LITTLE ROCK — With three weeks to go before the scheduled end of regular business, the biggest issues of the legislative session — the budget, Medicaid, taxes and a deal to land a $1.1 billion steel mill — remain to be decided.
“You know in the NBA games when there’s 30 seconds left and it lasts forever, and they call time out and then they move the ball to half court and it just takes forever? That’s where I feel like we are,” said House Speaker Davy Carter, R-Cabot.
This week, legislators are expected to take up legislation containing the Beebe administration’s proposal to offer incentives, including a $125 million bond issue, to Big River Steel to build a steel mill in Mississippi County. Carter is urging House members to approve the proposal, and Senate President Pro Tem Michael Lamoureux, R-Russellville, said last week he likely will vote for it.
“I know what’s going to happen if we don’t approve it, and that’s nothing,” Carter said. “I think it’s something that we ought to do.”
Carter and Lamoureux both said they hope to see a deal on tax cuts announced this week as well.
“I feel like I don’t know what I’m talking about since I’ve been saying ‘hopefully next week’ for five weeks,” Lamoureux joked on Thursday, but he said that this week, “I really feel like we should be able to do that.”
Carter and Lamoureux said legislators and Gov. Mike Beebe are hammering out details on a package of about $100 million in tax cuts. The largest is expected to be an income tax cut proposed by Rep. Charlie Collins, R-Fayetteville.
Collin’s proposal would raise the minimum income level for the top state income tax bracket from $34,000 to $44,000 a year and reduce the tax rate for that group from 7 percent to 6 7/8 percent. It is estimated to cost the state $57 million a year.
Other tax proposals before lawmakers include a $10 million sales tax cut on the utilities used by certain agricultural structures and equipment, including commercial chicken houses, and a $7 million income tax exemption on the service pay of active-duty military personnel.
Carter has proposed a capital gains tax cut that would cost the state $59 million over the next four years.
Beebe has proposed cutting the sales tax on groceries from 1 1/2 percent to eight-tenths of a percent. The cut would cost the state $69 million a year, but Beebe has proposed tying its effective date to certain economic triggers.
Beebe said last week he was concerned that some of the proposed tax cuts would take place before the state begins seeing savings from the expansion of health care coverage under the federal Affordable Care Act, if the state opts for expansion.
“The effective dates of some of these tax cuts have to coincide with that or else you gut the ‘14 budget,” Beebe said. “It needs to be scaled in a way that it takes effect, for the most part, in fiscal ‘15.”
Carter said Friday, “We’re working on that.”
“All of it won’t kick in until ‘15,” he said. “I think I’m safe to say that because I’m pretty certain that’s how it will work out. What the ‘14 number is I think is the question right now,” he said.
He estimated that the Legislature would have to trim about $60 million or $70 million out of growth spending from Beebe’s proposed budget for fiscal year 2014 to pay for the tax cuts that would take effect that year. Legislative leaders have not yet said where they want to cut spending.
The Medicaid savings that would help pay for the tax cuts would result from the federal government paying Arkansas hundreds of millions of dollars to extend health care coverage to people earning up to 138 percent of the federal poverty level — $23,550 a year for a family of four.
The Affordable Care Act proposes adding those people — about 250,000 Arkansans — to the state Medicaid rolls, but the Obama administration has said Arkansas could use federal Medicaid dollars to pay their premiums to buy private insurance through the state insurance exchange.
Under either option, the federal government would pay the full cost of the expansion for the first three years. After that, Arkansas would pay a gradually increasing amount, topping out at 10 percent in 2020.
The private option has gone a long way toward softening resistance to health care expansion in Arkansas. On Thursday, the Arkansas State Chamber of Commerce/Associated Industries of Arkansas endorsed the plan, which the state Department of Human Services says could save the state $670 million over the next 10 years.
Legislation to enable the private option has been drafted, but as of Friday it was unknown when a bill would be in committee.
The enabling legislation would require a simple majority vote in both chambers to pass. A separate bill to appropriate federal funding for the expansion would require a three-fourths majority vote in each chamber.
Republican House Caucus leader Bruce Westerman, R-Hot Springs, has said the Legislature should vote on the appropriation later in the year in a special session, after legislators have more information about the private option. Beebe, Carter and Lamoureux are not in favor of a special session, which would have to be called by Beebe.
“I don’t think it’s an option to rely on a special session that the governor’s not going to call,” Lamoureux said.
The Legislature is scheduled to go into recess no later than April 19 and formally adjourn the regular session no later than May 17. Carter and Lamoureux both said last week they expect all of the remaining issues of the session to be resolved before the deadline.
“I see a light at the end of the tunnel,” Carter said. “I feel as good about all of this stuff as I have the whole time, ever since we’ve been here.”
“We need to go home,” Lamoureux said. “People are tired of being here, people are tired of dealing with each other, people are tired of being away from their families and their businesses, and nerves are frayed. It’s time for us to get out of here.”