House of Representatives
August 10, 2022
Shepherd I invite the members, staff, press, and guests in the galleries to stand and be led in prayer by the House chaplain, Dr. Rex Horne, and remain standing for the Pledge of Allegiance to be led by Representative Lane Jean.
Horne Let’s pray, please. Father, we were reminded from the Scripture that as we wait upon you we’ll be able to run and not grow weary. We will walk and not faint. Then we think of Paul’s writing in the New Testament, where he encourages us not to grow weary in well doing because we will reap if we faint not. So I pray for these women and men of the chamber that as they do their work that they will have strength to run, have strength to walk, but most of all, have perseverance, endurance not to grow weary in well doing. Whether it’s in their personal life, their family life, community life or public service, may you bless them with an extraordinary amount of wisdom and strength today. In Jesus name, amen.
[Pledge of Allegiance]
Shepherd Members, please indicate your presence by pushing your yellow present button. Prepare the machine, Mr. Clerk. Cast up the ballot, Mr. Clerk. With 95 members present, the chair sees a quorum. Are there any requests for leave? Representative Pilkington, for what purpose?
Pilkington Leave for Representative Ray.
Shepherd Is leave granted for Representative Ray? So noted. Representative Allen. For what purpose?
Allen Leave for Representative Ferguson.
Shepherd Is leave– is leave granted for Representative Ken Ferguson? So noted. Representative Love, for what purpose?
Shepherd You’re recognized.
Love Leave for Representative Flowers.
Shepherd Is leave granted for Representative Flowers? So noted. Representative Frederick Love moves we dispense with the reading of the previous day’s journal. Without objection, so ordered. Are there reports from select committees? Are there reports from standing committees? Is there any unfinished business? Are there any executive communications? Mr. Clerk, please read House Resolution 1002.
Clerk House Resolution 1002 by Representative Ladyman. To recognize the Jonesboro High School Hurricanes boys basketball team as the 2022 Class 5 A State Champions and the second consecutive 5A State Champions.
Shepherd Representative Ladyman, you’re recognized to explain the resolution.
Ladyman Thank you, Mr. Speaker. I’d like to invite Representative Tosh, Representative Cavenaugh, Representative Rye and Representative Brandt Smith to come to the well. We want to recognize the Jonesboro High School Hurricanes boys basketball team for their accomplishments this past season. They were the 5A state champions for the second consecutive year. They defeated the Marion Patriots– sorry, Marion folks– in the state tournament finals by a score of 55-28. They finished the season with a 28-3 record and were ranked number one overall in the final Arkansas Sports Media poll. They did not lose to an in-state team and were the only team to defeat a very good North Little Rock team. I thought I’d get a response to that. They were also ranked number 20 in the 50 teams Maxpreps national rankings and number 22 in the SB Live Sports Illustrated Power 25 poll. At this point, I want to introduce the coach of the Hurricanes. Coach Wes Swift is in the North Gallery. And, unfortunately, he couldn’t get the players together. I know, I think Coach told me five of your players are going on scholarship. One’s at Oklahoma State. One’s at Army. One’s at Air Force. So he couldn’t pull those together. But, coach, we have a House citation that Representative Brandt Smith is going to present to you for your trophy case. Thank you for a good season. Now, now, let me, let me talk about the coach for a minute. Some of y’all– he knows quite a few of y’all. We met as he was coming in. But Coach Swift has been here a couple of times since I’ve been in the House. Coach Swift also received various awards for his job, his coaching job at the number one team in the state. He received the Lowell Manning Award for the most outstanding boys coach in any sport across the state of Arkansas for a second time. He was also number one on the list of outstanding coaches for 2021 and 2022 athletic seasons by the Arkansas High School Coaches Association. Six of his players were named All-Conference. Three of his players were named All-State. Coach, you had a great year, one of the best I’ve ever seen. We wanted to honor you and your team for your hard work and your accomplishments. Mr. Speaker, would you have the clerk read the resolution in its entirety?
Shepherd Mr. Clerk, please read the resolution.
