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Arkansas Senate
December 9, 2021
[Roll call
Prayer
Pledge of Allegiance]
Griffin: Any announcements? Any items at the desk?
Cornwell: No, sir.
Senate Bill 1
Griffin: We’re going to start the business agenda. Sen. Dismang, SB 1.
Cornwell: [Reads SB 1]
Griffin: Sen. Dismang.
Dismang: Thank you. Members, I just want to give a real quick overview on the tax plan’s foundations or what I believe to be the key components to what we’re doing with this bill. First, it’s fairness. Second, there’s simplification and then also I think it makes us more competitive. The immediate income tax will total over a quarter of a billion dollars and when fully implemented it will save taxpayers over a half a billion dollars.
Fairness. Every Arkansas that pays income taxes in the state of Arkansas will benefit from this plan. The bill will combine the low and middle tables. It will lower the top rate to 5.5% for year 2022 and will responsibly reach 4.9%. And that’s 5.3% for corporate income taxpayers. It will automatically adjust the standard deduction to match inflation and provides for a non-refundable $60 credit for those making $23,600. With a specific focus on working families, I believe this bill strikes the correct balance working Arkansans and also our job creators. Back to simplification, Arkansas has the most complicated tax code in the country. We currently have three tables and this bill is going to bring that back down to two. And one side benefit to doing so, it will provide tax relief to those that have been left out of previous reductions. Additionally, every taxpayer that makes above $39,700 in the state of Arkansas will share in the savings in the continued drop of the top rate.
When considering the mix of sales tax, income tax, and property tax, it is very clear that we’re falling behind our neighbors. I believe this bill helps close that gap. But with a commitment to reach 5.5% immediately and ultimately 4.9%, again, we’re going to be able to reach and try to achieve and make sure that we are competitive on the national level. Additionally, as you’re aware, this bill contains several provisions to make sure that these tax cuts are carried out responsibly. First, it renames the Long-term Reserve to the Catastrophic Reserve fund. The reason for doing that is not just for us in this chamber and to make sure that we understand what that fund is intended for, but also future legislators. It’s to make sure that we understand that that fund is something that is not to be touched with the exception of emergencies.
Additionally, there are triggers in the bill. Those begin on page 28. And those are both if there’s an economic downturn and DFA determines that we’re going to have to utilize the catastrophic Reserve fund, the ongoing tax cuts would cease. And then also if we as a legislative body decide that we want to try to tap that fund, the future tax cuts will cease until we come back and reach an agreement on how to move forward. Beginning in 2023, corporate rates will trail the individual Income tax cuts and be reduced to 5.7%. That will go to 5.3 percent in 2024, and then ultimately the 5.3% in 2025. The bill clarifies that the coronavirus food assistance program or any of its successor programs are exempt from state income tax. There has been some concerns that there will be a name change or maybe a code section change on the federal level, and this will provide clarification for DFA regarding that program.
And then also adjust the elective passthrough entity tax to mirror the top rate changes that are being done for the estates, trusts, and individuals. I could go line by line through the bill. I’ll save you from that. I think most of you have had a chance to review it and if you have any questions I’d be happy to answer those.
Griffin: Questions? Sen. Garner.
Garner: Thank you. What is the breakdown once the full implication of the corporate tax cut assuming they meet the triggers where they will actually go into effect? What is the breakdown between domestic and foreign companies?
Dismang: The question is what is the breakdown between domestic and foreign? I do not have that exact number with me today. I can tell you that the total corporate tax cut will total %57 million when fully implemented. And just for clarification, we’re talkin about domestic– those are corporations that are fully organized in the state of Arkansas, and foreign actually just means those corporations that have been organized in states outside of Arkansas. But, again, to be able to receive the benefit from the corporate rate reductions, you have to be doing business in the state of Arkansas.
Garner: Second question, if I may, lieutenant governor. What are the qualifications to receive the non-refundable tax credit?
Dismang: The qualifications? First, you have to file a timely tax return, and that’s with extensions, to be able to qualify for the credits. And, again, that credit is going to be– let me pull the page so I don’t mess it up. But that’s going to begin at, I think it was, $20,600, and it’s going to phase out for every $100 in income above that by $5 until it’s ultimately phased out– I think it’s around $24,700.
Garner: Thank you.
Griffin: Any other questions? Anyone wish to speak against? Sen. Leding and then we’ll go to Sen. Elliott.
Leding: Thank you. Colleagues, I just wanted to echo some concerns that were presented in committee yesterday by some people who just can’t be here with us in the chamber this morning. I watched the committee online, and there were 9 people signed up to speak on the bill. Eight of whom were there to speak against it, and all of whom spoke on the needs of Arkansans with disabilities. Now as Senator Mark Johnson pointed out, this bill does nothing to cut any services. But as everybody who spoke against the bill yesterday in committee pointed out, it is taking at least half a billion dollars out of state revenue over the next couple of years. And that’s money that we could use to improve services for Arkansans living with disabilities. One of the most moving stories was a father– I believe his name was Mr. Freeman. He was there with his daughter at the table. Six years ago, at the age of 22, she was placed on the DD waiver list. She was number 3,500. Six years later, she’s now 1,500. I don’t think anybody in this room is opposed to wiping out that list. And this money is something that we could do to invest towards that and making sure that these people have the in-home services they need. And Sen. Rapert, to his credit, echoed that concern. I think we’ve all talked about eliminating that list at some point in the last few years, but we got to make sure we keep our eye on that project.
