Aug. 9: House Revenue and Tax Committee transcript

House Revenue and Tax Committee

August 9, 2022

 

Fortner Okay. So the video started. A couple orders of business. If you wish to speak to this bill, please sign in. There’s a sign in sheet outside that door out there. And the only thing that I would ask you, if you speak, if you will limit your comments to 5 minutes so everyone can have a chance. I’d appreciate that. Okay. All right. Representative Jean, are you ready to present your bill? 

 

Jett I’m, I’m better looking than Representative Jean. I’m Joe Jett, representative. 

 

Fortner How about Representative Jett? Would you like to present your bill? Well, you stuck him up here with me. I don’t know what to think about. 

 

Jett I’ve been called a lot of bad things in the last past month and a half, but I think about topped– 

 

Fortner This shows you how much confidence Joe’s got in me. He’s got this guy next to me. All right. Representative Joe Jett, are you ready to present? 

 

Jett Yes, sir, Mr. Chairman, I’m ready to go. Members, appreciate it. I didn’t really think I was going to get to come back down here and do another bill. But we see fit that here we are. So the bill is pretty simple. It’s a four prong bill. We’re talking about income tax. We’re talking about corporate tax. We’re talking about the corporation– I mean, the 179 conformity issue. And we’re talking about a tax credit, a one year nonrefundable tax credit inside the package. If everybody recalls last session or last extended session, special session, whatever it was last December, we passed a tax cut package that we phased in, triggered in on the income tax side. And it was, right now, we, in 2022, we took the 5.9% to 5.5%. 2023, we went 5.5% to 5.3%. 2024, we went 5.3% to 5.1%. And finally, in 2025, triggers didn’t kick in, it was going to go from 5.1% to 4.9% on the top marginal rate. What this is, regardless of what anybody’s heard, read, read on the interweb, net, this is not a new tax cut. The only thing we’re done is we’re accelerating the tax cut. We’re taking out years 2023, 2024 to 2025. We’re retroactive putting that tax cut that we passed last December into January 1, 2022. That means if we pass this package today, the effective tax rate going back to January 1, 2022, will be 4.9%. So what that means on like for payroll, for example, somebody at DFA’s told me that, I believe it was September, they’re sending out the new payroll withholding schedule for the employers. In October, if the employers and employees so choose to do, their effective rate will go from 5.5% to 4.9% immediately. And then, then as they pay their taxes, going back from January 1, 2022, they’ll capture those additional eight months– I believe it was eight months, right– eight months down to 4.9% as well. So I just want to stress that that the end of the day, the income tax portion of this is not a new tax. We are just, we’re bridging, if you will, from January 1, 2022, to January 1, 2025. We’re taking that away and making this immediate, immediate. So that’s that portion of the bill. Move down to the corporation income tax. Right now, it was at 5.9%. We moved it 5.9%. And then we had it also that it was going to be triggered, phased in all the way to 2025. In 2023, it was supposed to go to 5.7%. 2024, 5.5%. And 2025, down to 5.3%. So what we’re going to do on this, we’re going to instead of making that retroactive to January 1, 2022, this proposal will make that active January 1, 2023, is what this proposal will do. This is, this is huge for the businesses of Arkansas, just trying to make Arkansas as competitive with the surrounding states. I would like to went ahead to push that all the way down to 4.9% this– within this package myself. But obviously, you know, we had to negotiate with the Senate and executive branch as well. So I did not get my way on that, contrary to what Representative Lane Jean thinks. He thinks I get my way on everything. I did not get my, I did not get my way on that. But it’s coming to 5.3% under this proposal January 1, 2023. Next will be the depreciation. This is something that I’d actually worked on since, man, I guess since the 89th General Assembly. I actually had a bill for this. And then 2015, I believe, we took, we took a look at going to Schedule 168 and Schedule 179, the depreciation schedule. But the cost of that was just enormous. If my memory serves me correct, I think the DFA fiscal impact for the bill, I think it come back to like $350 million. So it was just a huge impact. But I’m telling you, everything that we’re doing