Clerk Whereas the 2021-2022 Jonesboro High School Hurricanes boys basketball team netted the class 5A boys basketball state championship after defeating the Marion High School Patriots boys basketball team with the score 55-28 at the Bank OZK Arena in Hot Springs, Arkansas, on Tuesday, March 10, 2022. And whereas, with this win, the Hurricanes earned their second consecutive championship. And whereas, the Hurricanes finished the season with a 28-3 record and were ranked number one overall by the Arkansas Sports Media Poll and number 20 in the 50 teams Maxpreps national rankings and the number 22 in the SB Live Sports Illustrated Power 25 poll. And whereas, the Hurricanes team included Keon Williams, Omarion Wilson, Devin Smith, Dion Buford Wesson, Kylon Kelly, Devarious Montgomery, John Paul Pickens, Philip Tillman, Isaac Harrell, James Blair, Caleb Crow, Chris Stacey, Jesse Washington, Quinshod Neill, Ty Spicer, Kayvon Pointer, Terus Brown, Marquevious Pickett, Kellen Mullens and E.J. Phillips. And whereas, the Hurricanes were led by head coach Wes Swift and assistant coaches Sammy Lewis and Quinton Weaver. And whereas, head coach Wes Swift received the Lowell Manning award for the most outstanding boys coach in any sport across the state for the second time and topped the list of outstanding coaches for the 2021-2022 athletic season seasons by the Arkansas Head Coach Association. And whereas, Keon Williams, Jesse Washington and Isaac Harrell are All State for the 2021-2022 school years. And whereas, six of the players, Keon Wilson, Williams, Jesse Washington, Isaac Harrell, Omarion Wilson, Kayvon Poyner and Dion Buford Wesson and were named All-Conference for the year. And whereas, Keyon Williams was named the most valuable player for the Class 5A state tournament. Now, therefore, be it resolved by the House of Representatives of the 93rd General Assembly, that the House of Representatives of the 93rd General Assembly recognize the Jonesboro High School Hurricanes boys basketball team as the 2022 Class 5A state champions for the second consecutive class 5A state champions.
Ladyman Mr. Speaker, if I could, I’d want to ask my fellow representatives, did y’all want to add anything?
Shepherd Representative Ladyman has explained the resolution. Would anyone like to speak against the resolution? Would anyone like to speak for the resolution? Representative Ladyman is closed for the resolution. The question before the House is adoption of House Resolution 1002. All in favor, say aye. Any opposed? The resolution is adopted. Morning hour is ended. Mr. Clerk, please read House Bill 1002.
Clerk House Bill 1002 by Representative Jett. To reduce Arkansas income taxes, to adopt federal law on depreciation and expensing of property, to create an income tax credit for certain taxpayers, and to declare an emergency.
Shepherd Representative Jett, you’re recognized to explain the bill.
Jett Thank you, Mr. Speaker. Colleagues, I think everybody here probably knows how they’re going to vote on this bill. And it’s been out, been in the press. And I’ve talked to quite, quite a few of you guys and sent this bill out sometime last week. And appreciate the folks who called me to ask me questions about the bill. But so I think because of that, I think I’m just going to stay on 50,000 foot view. So this bill basically has four parts to it. I’m going to start off with the income tax reduction part of it. Everybody knows back last December, we passed a package– Representative Maddox’s bill– passed a package to take the top marginal rate down from 5.9 to 4.9. And that was going to be phased in, triggered in over a period of up to 2025. What this bill does, this is not a new tax, regardless of what you read, what you heard. This is not a new tax. Only thing we’re doing now is we’re bringing the 2025 4.9 in retroactive all the way back to January 1, 2022. So that means it’s an immediate reduction on payroll taxes. DFA is going to actually send out a payroll schedule to the employers. In September and October, the, the employers can elect with employees can elect to start taking deductions of 4.9% on their taxes. So the second part of the package is a corporate income tax. Same thing with it. It was triggered and phased in all the way up to 2025. We’re going to bring this back. Instead