The only other thing I would say is that, yes, we want to help working families and working Arkansans, but I think a more constructive way to do that is to invest in programs that can help keep hundreds, if not thousands, of dollars in their pockets. Child care is obscenely expensive, as I have learned in the last five and a half years. You know– making sure– sometimes being able– not being able to afford childcare that you need means not being able to take that job you want or having to work extra jobs so you’re not there at home with your child. Whether it’s investing in universal and affordable Pre-K, investing in robust paid family leave programs, there are just so many things we could do that I think would have a more meaningful impact on the lives of working Arkansans and families. Thank you.
Griffin: In favor of the bill, Sen. Garner.
Garner: It’s probably an appropriate time because I’m likely to vote for the bill, but this is more speaking on the bill. When I got a copy of this bill, one word popped into my head. Consistency. That word jumped in my head for a lot of reasons. I remember during the extended special session, as we discussed giving protections to the– those who could be fired because of vaccine mandates, there was a lot of discussion about consistency up here. My good friends, Sen. Dismang and Sen. Hickey, two of the architects of this bill and two of the strongest opponents of adding those protections to those workers, spoke about that consistency. They spoke about the free markets and how we should allow them to happen. How that we as capitalists shouldn’t interfere or allow government to have interference in those companies and how they operate. And I got up here and spoke at the time. I said I agree with that sentiment 100%. If you want to go to a true free market system, laissez-faire, I’m for it. But I also spoke about the myth that we’re actually in that kind of system in Arkansas. If you need an example, don’t look no further now than the agenda, where we have a massive, direct payment of government taxpayer funds to a corporation over others, where the government is picking winners and losers. Now we’re very likely to support that bill. I get it. Lt. Gov. Tim Griffin actually does a good spiel about this in speeches where he talks about where we live in this environment where you have to give these kind of stuff to these companies. I get it. If we had one in South Arkansas, I’d be standing up here just like Senator Wallace was.
But consistency is important. Because when I look at this bill, what jumps out to me is are we being consistent to those principles? We know right now that many corporations are feeling the sting of making decisions. The labor market, which is shortened, is starting to have a ply on them and starting to make a real difference now to them of people they fired. Those consequences are starting to come back home to roost. The federal money is running out. The courts, which they use as an excuse to fire people, over and over again have been (strucken) down as many of us predicted would happen during that debate. And right now, when those chickens are coming home to roost, I see a bill where consistently we give them a tax break. Right now when those decisions are coming home to roost, we know in FY 23, they’re going to get a bail out.
Now I asked Senator Dismang that specific question because I can’t get a fair breakdown of how much of this money will go in Arkansas to the corporations we have here. Sen. Dismang did a description of a small family farm that’s a corporation yesterday. Those are real. But you know what else is real? Those foreign companies. Let’s be real about where this money is going to go. You’re going to be giving a tax break to Nike, who employs slave labor, essentially, and is scared to go against China so they get a tax break. That’s money that could be going to that Mom who calls me weekly because she lost her job and can’t afford Christmas presents because we didn’t pass an emergency clause. We are giving money to Ben & Jerry’s, who won’t serve their ice cream in Israel because it’s occupied Palestinian territory. We’re hooking them up. That’s money that could be going to your mom and pop shop. As I drive across South Arkansas, I don’t see those big corporations shut down. I see Mom and Pop shops, who do– as Sen. Dismang will probably describe later– do passthroughs and LLCs, which isn’t included in a corporate tax break. I think about companies in Georgia who pulled the All Star game and who did issues on that. I think about– we could be using that money to support law enforcement. As our murder rates span and grow in every city in Arkansas, at a time when we have a problem retaining them and keeping them in those jobs, we could be helping them out. But we consistently do the same thing up here. Now I’m not anti-corporation. I’m not anti-corporation tax break. What I’m asking is this the time or the place to be doing that? Or could we be singularly focused on helping Arkansans reduce their income tax burden to get to 0, something many in this room has talked about before? Could we be singularly focused on that one goal instead of this piecemeal approach where we do these different ways?
Now I’ll get to my second point before I move away– this non refund tax credit. You know, when I heard this, I thought, here we go again. Here’s the EIC. We’ve tried to do it through a vape tax. We’ve tried to do it through many different things. I hate EICs. The initial thought process whenever they passed them, as Republicans did in the past, was that you incentivize people to work. So if you earned a certain amount of income at a certain point, your tax increase would increase– or would decrease. The thought process is we would get people back in the workforce up to a certain income level, then it would Trail off. This also has social good attached to it at the federal level. So if you’re married, you get a bigger EIC. If you have children, you get a bigger EIC. Now, I don’t think that’s true. I think there’s studies that disprove that that actually works to incentivize people to work. I think that most people get this credit and they’re going to work either way. And I think there’s actually studies that show that this has a 26% fraud rate at the federal level. 26%. 1 in 4 actually are fraudulent activities on these kinds of accounts. And that ain’t from some right-wing site I looked that up. That’s from the IRS’s website.
But, we’re not putting an EIC in place. There’s no– there’s no qualifiers to getting this credit. If you earn $8,000 under Sen. Dismang’s new plan, you can apply for the $60 refund. If you earn $23,500– whatever that cutoff is, you get the same amount of refund. If you are not married, you get the same amount of refund. If you don’t have children, you get the same amount of refund. Now at the federal level, they tried to expand EIC similarly to this. That staunch cut tax conservative who tried to do this was President Barack Obama in 2014, who tried to expand it to childless, single people the same amount of money. Now I had an idea on a better way to do it. Now I hope that my oratorial skills can keep up with this. I know I’m going to be giving a convoluted, complicated and confusing idea, and if you have any questions and if you have any questions as we go, Senator Hill, look at me. I’ll make sure I tell you. Here’s my idea. Step one, you let them keep their dang money in the first place. That’s it. That’s the step. You know what I had an amendment to do? Move up that lower credit at 0 rate to $8,000. That would be the same amount of money as this non-refund rebate. And it would not only affect the quote unquote poor under the new table, it could affect the middle class as well. Now I’m sorry, Senator Sample, I didn’t get this number from DFA. I know that’s a deadly sin and Tax and Rev. But I did get this from BLR, the Bureau of Legislative Research, and they said this would cost around $33 million to allow people to have more of their money and to move to that 0% income tax instead of this non-refundable refundable credit.