here, in my world and the way I see it, is this piece, this package is huge, doing this 179. This will be a huge benefit for small businesses, small businesses, farmers and ranchers, the people of Arkansas. This, this will save literally millions of dollars for these businesses and farmers. Basically, what this does is it’s going to conform the depreciation schedule to the federal depreciation code. Let somebody expense their deductions off right out of the gate 100% up to, I think– Paul, I don’t know where you’re at. If I’m not saying this right, Paul, please correct me. But I think it’s, I think it’s $1,080,000 that’s capped on this. So in other words, like if you buy a combine or whatever, cotton picker or whatever the case may be, you can expense that right out of the gate 100% up to $1,000,000. So and I also, I’d be remiss if I did not thank Representative Beatty. He championed his cause. He brought this bill to this committee last session and with everything going on, I asked Representative Beatty just to hold the bill back. Gave him my word that if the state comes in to where we could actually pull this off that I would support this 100 percent. And my only regret is I wish Representative Beatty was running this portion of this package. But leadership, we decided to put this all in one package and make this special session go as fast as possible was the reason why we did not hold this out. So it seemed like there was something else I was wanting to say about this, but it escapes me right now. But this, this will be huge for the businesses of Arkansas. And then last but not least, on inflationary income tax credit, this tax credit will be $150 a person for a resident of Arkansas. And that’s income up to– my notes are wrong– $87,000. Okay. I’ve got an old sheet here. It’s got 84,500, but we’ve updated that to $87,000. So in other words, anybody making below $87,000 in the state of Arkansas will get a non refundable tax credit of $150. For somebody that’s making, if their tax liability is less than $150– say their tax liability is $100, it will be a $100 tax credit that they would receive. It’s a non refundable tax credit. Make sure everybody understands that. So then it goes up to $101,000, I believe. I got the wrong notes here, but it goes up to $101,000. That scales out. So in other words, as you get above $87,000, that $150 actually scales down. And then you just double that for a married filer, married filing couple. If they’re filing married up to $174,000, then they’re going to get $300 tax credit, the couple will. And then that scales out on up to $200,000 as well. And like I said, that’s for residents of Arkansas. That is nonrefundable. We’re talking, we’re talking this total package is going to be a $500 million package, approximately $500 million. So it’s a significant amount of money, obviously. But I think it’s important to keep in mind that we’re operating out of close to a $1.7 billion excess above our RSA. I think it’s important to keep in mind that next session, DFA, what they do is they will– they forecast two years out and so on their forecast for two years out after RSA is met, there’s still a $400,000 cushion there above what we think it’s going to take to fund RSA. And I’m assuming, Paul, that’s inflation factored into that figure as well. So, and that leads to the 900 pound elephant in the room. Is the CARES Act money– because that’s the one thing that I’ve got asked about probably more so than anything. I actually have a high level of comfort of what DFA, the information they’re giving us. The information is, is that, you know, the money that we use for the CARES Act money is not flowing into RSA. I think, I think it’s important to understand and recognize the fact that the state of Arkansas is unique that, that, as far as I know, that we’re the only state that has an RSA mechanism and everybody else has like a general budget. I think that, I think that’s very, very important to recognize. So that kind of skews what thumbprint the feds have us under as far as how we use these, the CARES Act money, if you will. So the CARES Act money, it stipulates in their program– and I’m gonna read a quote or a paragraph that Secretary Janet Yellen, Department of Treasury Secretary, sent out for guidance to the state here in just a second. But as long as we do not use any CARES Act money to offset our, in our general revenue or the RSA, then we’re well within the federal guidelines to go ahead and cut taxes. And the, the response the secretary wrote is– I’d like to read it, Mr. Chairman, if you will. 

 

Fortner Yes. 

