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16 lawmakers named to task force on state's tax code

Legislative leaders on Monday announced their appointments to a 16-member task force charged with making recommendations to overhaul the state's tax code for the General Assembly to consider in the 2019 regular session.

This year's Legislature created the Arkansas Tax Reform and Relief Legislative Task Force as part of Acts 78 and 79 of 2017 that will implement Gov. Asa Hutchinson's plan to cut the state's individual income tax rates for Arkansans with taxable incomes below $21,000, effective Jan. 1, 2019. Those cuts are projected to reduce general revenue by $25 million when they start in mid-fiscal 2019 and then $50 million a year thereafter. The task force was created largely to placate lawmakers who favor larger income tax cuts.

Senate President Pro Tempore Jonathan Dismang, R-Searcy, said he appointed Sens. Joyce Elliott, D-Little Rock; Bart Hester, R-Cave Springs; Missy Irvin, R-Mountain View; David Wallace, R-Leachville, and Larry Teague, D-Nashville, who is a Joint Budget Committee co-chairman. Dismang said he, Senate Republican leader Jim Hendren of Sulphur Springs and Senate Democratic leader Keith Ingram of West Memphis also will serve on the task force as a result of their leadership positions.

Dismang said he asked Senate Revenue and Taxation Committee Chairman Jake Files, R-Fort Smith, whether he wanted to be on the task force.

"It's my understanding he is starting a new job and will not have time to participate," Dismang said.

Files, who has been in the construction business, said in an email to the Arkansas Democrat-Gazette that he "just started a new job" with Texas-based EnviroSolar as a solar consultant.

"I will be traveling some as well, so didn't feel like I could commit to it. Having said that, I hope to be a part of the conversation as I had planned on being a part of the task force," Files said.

House Speaker Jeremy Gillam, R-Judsonia, said he appointed Reps. Joe Jett, R-Success; Frances Cavenaugh, R-Walnut Ridge; Bob Johnson, D-Jacksonville; Jim Dotson, R-Bentonville, and Warwick Sabin, D-Little Rock.

Gillam said a Joint Budget Committee co-chairman, Rep. Lane Jean, R-Magnolia, will serve as Gillam's designee on the task force. House Republican leader Mat Pitsch of Fort Smith will serve as a result of his leadership post, and Rep. Kenneth Ferguson, D-Pine Bluff, will serve as the designee of House Democratic leader David Whitaker of Fayetteville.

Gillam said he didn't appoint Rep. Charlie Collins, R-Fayetteville, to the task force because he doesn't consider Collins' work as co-chairman of a health care task force to be completed. Gillam said Collins, a leading advocate for further individual income tax rate cuts, "still will be in the discussions for sure" as a member of the Joint Committee on Economic and Tax Policy, to which Gillam appointed him.

Collins said he had hoped to be on the tax task force, but Gillam always has "a good thought process" in making appointments. Gillam has twice appointed Collins as chairman of the House Insurance and Commerce Committee.

Gillam said he expects the task force to meet at least monthly and meet for the first time during the week starting May 21.

These appointments come on the heels of two budget cuts. Hutchinson cut $70 million, or about 1.3 percent, from the $5.33 billion general revenue budget for fiscal 2017. The governor cited lagging sales and corporate income tax collections. Hutchinson also cut $43 million, or about 0.8 percent, from the $5.49 billion general revenue budget for fiscal 2018.

In 2015, the Legislature approved Hutchinson's initial plan to cut individual income tax rates, that time for those making between $21,000 and $75,000. Those rates will reduce general revenue by about $100 million in fiscal 2017. Fiscal years start July 1 and end June 30.

Asked about his marching orders to the task force in light of the recent budget cuts, Hutchinson said in a written statement, "I expect the tax reform task force to make recommendations that simplify the tax code and makes our tax policy more fair and pro-growth.

"Our tax system is full of exemptions and each one needs to be reviewed in terms of fairness, economic growth impact and simplicity. The task force should also provide guidance on the timing of future tax cuts and their impact on growth and essential services like education."

Under Acts 78 and 79 of 2017, the task force is charged with recommending legislation to "modernize and simplify" state tax laws, make the laws "competitive with other states in order to attract businesses to the state [and] create jobs for Arkansans" and "ensure fairness to all individuals and entities impacted." The task force's preliminary interim report is due by Dec. 1 and a final written report by Sept. 1, 2018.

Dismang said the recent budget cuts highlight the need for the task force to review the entire tax system.

He said he wants the task force to consider updating tax laws to reflect "the more modern economy" and to have "an efficient and predictable system in place" that's competitive with other states.

Hendren said he's optimistic that individual income taxes can be cut by closing loopholes, removing exemptions and simplifying the tax code, but it's going to be a challenge.

"I don't think you will see us do anything to put us in a budget crisis," Hendren said.

Hendren, nephew of the governor, said the tax code "needs a tremendous amount of work no matter" if the state had a $70 million budget cut or a $300 million surplus.

Metro on 05/09/2017

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