So I’m going to vote for this bill very simply because I made a promise when I got elected that I’d vote for every tax decrease that got put in front of us. But I ain’t going to be happy about it. And I ain’t going to like it. Because there’s a way we get to 0% income tax and guess what guys? This ain’t it.
Griffin: Sen. Elliott. Will you take questions, Sen. Garner? Okay. Sen. Elliott. For what purpose does the gentleman rise, Sen. Hickey?
Hickey: I just want to speak on the bill. In what was said, there was something that was not correct.
Griffin: Okay, let me put you on the list. Sen. Elliott. So, just to get the list here– and you don’t have to stand over here. That’s your right, but you don’t have to stand in line because I’m writing a list down. So, who was first? You? Okay, senator– we’re going to go to Senator Elliott, then to Sen. Rapert in favor, then Sen. Clark against, and then Sen. Hickey on, Sen. Teague, Sen. Chesterfield. Okay. Alright. Sen. Elliott, you’ve got the floor.
Elliott: Thank you, Mr. Governor and colleagues. Like probably anybody else in this body, there’s not a single one of us who is against a tax break. It is also true I could have a tax break in my own home if I chose not to pay my mortgage, if I chose not to pay the payment on my car, if I chose not to pay my utilities, I could have my own tax break right in my own home. But as it turns out, those are the essential things, some of them, that I have to have to have just a decent life. I look at this bill the same way. Of course we can afford a big tax break if we’re not taking care of so many of the things we need to take care of in our state for Arkansas. $1.8 billion over 5 years, what could that do for the good of Arkansas as a whole? I recognize we have different priorities and I respect that. But what I do struggle with more than anything else are the things we are not doing.
And this is not a new speech from me. This is not a new way of thinking from me. This is something I have worked on for years over different governments. For me, it’s not Democratic or republican. It’s just that Arkansas is one of the poorest states in this country and we have great needs, and we are going to spend $1.8 billion over 5 years and be told that that’s going to be okay.
What I heard yesterday in testimony– and I went to the Senate committee meeting and most of the House committee meeting. I think I feel good about we’re going to be able to do this and not put the state in grave danger. I feel it. I feel good about it. And you know what? You know who else set it? Moody’s Analytics said it would be okay. I went to the hearing when Moody Analytics was here to give their report. There was nothing compelling that told us that we are going to be able to give this tax break and still be okay even as we are. But think about this. What if we are not, and we still haven’t taken care of those things that people need taken care of so badly? We have right now an appropriation of $5 million dollars just to have just to have. And this won’t do it all. A housing trust funded at $5 million. That’s going to be a measly amount if we could just do that. Can’t get it funded. Appropriation is there. It is as if we have come to terms with– just with housing– and people will say things as if it’s normal. We’re always going to have homeless people. Why? Well, this is a good reason. We are always going to have homeless people. We have homes out there that are affordable for people. As it turns out, many of them are not affordable. And if they are– because I’ve done the research on this with the Better Business Bureau. One of the main businesses out there that’s doing the affordable homes, you read about what it’s like and it’s not at home you would even want to stay in. But that’s okay as long as we can have our tax break.
This year, for the first time in our education committee when we did adequacy, for the first time, a consultant had suggested to us that one of the things that we ought to do is look at the factors outside of education that affect our education system and also affect the idea that we are going to be okay as long as we are doing adequacy. Y’all, we’re doing something we call adequacy. I don’t believe a single one of you in this room would be okay– “My child has an adequate education. Oh, boy. I’m so thrilled about that.” I don’t think there’s anybody here who wants that. That’s the reason we have that suggestion, which we have said we’re going to follow, that we look at those outside forces because if a child needs to eat, a child should not have to go to school to eat. If a child needs a good home, a child should not have to stay after school late and get there early to have a decent roof over his or her head. That should not be the case. But yes, we look at education simply and the education committee and then you know what we say? We have been spending these billions of dollars over all these years and things haven’t gotten better. Well, why not? Because when your child goes to school, your child doesn’t go to school with all the baggage that most of the kids that we are promising adequacy to– that if you get that you’re going to be lucky– they don’t go to school with all that baggage. But you know what we need to address all that baggage like a good home? Not having a tax break. If we’re going to spend $1.8 billion dollars, there’s so many things we can spend it for. And when I pay my bill at home, when I pay my car note, when I pay– buy groceries, when I pay my mortgage, then okay. I can do these other things I want to do. That’s not what we’re doing. We would say to any other person especially people of low means oh, you are not being responsible. You are buying this, you are buying that, oh my God, you have a big iPhone as if they’ve done something horrible. This is our big iPhone, people. Do we have to have a 13 when we haven’t paid for our 7? We don’t.