 

Jett “Nothing in the act prevents the 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 net tax revenue. If states lower certain taxes but do not use funds under the Act to offset those cuts, for example, by replacing lost revenue through other means, the tax mandate is not implicated. So that’s coming from the big daddy rabbit herself up in D.C. And, you know, she’s like, you know, she, she put this guidance out even though the feds know the state of Arkansas has entered into a party of a lawsuit against the feds over this issue. A federal district court has ruled, and the 13 states that were part of this party in, has ruled– is in our favor right now. So we’ve already passed one litmus test as far as using, can we use or not cut taxes and still have this pot of money out there and use it? And I would maintain that I have, do have a high level of confidence with DFA in this issue. I actually reached out. I will tell y’all, you know, going back into last session as we, as we ramped up into the special session to the December tax cut, we probably started– leadership started meeting with the governor’s office, and I’m guessing probably around July. And we probably met, I don’t know, probably half a dozen times at least. And I mean, I remember asking this question ad nauseum to Larry– I mean, or Secretary Walther– if you were on these meetings about asking about this issue and always was assured about this, you know, we were operating well within the guidelines set forth by the federal policies. And so then you fast forward to this, you know, when we started ramping up on this. And other numbers started coming out and DFA has got to use a formula and I’ll be the first to admit I don’t understand the formula other than the fact that what I do understand– one of the assumptions that goes into this formula, based on what DFA is telling me, is inflation. I don’t know if the inflation index is CPI. They can answer that, probably– I know they’re going to answer it better than I can. But I don’t know if it’s CPI. But regardless, it’s an index– it’s an inflation index of some sort that goes into the assumption of this formula. So back last year, if CPI or whatever that index was that they were using was at, say, 3%, and now it’s at 8.5%, that number skews the number that this formula is spitting out, which changes the dynamics of this question a lot. And so I think that’s a lot of where a lot of the confusion lied as we started ramping back up this discussion based on what the secretary and his folks have told me. So I really don’t want to wade off in numbers, but I’ll answer the numbers towards that. I don’t know if it does anybody any good other than the fact to tell you that I’m assuming there’s thousands of pages that’s under this CARES Act of how we can use this money. But when you boil it down, this one paragraph from Secretary Janet Yellen, who runs the department, put this– I think, I think this speaks for itself of what we’re doing. And I think we’re doing it in a responsible manner. So with that, Mr. Chairman, I’m done. And I will try to answer any questions. And if I can’t, I’ve got pretty smart people sitting all the way around me to help me. 

 

Fortner Thank you, Representative Jett. Are there any questions from the committee? Representative Garner. 

 

Garner Thank you very much. I’ve got a lot of questions, actually, as you might guess. First of all, we’re talking about a surplus when we have so many underfunded programs. I’m concerned about that. I’m also concerned about the potential for inflation, which we don’t seem to have considered into the, the, the final numbers. It feels like the timing and the responsible manner that you talked about are off a little bit. And it seems that if we know that a court case is going to be determined– in a month or so the Supreme Court can hear it, I guess. And we know that that’s going to– that somebody is going to be talking about that. So we’ll know a little bit better about that. We’ve got all these programs that are underfunded, such as the disability community, all of our caregivers, our teachers, all of those kinds of things that we know are underfunded. It just seems like the timing is bad. I know it’s not a new, I know it’s not a new tax. I’m not arguing about that. I actually agree with some of the corporate issues, some of the things that, that I do think we need to do. It worries me that this $150 is not refundable for the very folks that need support the most are not getting anything back because they don’t pay taxes. It just seems like the timing is extremely bad when so many people are hurting after COVID. And I guess I just want you to reassure me that that’s not the case and we’re going to have money to take care of these folks in the next session. 