of making it retroactive to 2022, it’s going to come back to January 1, 2023. And that’s going to go down from 5.9 to 5.3. The third part of the bill is the depreciation for the 179. Be remiss if I didn’t mention Representative Beatty. He championed this cause, brought it to Revenue and Tax this past session. The cost of it at the time– we was talking about doing schedule 168 along with the 179– I think it was like a $300 million hit. It was just too much to get our hands wrapped around at the time and I promised Representative Beatty that if we have the opportunity to fix this, we would do this. So this is included in this package. I will tell you all, this is big for Arkansas businesses. It’s huge for Arkansas farmers, ranchers. Like I said yesterday in committee– excuse my language– this is not sexy, but it’s something that will absolutely benefit the hardworking Arkansans that own businesses and farms and ranchers. It will let them depreciate 100% right out of the gate. This will be over a period of years. Instead of them having to depreciate something over five to seven years, if you will, they get to take 100% deduction right out of the gate up to $1,080,000 right out of the gate. So this, this will be huge for those folks. Last but not least is inflationary. The $150 tax credit. It’s a non refundable tax credit. It goes up to $87,000. Somebody makes below $87,000, they get $150 nonrefundable tax credit. And then it scales out to $101,000. So anybody making above 87,000, it scales back down off $150. And then, below $87,000, it’s a $150 tax credit. Like I said, it’s nonrefundable. And then if a married couple is filing jointly, then you just double that. And the same, it’s the same mechanism, if you will. Total cost of the package is $500 million. I think it’s important to keep in mind DFA as they forecast out into 2023, we can do this along with everything else forecast, fund RSA, there’s still well over a $400 million surplus. The elephant in the room is, the thing I’ve been called most about is the Safe Harbor Act. And the Safe Harbor Act is talking about the federal government claws back the money if we do not operate, spend, do our taxes based with what the federal guidelines are on the CARES Act. So with that, I’m telling y’all, I worked trying to get an answer on this for about a year now. And so I reached out to DFA several times and obviously and the BLR and some folks. But so I’ve come up with this quote from this– it’s a, it’s a paragraph that Secretary Janet Yellen wrote for the Department of Treasury. And it says, and she says, “nothing in the act prevents states from enacting a broad variety of tax cuts. That is, the act does not deny states the ability to cut taxes in any manner whatsoever. It simply provides that funding received under the Act may not be used to offset a reduction in tax revenue. If states lower certain taxes, but do not use the funds under the Act to offset those cuts, for example, by replacing the lost revenue through other means, the tax mandate is not implicated.” So I think that probably speaks pretty good of what we’re doing. No money that’s been used on the CARES Act has offset anything that’s in our budget, regardless of what anybody’s read, heard or said. And also I reached out to Secretary Larry Walther. And on your desk, you’re going to find a statement from Secretary Larry Walther that this will be entered into the journal. If we pass this package today, this statement will go along with the tax, this tax cut package that’s going to be processed into the journal. And I think it’s vitally important that members be made aware of this information. I’ve had copies, like I said, distributed and it’s on your desk and I submit this information to create a historical record of information on which we based our legislative decisions. So with that, members, just once again that’s a 50,000 foot view of what we’re doing. I think, like I said, I think everybody knows pretty much how they’re going to vote. And I would appreciate a good vote. And the people of Arkansas, hardworking citizens of Arkansas, would appreciate a good vote as well. Thank you.
Shepherd Representative Jett has explained the bill. Would anyone like to speak against the bill? Representative Collins, you’re recognized to speak against the bill.