And as for the issues of competitiveness and fairness, there are people who are absolutely convinced that the fairest tax we have is the sales tax. And they say that is the case because everybody pays the same thing. That’s exactly the reason it is not fair. Because everybody has to pay the same thing. When it comes to fairness and this tax bill, I’m not sure how we’re defining it. But I asked the question over and over, should we have a tax system that is equitable or one that is equal? And that does not get discussion. And I wish it were equitable because I think we think more about fairness in a way where fairness is really fairness. If I had, I don’t know, let’s just say, Sen. Dismang since he’s right there– Sen. Dismang lines up with– well, Hendren is tall. And you guys are going to have to dunk this ball. Anything fair about that? Maybe Dismang can jump really high and I’m sure he would say he can. But you’re going to have to figure out a way to dunk this ball without anything extra. And it’s fair. Everybody– they have to dunk in a goal at the same height. But who has the best chance here without having something else, without having something else happen? You know why we have the three-point play? One of the reasons we have the three-point play is because short people could really shoot those balls from a long way away and the tall people were dunking all over them and that helped level the playing field. That’s what I’m talkin about. Equitable means people get what they need, not what’s fair when they say everybody has the same thing.
I’m going to try to wrap up here but I don’t know why. It’s pretty close, I’ll tell you that. So we need to rethink fairness. When it comes to competitiveness, we’ve talked about Texas and Tennessee not having an income tax. It’s not hard to know. Texas has, if you read about it a little bit– I have relatives in Texas, sisters, nephews, nieces, and they pay property taxes out of the wazoo. But they don’t have an income tax. They get it from somewhere. And the other place they get it– do we have oil as Texas has oil? No, we don’t. So we are not comparing apples and oranges here. And Tennessee has long had no income tax. They have now grown that into their system. We don’t have that. But if we’re going to talk about fairness in terms of we’ve got to have these taxes like this to lure people to Arkansas, they will come just like they come right now when we hand them out money. They will come. They will stay when we hand them out money. But those things that I just talked about that we are not funding, that is really what will get people to be in Arkansas. And people come to live more cheaply because we’re cheaper than the states they’ve come from. But the people we want more than anything in Arkansas are our kids and our grandkids to remain here and not leave us. So for years starting in 2009 when I first got to the Senate, I have tried these proposals of doing something about all these things. It didn’t happen under a Democratic governor. It hasn’t happened under a Republican governor. So for me this certainly ain’t partisan. I just disagree with this to the bone when we are not doing what we should do for the people we talked about with disabilities. And the response they got was, ‘we are not cutting anything.’ No, we’re not cutting anything, but we are not adding anything. And people are on that list in the thousands.
So, let me suggest to you perhaps– all of you have got something that looks like this on your desk. I’m sure some of them have made it to the trash can. But there was a person yesterday– this is a report called Alice. And Winthrop Rockefeller was a big part of it. This is Arkansas’ Alice report. But it makes suggestions about what we can do to make sure we move everybody ahead. But there was a woman who testified yesterday and who mentioned Alice and who thanked the committee for the tax credit that people are going to get– that $60, $69, whatever it was that we were just talking about. And they spoke for the bill because she didn’t have any option to speak on the bill. You had to take a for or against. They spoke for the bill saying that, rightfully so, it’s always a good thing when people can get some more of their own money in their pocket. And they spoke about this. Yes, they are for the bill in terms of that credit. And then we talked about all the other two bills that we have passed, at least in the House, over the years that gave the people at the bottom end a tax break.
But y’all, if I have a tax break of $21 and if I have a credit– and I’m not saying it’s just nothing– for $60– think about it this way. Suppose we took all that money and combined it and did something really great for people who are hurting. Suppose we did that. And these are just philosophical differences, I guess. Which is one of the things without saying it outright that way, that’s not– that’s not what Alice says. Alice stands for Asset Limited– and folks are– Asset Limited Income, Limited and Income Constrained, but also Employed. Now what does that have to do with the tax break? We’re talking about people making $23,000 or whatever getting back a $60 credit. They can buy gasoline probably for two fill-ups. That’s helpful.
But what the problem is, and these are folks– we’re talking about folks who are not working. We are talking about folks who are working and not making it. And they have been for years and years and years. Is it time for a tax break if people have been working and working and working and we tell them, ‘if you work hard, things will be okay.’ Well, flashpoint here, people. People are working and they’re not okay. And this is not going to make them okay. And they could do something else, though, that would. We could do something else like spend that money on the things that help people address some of the issues they have just trying to make it day to day. These are the things– these are the things from this report. Household survival budget sources for housing, for example. Many people don’t have the money for housing. That’s why they’re in the streets. Many people don’t have the money for housing. That’s why their kids, they are moving from place to place come rent time. And then those kids have to find a school to go to wherever their parents move to. How would you feel if you didn’t know when you got ready to go home, you didn’t know where home was? You don’t even know where you’re going. Kids get off the bus and their parents are waiting there for them because they have to flee to some other home because they can’t pay the rent. Many of you in here are landlords. You know exactly what I’m talking about– when they haven’t paid the rent and they’ve got to move to have some place for their kids to lie down tonight. And they are literally living in their cars. The Department of Education can give you these numbers. They have them.
Child care is another one on their list. We’re talking about people not going to work. Well, yeah, there are people not going to work. There are two really good reasons. One, a lot of child care places have shut down. Two, if there is a child care place, I can’t afford it. And the minute I make some little amount of money, I’m going to be cut off from getting child care because I’m making $5 too much. And you tell that person to make it while we get a tax break.
Food insecurity. We’ve accepted food insecurity as if it’s some kind of festival where we have events about it. It’s good that we do. But is that okay? Because if these people had the opportunity to have some consistency in their lives and we could do something about that, they wouldn’t have to subject themselves to the everyday indignity of I’ve got to get to the food bank and I don’t even know how I’m going to get there. Is that your life? If that’s not your life, I’m not sure we should have a tax break. I know it is enough people’s lives, at least where I live, that we shouldn’t have a tax break.
