving more money out of a budget, particularly with his hopes to reduce the sales tax on food by another half-cent.

Beebe has "strong philosophical differences" with the capital gains tax cut. "It leaves out nearly 98 percent of the state population," DeCample said. "And there is absolutely no guarantee of a single penny being reinvested in the state, but it will leave us with a $65 million hole in the budget."

Would Beebe veto the legislation if it passes the Senate? DeCample said the governor was torn. He disagrees with the bill. But the governor believes people should be responsible for their decisions and not expect the governor to backstop bad ones with a veto. He's said before that the tax cutters should be ready to designate spending to be cut to meet shortfalls.

Beebe told reporters, in response to the argument that, based on effective date of the legislation, there'd be no impact in this fiscal year, that he "doesn't believe in kicking the can down the road." Next year's budget looks more perilous than this year's, DeCample said, with further expenditures expected to be required to shore up Medicaid and the crammed prisons. Beebe noted that some of the opponents of health care reform were among those pushing the capital gains tax break. In the case of health care, they said it wasn't right to argue that concerns about costs were down the road, in 2017. But, with capital gains, they are raising just the same sort of argument.

Beebe also addressed the Republican whining that he'd worked against the legislation. "If he didn't, he wouldn't have been doing his job," DeCample said. "Someone who is surprised the governor twists arms doesn't understand the office of governor."

But Beebe said no threats were made by him or anyone working for him. If a legislator thinks otherwise, DeCample said, "he wants to know who did that and what they said and he'll deal with it."

The Senate committee that will consider the tax bills has four pure Republicans and a fifth, Jerry Taylor, who reliably votes with Republicans. It takes five votes to get a favorable recommendation in committee. Most believe the manufactuers' tax break and the single-parent tax break will pass easily. A used car sales tax reduction, coming from powerful Sen. Gilbert Baker, also is expected to pass the Senate. The Senate Democratic majority might provide some hope for Beebe on the capital gains tax and both he and former senator Morril Harriman, his chief of staff, were at work in the Senate today. Paradoxically, amid all the tax cutting, comes some belief that Beebe's bill to reduce the tax on groceries a half-cent might face a difficult route to passage.

But you have to understand, a grocery tax cut helps poor people. By their actions today, the Republicans have made clear that is not their top priority constituency.

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