Some legislators unhappy that governor's proposed tax cuts benefit poor, not wealthy | Arkansas Blog

Wednesday, January 4, 2017

Some legislators unhappy that governor's proposed tax cuts benefit poor, not wealthy

Posted By on Wed, Jan 4, 2017 at 6:15 PM

click to enlarge WHERE TO CUT, AND HOW: House Speaker Jeremy Gillam (left) and Senate Majority Leader Jim Hendren speak to reporters. - BENJAMIN HARDY
  • BENJAMIN HARDY
  • WHERE TO CUT, AND HOW: House Speaker Jeremy Gillam (left) and Senate Majority Leader Jim Hendren speak to reporters.

Senate Majority Leader Jim Hendren (R-Gravette) told reporters today that some conservative lawmakers are considering changing a law that fully phases out Arkansas's 1/8-cent grocery tax and instead directing that revenue towards a tax cut for higher-income earners.

The comment came during today's preview of the 2017 legislative session, at which Hendren addressed reporters along with House Speaker Jeremy Gillam (R-Judsonia) and, later, Governor Hutchinson. The governor, who in 2015 championed a tax cut package that excluded Arkansans earning under $21,000 annually, is this year pushing a $50 million tax cut that is focused solely on those lower-income earners who were previously excluded. But some conservatives, including some members of the General Assembly, want more ambitious tax cuts and would prefer to focus on slashing the tax burden of the wealthy.

Hendren is a fairly conservative Republican, but he also happens to be the governor's nephew and in a position of legislative leadership. His message today: Easy does it. "This is part of the difference in mindset in being the majority party," he said. "As the majority party, our obligation is to make sure the budget balances. …  People have talked about, ‘Oh I want to do more than that — I want to do 100 million dollars, I want to do 200 million.' I’ve heard $300 million. My first response is, 'OK what are you going to cut [in terms of spending]?'"

Hendren said he thought Hutchinson's proposal would pass. "I think it has strong support," he said, but later added, "I have heard, let’s take the deseg money and do something for the higher end." That's a reference to the soon-to-end annual payments made by the state of Arkansas to Pulaski County school districts as part of a settlement resulting from a decades-old desegregation lawsuit. The settlement dictates the state's payments will end in the 2017-18 school year — but that revenue is already spoken for under current law. A statute passed under Democratic Gov. Mike Beebe says that the last of the state's tax on groceries must be eliminated if deseg payments end. Some members evidently want to repeal that law.

Speaker Gillam said that the idea to avoid any tax cut this session was also "in the mix," among House members, although he said it was not necessarily "the dominant prevailing mood."

Later, when the governor was asked about the possibility of  foregoing a tax cut, Hutchinson tried to reassure conservatives that he's committed to cutting taxes for the rich as well. He the legislature shouldn't delay his proposed $50 million cut for lower-income households.

"I don’t want to see it put off. ... I have a long-term goal of flattening the rate to … a 5 percent rate in Arkansas. It takes time to do that. ... Yes, we do need for a next step, to reduce the rate for the higher income. They are job creators. I’ve not changed my commitment to that. We did middle income, we need to do lower income — if we fail to do that, then we’re delaying the debate, we’re delaying the opportunity to flatten the tax," he said.

Note also this quote from Sen. Hendren's opening remarks about the legislative session in general:
I see some similarity in Little Rock and D.C. in that we have a situation in which Republicans really have no excuses for not performing. We have firm control of both houses, and we have the governor’s office, so the days … of us playing the role of criticizing and looking for opportunities to point out failures is over, and our day to produce is here.
Hard to argue with that.

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