Transportation. They don’t have that. Many of the folks that we are talking about are going to get a tax break don’t even have transportation. I talked about filling up your gas tank? You’re probably lucky if you have a gas tank because maybe you have transportation. And the health care that’s happening with our families, technology that they don’t have that we’ve been talking about for the last 20 years. And all of the other things that you think about in your life that makes your life rich, which takes me back to where I want to stop. Education. We haven’t had that study yet. What would it take? Because the people and the economic development, ag economic development, that’ll be an issue for you, not just the education committee, not just the education committee. The people in Public Health take up some of that. But all the rest of the committees look right back at education and go, ‘y’all fix it.’ And yet, all of the things that’s happening in that child’s life, unlike countries who have the highest performing systems in the world who look at a child’s life and what it’s like way before they get to school and address issues. Kids go to school to be educated. They shouldn’t have to go to school to see a doctor. Well, these are things right here– these are the things we ought to be doing rather than give a tax break that I am not philosophically against. I just have a different priority system, I guess. Thank you very much. I ask you to vote no.
Hill: I move for immediate consideration– Oh, I’m sorry. Apologize.
Griffin: For what purpose does the gentleman rise?
Hill: I have a motion, sir.
Griffin: The gentleman would like to be recognized for a motion.
Hill: I move immediate consideration.
Griffin: You’ve heard the motion. It’s a non-debatable motion. All those in favor, say aye. Opposed? The ayes have it. That required 24 votes, but the ayes have it. Madam Secretary, call the roll.
Senate Bill 1 Vote
[Vote on Senate Bill 1
Yes, 30; No, 4
Yes: Ballinger, Beckham, Bledsoe, Caldwell, Clark, Davis, Dismang, English, Flippo, Flowers, Garner, Gilmore, Hammer, Hendren, Hester, Hickey, Hill, Ingram, Irvin, B. Johnson, M. Johnson, Pitsch, Rapert, Rice, Sample, Stubblefield, Sturch, Sullivan, Teague, Wallace
No: Chesterfield, Elliott, Leding, Tucker]
Griffin: 30 yeas, 4 nays, the bill is passed. Transmit. Emergency clause adopted. Transmit to the House. One second– for what purpose does the gentleman rise?
Teague: May I just make a comment, please? Sir, I’ve been here 20 years, and I’ve always wanted to hear a filibuster, and now I’ve heard two, Sen. Garner’s and Sen. Elliott’s. I wanted to thank them for that.
Griffin: It’s not funny, so I’m going to consider that a point of personal privilege as opposed to a joke. Okay, Sen. Dismang.
Senate Bill 2
Cornwell: [Reads Senate Bill 2]
Griffin: Sen. Dismang, as a courtesy to the– as a courtesy to the President Pro Tem, Sen. Hickey, would you like to take a moment on the floor to clarify something as a courtesy to you?
Hickey: Yes, if you don’t mind.
Griffin: Because what you were telling him was probably good for the– for the good of the order. Sen. Hickey.
Hickey: Yes, the comment was made that LLCs and S Corps are not included in the tax reduction bill that we’re doing. You have to think of it this way– the profits of those S Corps, LLCs, what they’re going to do is pass through to the individual, so they will actually be taxed at the reduced individual rate. So I just wanted to make sure that we do get that clarification so there’s no confusion.
Griffin: Thank you, Senator. Sen. Dismang is recognized on SB 2.
Dismang: Has she read it across? I don’t think so.
Griffin: Did, did, did she read it? You already read it? Yes, she read it.
Dismang: She did? Okay. Members, there was some inconsistencies on the appointment process for the initial appointments and after they were appointed later on. This strikes the initial so it would match up throughout the bill.
Griffin: Any questions for the senator? Anyone wish to speak against or for? Senator’s closed. Madam Secretary, please call the roll.
Senate Bill 2 vote
[Vote on Senate Bill 2
Yes: 34, No: 0
Yes: All
**Recall that Sen. Eads has resigned and his replacement has not yet been elected. Thus there are only 34 Senators at this time.**]
Griffin: 34 yeas, 0 nays, the bill is passed. Emergency clause is adopted. Transmit to the House. We probably should have rolled that one. Nothing. Just a comment. Sen. Dismang, SB 4.
Senate Bill 4
Cornwell: [Reads Senate Bill 4]
Griffin: Any questions? I’m sorry, go ahead.
Dismang: I’m good with that.
Griffin: Any questions for Sen. Dismang on this? Anyone wish to speak for or against? Any objection to rolling the vote? Please roll the vote.
Vote on Senate Bill 4
[Vote on Senate Bill 4
Yes: 33, No: 0, Not voting: 1
Yes: All but Clark
Not voting: Clark]
Griffin: 33 yeas, 0 nays, the bill is passed. Emergency clause is adopted. Transmit to the House. Sen. Sullivan, SB 7.
Senate Bill 7
Cornwell: [Reads Senate Bill 7]
Griffin: Sen. Sullivan.
Sullivan: First of all, I’d like to thank the governor for putting one of my bills on the call. A lot of you tried to get bills on the call, and I was thankful to get this one on there. You know, the intent was to get the lowest price on insulin, a life saving drug. We had good intentions trying to leverage that for all Arkansans. The language wasn’t good. We tried to work with the insurance department and the pharmacy folks across the nation, and we couldn’t change the language. The best thing was just to repeal the bill and start all over. So we will be coming back with this. I think the goal is good to get the lowest price for all Arkansans. And with that, I’m closed.
Griffin: Any questions? Anyone wish to speak against or for the bill? Any objection to rolling the vote? Please roll the vote, Madam Secretary.
Vote for Senate Bill 7
[Vote for Senate Bill 7
Yes: 34; No: 0
Yes: All]
Griffin: 34 yeas, 0 nays, the bill is passed. The emergency clause is adopted. Transmit to the House. Sen. Wallace. This is SB 10. It doesn’t not have an emergency clause.