Collins Thank you, Mr. Speaker. A lot of respect for the people who brought the bill, and I do think that there is some value in it. I’d like everyone’s taxes to be as low as they can be while affording what we need to do as a state and ensuring that our contributions through tax toward our shared interests are fair and equitable. What I think it comes down to is priorities and cost benefit. As the Representative mentioned, this bill has three components. The Section 179 depreciation change catches us up with other states. I think it conforms to federal law, offers a big boost to business investment without a huge price tag, very sensible component that’s easy to support. The $150 nonrefundable tax credit is the only part of this bill that benefits working class, lower income people, and it’s just insufficient. $150 might get you two tanks of gas. And for lower earners, as the Representative mentioned, whose tax liability is less than $150, they don’t even get that full amount because it’s nonrefundable. So the higher income person might get $150, the lower income person might get $50 or $20 or $0. And that’s not really inflationary relief that works for everybody. Everybody’s paying higher prices right now. Everybody should get this credit. That’s what a refundable tax credit would do, but that’s not what this is. But the biggest issue for me is the acceleration of the reduction of the top individual and corporate tax rates, and in particular, the changes to the second individual tax table that only hit people making $84,500 or more. Cutting taxes for the wealthy like this is not going to have the impact that some seem to expect. People with high incomes will save a few hundred dollars a year. People with extremely high incomes will save a few thousand dollars a year. Think about the person that you know who makes $400,000 a year, if you know anyone. That person is easily a millionaire and that person would save maybe about $2,000 under this bill. You think $2,000 for a millionaire is going to prompt him to hire a bunch of employees or expand his business or change his spending habits or pay his employees a living wage? You think $2,000 will prompt businesses to locate here in Arkansas? Businesses want to be in places with an educated workforce, low crime, high quality of life, fair laws, where top employees want to live. And this bill doesn’t do that. For the wealthy people this part of the bill attempts to cater to, it just doesn’t move the needle in the ways that matter. But it does cost the state quite a bit, $315 million a year, for this part. The fiscal impact you all have seen optimistically presumes that we aren’t going to have to dip into long term reserves over the next several years. But if we have a recession, as some think we might, we do need extra funds. Somewhere close to that $315 million will be hit every single year into the future. That’s $315 million per year we could use to pay our teachers, fix our roads, support our police and reduce crime, support our pregnant women and mothers. Instead, we’re throwing this money mostly at the wealthy who don’t need it and won’t care. It’s a high cost for a low benefit. A couple other things, some of which have been mentioned. This bill could cost us hundreds of million dollars in ARPA funds. We don’t know. There’s litigation pending on that right now. It will increase inflation because we’re pumping more money into the economy, same as the stimulus. It’s a stimulus mostly for the rich. And it sends a message to our constituents who are crying out to pay our teachers that instead we care more about tax cuts for the wealthy. We’re acting deaf to our people and that undermines us. We have incredible needs in our state, education, crime, infrastructure, and tax relief for the working class and middle class. Another tax cut for the wealthy is the wrong approach, and I would urge you to vote no. Thank you.
Shepherd Representative Collins has spoken against the bill. Would anyone like to speak for the bill? Would anyone like to speak against the bill? Representative McCullough, you’re recognized to speak against the bill.
McCullough Thank you, Mr. Speaker. I mean, it will be no surprise that I’d love for the surplus to be spent in what I believe to be more meaningful ways, teacher and support staff raises, housing trust fund, mental health help for all who desperately need it, and more. In this chamber, we sometimes throw around the term surplus. When we have the money to fund our most essential state services, we refuse to do so and sit on our hands, and we can hardly call that a surplus. We’ve seen the billboards and the statistics about teacher salaries in other states and us not being competitive. Our historic surplus could be used to help it. I was in the classroom for 33 years and I can tell you some of our most talented teaching professionals are leaving the profession and sometimes the state. An investment in our teachers is an investment in our children. This very legislature was concerned about how kids were learning during the pandemic, but now we’re not taking action when our school districts need it most. This year, we also approved the use of funds to take thousands of people off the developmental disabilities wait list. And while this took those people off the wait list, they’ve now gone on to another one. Our departments simply don’t have the money to pay the salaries to hire the support staff to help these people. And now they still wait for the care that they deserve. Money from our historic surplus can be used to aid in those areas. And I know that some money for folks who need it the most is some money. I get that. But with– in 1970, $150 would have been something to really help. Today it certainly cannot be stretched very far. So now’s not not the time, I believe, for these tax cuts or for expediting these tax cuts. We have a historic opportunity to fund our essential services, but we’re focused on the wants of a few over the needs of our neighbors who need us the most. So I ask that you vote against expediting the tax bill.
