Deal on tax cuts possible this week


LITTLE ROCK — Legislators and the governor are probably “a day or two” away from reaching an agreement on about $100 million in tax cuts, Senate President Pro Tem Michael Lamoureux, R-Russellville, said Wednesday.

House Speaker Davy Carter, R-Cabot, also said a deal is expected soon.

“I think we’re very close on having a consensus on the tax cuts and trying to finish up some of the early discussions on the budget,” Carter said.

Matt DeCample, a spokesman for Gov. Mike Beebe, would not speculate about when a deal might be reached, but he said that “we’ve definitely been a part of active discussions with both the House and Senate all week long.”

Asked where the governor currently stands on passing $100 million in tax cuts, DeCample said, “It all depends on where you’re able to find the money. We’ve been hearing and continue to hear ideas from both the House and Senate that we’re willing to listen to.”

The deal apparently will be tied to expanding health care coverage under the federal Affordable Care Act.

“Some of the potential money they’re looking at comes from savings that only exist if you pass Medicaid expansion,” DeCample said.

The Obama administration has said it will allow Arkansas to use federal dollars to subsidize the purchase of private insurance for Arkansans earning up to 138 percent of the federal poverty level as an alternative to adding those people to the Medicaid rolls, as was originally proposed. The expansion would be fully funded by the federal government for the first three years, after which the state’s share of the cost would increase gradually to 10 percent.

“The economic growth that they expect with it, it’s a little bit of a short-term windfall to the state,” Lamoureux said. “For revenue projections going forward, I think it makes it easier for us.”

The House and Senate have already passed $17 million in tax cuts, though at this point the bills have only been approved in one chamber.

On Wednesday, the Senate Revenue and Tax Committee endorsed Senate Bill 108 by Sen. Sen. Keith Ingram, D-West Memphis, which would extend the period for which a businesses’ net operating loss may be carried forward for purposes of state income tax from five years to 10 years, or until the loss has been exhausted or absorbed by the taxable income of a succeeding year, whichever is earlier. The bill is estimated to cost the state about $13 million a year.

The committee also endorsed SB 1185 by Sen. David Sanders, R-Little Rock, which would allow retailers of cigars to deduct credit card fees from the sales taxes they collect. The bill is estimated to cost the state $134,000 a year.

Lamoureux said the bills will not be sent to the House before an agreement on a total tax-cut package is reached.

“Today, I wish the committee had not passed out some of the bills it passed out, but really it’s not as big of a deal if we just hold them here,” he said.

Lamoureux said having a deal that sets a limit on tax cuts will make it easier to decide which bills to pass.

“We can pass every tax (cut) in the world, but the dollar cap is what sets the negotiation, and until we have that done what we are doing is not particularly helpful,” he said.

To date, Beebe’s official position has been to oppose all tax cuts other than his proposal to lower the state sales tax on groceries to one-eighth of a cent, contingent upon certain economic triggers.

Carter has said he would like to cut the capital gains tax this session. He said Wednesday that the grocery tax cut and the capital gains tax cut would be considered separately from the roughly $100 million package that is expected to be agreed upon.

A revision of the state income tax code is expected to be part of the package and likely will “take up a good portion of the bucket,” Carter said.

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Reporter Rob Moritz contributed to this report.