Senate Bill 10
Cornwell: [Reads Senate Bill 10]
Griffin: Lt. Col. Wallace is recognized.
Wallace: Thank you, governor. Positive cost benefit analysis. You all remember those words because I’m going to probably screw it up a couple of times while I’m up here. We’ve got the opportunity to bring a great addition to the state of Arkansas with another addition by Big River Steel, US Steel. They want to bring a $3 billion capital investment. This is in addition to the $2.2 billion they’ve already put in the ground in Arkansas, which is a total of $5.2 billion. That $3 billion investment, if it passes, will be the second largest economic package done in the United States this year. I grew up, spent my time in the Army, and listened to folks from California and New York kind of poormouth Arkansas, and we’ve got a chance to have the second largest economic package in the whole country.
This package is going to bring 700 jobs paying at least $120,000 a year. 700 more jobs in the Delta where people’s parents and grandparents were sharecroppers making $120,000 a year. 200 more jobs with the vendors of these steel mills making $60,000 or more. That’s all good, but here’s a problem we’ve got. There’s two other southern states right behind us pushing hard for these projects, Alabama and Mississippi. They’re saying we can do it. Come here, come here. The good news is we’re in the driver’s seat. We’ve only got to do a couple of things and we’re going to bring this home. The $50 million that Sen. Hickey already talked about in tax credits. Tax credits which we have done two times before with very successful results. And I’m going to talk more about these tax credits in a little while, but first I’m going to talk about the Delta and what these steel mills have meant to Arkansas and what these steel mills have meant to the Mississippi Delta on the east side of Arkansas.
When I grew up in the Delta back in the 40’s and the 50’s and the 60’s, I made 60 cents an hour chopping cotton. I was probably overpaid because some guys only got 50. It made the army look pretty good. 30 years later, minimum wage in Arkansas was $3.30 an hour. Not much had changed in the delta. We still had sharecroppers but some of them had been replaced by Machinery, so no jobs at all. The steel mills changed that for Mississippi County and for Crittenden County and for Craighead County and Poinsett County, all those counties surrounding Mississippi County. We have young men and young women now with a year of college, 2 years of college, with no college– we have young men and women– I just helped one go straight out of high school, go through an apprenticeship, and he is now working at Big River Steel. That’s a success story. Making over $100,000 a year, who his family had years before worked on a farm sharecropping. That’s the difference that those steel mills are making in Arkansas.
There is young folks with new homes, good homes, new cars, good food, new and better schools. That’s what the steel mills are bringing to Arkansas. These folks are living a better life– young folks, than their parents and their grandparents grew up with. So what’s it going to cost us? In the long run, very little. When I was growing up, one of the chores I had– everyday I had to go out and prime the pump. Those old handle pumps. And you’d pour a little bit of water in there and you’d pump it and we’d get gallons of water back. Well, that’s what we’re got to do this time with these tax credits. We’ve got to invest some tax credits, relatively very little, and we’re going to get back billions and billions of dollars from these tax credits when we do this.
How do I know this? We’ve done it twice before with tax credits and it’s worked very well. The living proof is, just as I explained, what’s happening in Craighead County, Mississippi County, Poinsett, Crittenden County. These tax credits are going to cost $11 million a year over the next 14 years. If the state buys them back, or if our teacher retirement fund buys them back, we buy them back at a 20% discount. It becomes $8.8 million over the 14 years. So for as little as $8. million a year, US Steel is going to put $3 billion into the ground in the state of Arkansas. They’re going to create, directly or indirectly, 900 more jobs. And here’s a money back guarantee. When they do that, before they qualify for these tax credits, the infrastructure has to be done, the plant has to be done, the jobs have to be filled with people before they get tax credit one. And then they have to show via that positive cash development– and I missed that up. To DFA and to our Arkansas economic development folks, they’re going to do an analysis to make sure that in fact Big River Steel, US Steel has done everything they said they would do.
And here’s one more thing. Those 900 jobs, 700 people– somebody do the math with me– times $120,000 a year. That’s $84 million a year. 200 people times $60,000 a year. That’s $12 million more a year. That’s pretty close to $100 million. Tax rate of 5% on $100 million? That’s $5 million more coming back to us. If it’s $120,000 this year, 10 years from now, that salary will be $130,000 or $140,000. We’ve done this twice before. We’ve been successful. This is a winning play. Let’s run it again. And with that, I’ll stand by for your questions.
Pitsch: Are there any questions? Rep. Johnson– or Sen. Johnson, excuse me. I’m still talking up here. Go ahead. Yes.
- Johnson: Sen. Wallace, thank you for everything you’ve done in economic development in Mississippi County and your region. Like you, I’m old enough to remember when that was dirt country, and it was rich dirt. There was a lot of money in the Delta, but it was concentrated more at the top. This is– spreads the wealth around a lot more. Is it true that Mississippi County is now the largest steel producing county in the United States?
Wallace: Sir, we believe that we are, and we know for a fact that when we get this next addition we will be– in the whole country.
- Johnson: Well, I want to commend you because I’m so concerned about a loss of manufacturing to, not just overseas, but to our competitors. I mean that in capitol C competitor. Thank you for all you’re doing, and I’m happy to support the bill.
Wallace: Thank you.
Pitsch: Are there any other questions? Sen. Garner.
Garner: Yes, sir. After they meet the initial requirements, if they fail to follow up with these jobs– after they meet the initial requirements and they fail, say, in the future to meet the requirements in jobs, is there any clawback provisions in this?
Wallace: There, there are safety conditions, clawback conditions provided in this.