Shepherd Representative McCullough has spoken against the bill. Would anyone like to speak for the bill? Would anyone like to speak against the bill? Representative Jett, you’re recognized to close for the bill.
Jett Thank you, Mr. Speaker. Colleagues, I really didn’t want to come down here and have to close. But I think there are some things that were said I’d just like to clean up. You know, at the end of the day, let’s just have us an honest conversation. This tax cut bill was put on the records, this body voted on this back in December. We’re not changing anything other than what we’re doing today is we’re accelerating what we done back in December of 2022. Now, if we’re going to have an honest conversation about who benefits from this, all Arkansans benefit. Why would we not want to include people who’s been well off and been productive members of our society? Why would we not want to include them? If you guys recall back in December, we did the tax cuts was for the bottom and middle income earners. I mean, we, we combined the bottom table with the middle table. And I’m just going to give you just a couple of figures. You know, we’re spouting out figures here, so I want to share a couple of figures also. So we’re taking this thing down to 4.9%, right? Everybody that’s going to make above $23,600 is going to be in that 4.9% bracket. They get the benefit of this. They– somebody go out in the public here in Arkansas and find somebody who’s making $23,600, and you ask them if they’re wealthy. And I’m telling you all $23,600 is not a lot of money. I couldn’t live on it. I don’t think anybody in this chamber can live on it. But those folks get, those, those folks are getting the benefit of what we’re doing here today. So it’s just not just for the wealthy folks here. Somebody making $26,526, their effective tax rate, because we do have a regressive tax scale, for example– so in 2022, their effective tax rate’s 1.97%. And they’re going to– their tax– they’re going to– their tax– they’re going to lose $365 off their tax liability on a $26,000 income. That is significant. And I challenge anybody in this chamber to go out and find somebody that makes $26,000 and see if they’re wealthy. They’re going to tell you they’re not wealthy. They’re just barely getting by. So with that, Mr. Speaker, I’m closed.
Shepherd Representative Jett has closed for the bill. The question before the House is the passage of House Bill 1002. We do have one pair on the desk. Representative David Ray votes yes, Representative Jamie Scott votes no. Representative Scott is the present member. Are there any procedural objections to this pair? Hearing none, please do not vote either of these two voting machines. Prepare the machine, Mr. Clerk. You’re voting on the bill and the emergency clause. Has everyone voted? Has everyone voted? Cast up the ballot, Mr. Clerk. By a vote of 81 yeas and 14 nays, the bill is passed. Members, we are going to stand in recess upon the call of the chair. We’re going to wait for the Senate to send their, send bills down to us so that then we can refer those to committee. So we’ll stand in recess, hopefully, just for a few minutes upon the call of the chair.
Shepherd The House will come to order. Members, before I, before I take a motion to adjourn, just so you’ll know, the Senate passed both bills that were on their calendar today. So they’re– those are headed down here to us. There will be a Rev and Tax, a House Rev and Tax committee meeting 15 minutes upon adjournment. We have to get the bill, so hopefully we can get that in the next 15 minutes. But there’s no sense in everybody else waiting around. So with that, I’ll recognize Representative Evans.
Shepherd You’re recognized.
Evans Thank you, Mr. Speaker. After the announcements, reading of the bills, transferring the bills, placing the calendars on the desk, members amending their own bills with their own amendments, members withdrawing their own bills, finalizing resolutions, reading communications, and any remaining committee reports, I move that we adjourn until 9 a.m. tomorrow morning.
Shepherd That’s a proper motion. It’s not debatable. All in favor, say aye. Any opposed? Motion passes. Are there any announcements? Representative Fortner, what purpose?
Shepherd You’re recognized.
Fortner Rev and Tax. 15 minutes, 151.
Shepherd Any other announcements? Seeing none, the desk will remain open as needed for the reading of the bills. And upon completion of the items named in the adjourn resolution, the House will be adjourned until 9 a.m. tomorrow.