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Special Arkansas legislative session focused on tax cuts to begin next week

Michael Hibblen
The Arkansas House of Representatives, seen here in August, is to convene along with the Senate next week for a special session of the legislature.

With a majority of support from legislators for a tax reduction package, Gov. Asa Hutchinson said Tuesday he is calling a special legislative session to begin Dec. 7. The session also will include a vote on security personnel for the Arkansas House and Senate.

Hutchinson previously outlined a three-part plan to reduce the state’s income tax rate. One part of the plan would boost the tax credit for those who make about $22,900 or less from $29 to $60 which would cost $19.6 million a year. The second part would combine lower and middle-class income tax brackets and create a total reduction of $132.7 million in taxes for this group.

The third part would drop the upper income tax rate from 5.9% next year to 5.5% the following year at a cost of about $109.6 million. The rate would then drop again to 5.3% the following year costing the state another $27.4 million in annual revenues. Once the entire plan is enacted it will cost an estimated $321 million per year. The bulk of the tax cuts would impact those making $82,000 or less per year, he added.

The Arkansas Advocates for Children & Families (AACF) says the tax cut plan will primarily help higher income residents. The group posted analysis from the Institute on Taxation and Economic Policy (ITEP) showing that higher earners would benefit the most.

“ITEP estimates that cutting the top tax rate from 5.9 percent to 5.5 percent would cost the state $138 million annually. The top 5 percent highest-income Arkansans – those making more than $218,000 a year – would receive more than $93 million, or 68 percent, of this tax cut. The 40 percent of Arkansans making less than $37,000 would get nothing at all,” AACF noted in its report.

Hutchinson said other items to be considered during the session include legislation to move restricted reserve funds, technical language to correct the appointment process for the newly created Tax Appeals Commission, a bill to repeal legislation on insulin prices, legislation to guide appropriation of federal funds related to pandemic recovery, legislation allowing security personnel for the Arkansas House and Senate, and possible legislation related to recycling tax credits tied to a potential economic development project.

“We’re still working on the language of that,” the governor said of the possible tax credit change.

Additional details of what will be considered during the session should be available by Friday, Hutchinson said.

Some legislators, including Sen. Jason Rapert, R-Conway, have said they plan to push a Texas-style abortion restriction bill during the special session. Gov. Hutchinson said such a bill is not needed because Arkansas already has “one of the most restrictive abortion” laws in the nation, and Texas and Mississippi laws pending before the U.S. Supreme Court.

“Any additional action should await guidance from the Supreme Court,” Hutchinson told reporters Tuesday during his weekly media briefing. He declined to comment on what he would do if a more restrictive abortion bill is passed during the special session and placed on his desk for signature.

Talk Business & Politics reporter George Jared contributed to this report.