Garner: Okay, I just didn’t see them when I looked through. I might have missed them. Secondly, does US Steel or Big River Steel require a vaccine mandate for employment?
Wallace: I don’t believe so. I’m pretty sure not, but II don’t know for sure.
Garner: Okay, thank you.
Pitsch: Are there any other questions for Sen. Wallace? Would anyone like to speak against the bill? For the bill? Sen. Rapert, you are recognized.
Rapert: Well, members, I do rise to speak for the bill. In fact, and I can’t recall, Sen. Wallace if you were actually here for the first package or not. But I was here for the very first package like this was actually put in play and we debated it on the floor. It was a very big deal, and as much as we’d all like these in our own districts, we’re glad it’s coming to Arkansas and going to be helpful because that area of the state needs it. My comments for the bill today and on the bill– and I will share with you, hopefully it will be a little bit uplifting for you. We all come down here and we have strong feelings. We have strong will about these issues, and in a matter of just one hour here we’ve just passed the largest individual tax cut bill that’s ever come through that I’m aware of in one session in one bill. And I’m proud of that, but over the 10 years we’ve also passed the largest historical tax cuts in our state’s history. And I’m proud of all the work that each of you have done on that as well. So this is a big deal.
I started my day off– we had a day yesterday where we had a lot of opportunities to try to see if we could get policy crafted that would represent even greater will. Just as I got here to the Capitol this morning, my youngest daughter who was 8 years old when I started serving here sent me a message. She said, “Dad, just wanted to let you know I’m praying for you. I wanted to encourage you with a verse, ‘Do not grow weary of doing good for at the proper time we will reap a harvest if we do not give up. Don’t let any hate that you’re getting upset your calling.’ Well, I’ve never done that and I won’t.
And so I am for this bill. But Sen. Garner raises some important issues. And as I sat and listened to all of this, I will say I did speak with Sen. Dismang on the other bill. This is a deliberative body. It’s a process that we go through. I tried yesterday to see if you would add an amendment to SB 1, not because I didn’t like SB 1. I actually love it. I’m glad that we’re doing tax cuts. But I wanted to see that this body would stand up and also add the $25 million. We’re doing $50 million here. We’re giving money away to all sorts of things. It’s just a matter of what we wanted to do. And all I wanted to do in rising here today was to tell you that in this process that we have, and I know that Sen. Wallace– I can remember a bill last session, a very significant bill dealing with solar. And that was a deliberative process. And I was called as chair of the committee at that time to come in and sit down and man we worked through that and we got a good bill passed and people got behind it. And I just want to urge all of us because I do love the Senate and love what we do to not be rushed when each of you want to speak. You all are elected by Arkansas citizens and each and every one of you have a right to stand up and speak on behalf of your citizens and to advocate for policy and to not be squelched when you do it.
And I’m proud of the fact that the first time I walked onto this floor, one of our former senators brought me in here by myself and he looked around and said, “What you need to understand is whether you were elected yesterday or you’ve been here for 20 years, you are individually, each and every single one of you, a senator with the exact same rights and privileges of any other senator. By privilege, we nominate a Pro Tem to serve us ceremonially here. But no one here works for our Pro Tem, none in the past, none that are current. We answer to the people of Arkansas. And when I see that some people’s voices are squelched in this process or there’s words spoken that it’s disrespectful for us to run motions or file bills or amendments, it’s not disrespectful. That’s part of the process. Any number of times, Sen. Elliott and I have spoke vigorously against issues. But on human trafficking, on disability issues, we speak together and have shared laughs and to be able to be friendly outside of that. That’s important to me. And so as we get ready to pass this bill out of here and I support it fully, Sen. Wallace, and I’ve taken a little bit of liberty in voicing my concerns because I didn’t get an opportunity like several members to speak just now. But in an hour, we’ve passed all these things. We’ve not wasted anybody’s time. We stood here. I had hoped, and I will say this because I’m going to continue advocating because nearly 50 legislators wanted to do something for law enforcement. If somebody had a better idea we could have done that. And what I’m saying is that we always have time to pause before we close the doors down here to do the right thing. There’s never a right time to do the right thing. Harry S. Truman says, and I close, “It’s amazing what you can accomplish when you don’t care who gets the credit.” But we shouldn’t oppose things when some people actually do care who gets the credit.
Pitsch: Would anyone like to speak against the bill? For the bill? Sen. Wallace, would you like to close for your bill?
Wallace: I’m closed.
Pitsch: Sen. Wallace has indicated that he’s closed for the bill. Are there any objections to rolling the vote? Seeing none, Madam Secretary, please roll the vote.
Vote on Senate Bill 10
[Vote on Senate Bill 10
Yes: 34, No: 0
Yes: All]
Pitsch: With 34 yea, 0 nay, SB 10 has passed. Transmit to the House. We are going to transition into the budget calendar. Sen. Dismang, you’re recognized.
Dismang: Thank you, Senator. Members, first up is– sorry, if you want to.
Senate Bill 3
Cornwell: [Reads Senate Bill 3]
Dismang: Members, this is an increase in appropriation. We just about hit the limit for federal funds coming through. This increases that to $3 billion or by $3 billion in supplemental appropriation. All the same requirements and oversight will play into these funds just like we have in place today. Be happy to take any questions.
Pitsch: Are there any questions for Sen. Dismang? Sen. Rapert, you are recognized.
Rapert: Senator, do you happen to know were there any intentions or any intended allocations for this appropriation?
Dismang: I think a significant part is what we’ve talked about in regards to broadband, which this chamber has been invested in.
Rapert: So $3 billion more– you’re not saying that we’re–
Dismang: We, we will not know until it’s brought before us. And I’m not sure we know exactly how many additional federal dollars is flowing. This is just appropriation, and all the same requirements where they will come and ask for approval to spend are in place. We’ll be a big part of that conversation.
