Budget panel endorses state spending bill


LITTLE ROCK — The Joint Budget Committee on Friday endorsed identical House and Senate bills detailing the proposed $4.9 billion budget for the coming fiscal year.

The House gave final passage to several tax cuts and one tax increase. It also referred to voters a proposed constitutional amendment that would impose tougher requirements on the ballot petition process.

Both chambers are expected to vote on Senate Bill 22 and House Bill 2233 on Monday and the legislative session could end Tuesday, said Rep. Duncan Baird, R-Lowell, co-chairman of the budget committee.

The budget outline is nearly identical to the balanced budget proposed by Gov. Mike Beebe — it includes a 2 percent cost-of-living increase for state employees, modest spending increases for public schools and human services, mainly Medicaid, and holds the line on other state spending.

It also reflects the wishes of the Legislature’s new Republican majority, Baird noted, with $10 million in tax cuts in the upcoming fiscal year, $82 million in 2015 and about $120 million in 2016.

“I guess, just kind of the big picture, if you look over two years at the tax cuts and how it’s going to effect year two,” he said, “I think we’re very much headed in the direction” of a 3 percent cap on the growth of state spending that was proposed but not adopted during the session.

Beebe, who visited with lawmakers before Friday’s budget meeting, said he plans to sign 11 different tax bills if they are approved by the Legislature.

“I think they have made some assumptions for 2016, long after I am gone, the third fiscal year from now, that are awful ambitious and rely on some pretty good revenue growth,” he said. “Their answer is, if they think it is going to be there but if its not, they’re going to be in regular session and they can make adjustments. It’s my job to warn them.”

Beebe said funding a proposed new economic development initiative along with all of the tax cut measures could be a problem if state revenues fail to meet projections.

The Senate gave final legislative approval Thursday to HB 1832 by Rep. Darrin Williams, D-Little Rock. Under the legislation, known as the New Markets Jobs Act, investment groups would be able to use tax credits to encourage private business to invest in poor communities. The state Department of Finance and Administration estimates the measure could reduce state revenues by $19.9 million in 2016.

Williams said Friday that the DF&A estimate fails to include the additional state revenues that will be generated by the new investments made in local communities.

The House on Friday gave final passage to bills cutting the state income tax, the state capital gains tax and the state sales tax on certain agricultural equipment, among others.

The House concurred in Senate amendments delaying or phasing in some of the tax cuts in order to take advantage of savings that are anticipated under the so-called private option for expanding health care coverage in the state.

The bills are part of a package of tax cuts estimated to total about $10 million in the next fiscal year, $82 million in the year after that and $120 million in the year after that.

The House also voted to approve a 5-cent increase in the state forest fire protection tax to benefit the Arkansas Forestry Commission.

Because it would raise taxes, the measure needed 75 votes in the 100-member House to pass. It squeaked through in a vote of 75-10. The tax hike passed previously in the Senate and now goes to the governor.

After some debate, the House voted to approve Senate Joint Resolution 16 by Sen. Bill Sample, R-Hot Springs. If approved by voters, the measure would amend the state constitution to require that a group collecting signatures for a ballot initiative submit a number of valid signatures equal to 75 percent of the total number of signatures required in order to qualify for extra time to correct deficiencies.

The resolution passed 65-17. It passed previously in the Senate and is now cleared for the November 2014 ballot.