Rapert: Follow up to make sure– is this Cares– are you saying appropriation–
Dismang: ARP.
Rapert: ARP. Okay. And so the ARP– do you happen to know how much we’ve already spent on broadband. I’ve heard– I keep–
Dismang: Like I told you yesterday when you were asking for the report, and I think you immediately got it. So I think you’ve got those numbers, but if you look at the end of the–
Rapert: No, actually, I, I didn’t get it. I didn’t ask specifically on the broadband–
Dismang: It’s detailed in that same report you received. If you had read through it, it actually stipulates how much was for each project and the type of project. For any member that has concerns or wants to learn a little bit more about how those dollars are spent– so if you’ve missed the meetings or whatever, so that would be a Peer meeting or even a full ALC meeting– if you missed those, you can go and look and see what’s historically happened at the end of the Peer report online. There’s a report that outlines exactly how those dollars have been spent and what’s left.
Rapert: Okay, so the $3 billion appropriation that we’re–
Dismang: Appropriation– supplemental appropriation.
Rapert: Okay, we typically don’t make appropriation without an expectation. So I’m just asking, do you know of any specifics on the full $3 billion appropriation at all that we might want to know about?
Dismang: No. And we are going to know. So this is non-typical. We’re all aware of it. That’s why we put stipulations in place and required approval by ALC before these funds are spent. But you still have to have the authority to spend the funds. This is what’s granting that, but we will still, again, be a full part of that process. There’s no sidestepping or whatever it may be in regards to utilization of these funds.
Rapert: But as I’m understanding it, this is still going through the governor’s committee that he formed and then comes back for review? Or is this coming straight to us?
Dismang: Approval. Approval, which the process which you voted on and you were a big part of back in the regular session.
Rapert: But my point is it’s still going through the governor’s committee.
Dismang: Well he is the executive branch, and that is how that works typically. We set the appropriation thresholds, and in fact, this would be different from what we normally do when we inject ourselves even at the end, not just for review, but actual approval of expenditure of those funds. So yes, I mean, but, again, the executive branch is the executive branch, and that’s their function. I would say we’ve added a little bit of extra on the back end of it through a vote previous.
Rapert: Thank you for clarifying so that everybody knows the process that is listening as well. Thank you.
Dismang: Okay.
Griffin: Any other questions? Anyone wish to speak against the bill? For the bill? The Senator is closed. Any objection to rolling the vote? Please roll the vote.
Vote on Senate Bill 3
[Vote on Senate Bill 3
Yes: 34, No: 0
Yes: All]
Griffin: 34 yeas, 0 nays, the bill is passed. It required 27 votes and cleared that threshold. The emergency clause is adopted. Transmit the bill to the House. Sen. Dismang, SB 5. It has an emergency clause, and unlike SB 3, only requires 18, not 27 votes.
Senate Bill 5
Cornwell: [Reads Senate Bill 5]
Griffin: Sen. Dismang.
Dismang: Thank you, members. This is tied back to the recycling tax credits and that particular project that we’re trying to get up and going here in the state of Arkansas. There’s a potential to transfer up to $50 million to be able to help with infrastructure projects. There are clawbacks tied to that to ensure that this project does take place. And again, this is part of the bill that we’ve already passed. If that project does not take place, that money would sit in a general allotment reserve fund and not be spent and we would be able to transfer that back or do what we’d like at a later date.
Griffin: Any questions? Sen. Garner.
Garner: Thank you, Lt. Gov. So we’re removing $50 million from the Long Term Reserve Fund which we just renamed the Catastrophic Fund, correct?
Dismang: Yes.
Garner: If we were to do this in 2024, this same maneuver, wouldn’t that violate the triggers, and then the triggers for the income tax wouldn’t be available for us moving forward?
Dismang: Actually, as of July 1, 2022. Yes, sir.
Garner: Okay. I, I, I missed it. I thought it said FY 2024.
Dismang: That’s when the triggers take place, but there’s actually a provision that if we try to take money out of that after July 1, 2022, then it would not allow the tax cuts to proceed.
Garner: Here’s my question on that. I know I’m developing this. If we have future funds like this where we’re going to access– I know within the Catastrophic Fund, you put a clause in there where you could use it for super projects like this. How can we be assured those triggers will go into effect if we need to fund a future super project without violating those triggers?
Dismang: Well, and I mean, one thing I don’t like to say is this body can change the rules even related to the Catastrophic Reserve Fund with 18 votes and 51 votes on the other side. But my assumption is that we will be able to adequately fund various fund balances to ensure we have the money available for that type of super project if one does come up in the state. This is a little bit different– I mean, I don’t want to force Sen. Hickey to come down, but there’s some moving parts to this one where it was automatically going to float a Long Term Reserve Fund, so you have to take it from that fund, put it in general allotment fund before it gets out to the quick action closing fund. Is that fair?
Garner: But I am correct, if we were to do this after July 2022, that would violate the triggers where we would not have those income tax deductions?
Dismang: Yeah, we’ll have to come up with a different mechanism. The whole point of the Catastrophic Reserve Fund is to have that backstop and also set a floor of 20% of prior year spend. And so that’s the purpose of that fund and what we’d like to see it stick with as we move forward.
Griffin: Anyone like to speak against? For? The senator’s closed. Any objections to rolling the vote? Please roll the vote.
Vote on Senate Bill 5
[Vote on Senate Bill 5
Yes: 34, No: 0
Yes: All]
Griffin: 34 yeas, 0 nays, the bill is passed. The emergency clause is adopted. Transmit to the House.
[Announcements]
[Adjournment]