 

Jett Yes, ma’am. I certainly appreciate your concern. And there’s no doubt about it, your heart’s in the right place. You care for your constituents. You care for the people of Arkansas. I appreciate that and I respect that a lot. I would just say that the medium income is $26,526. DFA’s number is showing those folks are going to immediate, immediate tax reduction of $365 right now. That’s for, for a mother of two that’s working. $365 is a significant savings. Is it a lot, is it a lot of money? No, ma’am, it’s not. Is it enough? Probably no, ma’am, it’s not. But, the end of the day, I just think it’s important to get this money back out to the people who need it. And as far as the inflation goes, I mean, this all goes back to inflation. You know, this lady was paying, you know, before maybe $30 to, you know, put 15, 20 gallons of gas in her car just to get back and forth to work. This immediate savings will actually make a difference in somebody’s life right now. I don’t want to minimize anything that you just said. I think everybody in this room is sympathetic to the people on the DD waiting list. Just, I mean, you just name it, up and down, up and down, just take a cause, you know, I wish I could snap my fingers and make it right for the whole wide world. Absolutely, I’d join you in a heartbeat. But, but this is what we’re tasked with right now to try to get immediate relief to the hard, hard working Arkansans out there right now who are suffering. And this is the– this is– in my world, this is the fastest way that I know how to do it, ma’am.

 

Fortner Yes. Go ahead. 

 

Garner Thank you very much. I guess my concern is that cutting taxes doesn’t really help inflation. So that we’re giving people money, but we’re not expediting any over the supply side. So that we give money in their pockets, but then the demand is not there and so we don’t have– inflation just goes up. So that doesn’t really help that person who’s getting that little bit of money. And yet we’re– if we pool that money, that little bit of money that they’re getting, if we pool that money, then we have money for all of these programs that need to be funded that we haven’t even talked about. 

 

Jett Yes, ma’am. Let me– I’m going to back up to the first question, because I think you touched on it again. I got myself sidetracked. I can only remember something for about 30 seconds. So, you know, I referenced a while ago, you know, DFA, you know, they forecast out two years. And, you know, we can argue about the forecast, you know, and who’s the governor, and conservative forecast, not a conservative forecast. But at the end of the day, they’re forecasting right now, in 2023, $400 million above RSA. I mean, now, if, if we were coming in here and we were actually bumping red line on their forecasts in 2023, you know, my, my suggestion in the leadership meetings, I might be saying, hey, guys, we might not be, you know, we might slow down on this. But that’s not the case. You know, right now, you know, we’re showing $400 some million in 2023. So that gives me confidence that when you come back– obviously, I’m not coming back– but when you come back next session, champion those causes. You know, there’s money there to do some of the stuff that you want to do. I know like when we did in December, you know, we had a lot of folks come down to the end of this table on the DD waiting list, right? And just about everybody in this community– I remember I was sitting right up there where Jack was sitting at and just about everybody on this committee wanted to go on record to support that cause. And we all said to a person in here that, hey, listen, we come back next in our next regular session, we’re going to, we’re going to fix this. Well, I’m telling you right now, based on what DFA is telling me, there’s $400 million. There’s more than enough money to help fix that cause next session. So, you know, I don’t know if that– representative, I don’t know if that answered your question. I don’t know if that made you feel warm and fuzzy. I’m just telling you, that’s the best I can do. 

 

Garner I appreciate you. Thank you, Joe. Appreciate you. 

 

Jett You’re welcome, ma’am. 

 

Fortner I feel warm, Joe. Are there any more questions? Representative Beatty. 

 

Beatty Just a comment, Mr. Chairman. I want to thank Chairman Jett, Senator Dismang and Senator Gilmore for– primarily Jett for encouraging with the 179 portion of this bill. When I brought it to him, it was a huge, huge price tag. And at the time, we were limited with what we were going to be able to do in the session. Never lost hope. Worked on that. Thank you for your encouragement. Thank you for, for making certain that this made it to the call and made it to this point today. It’s going to help every business man and woman in the state of Arkansas. And I just want to say on behalf of the committee that your leadership will be missed on this committee. And thank you for your service. 

 

Jett That’s very kind of you. I certainly appreciate that. And I appreciate also you carrying the football down the field on this to take this up. And just to add to, to that issue real quick, we tried to do the, the 168, but the 168 federal, the federal government is phasing that out and is phasing it out 20% a year for the next five years. So that’s going to go away. So that really kind of got the price tag down. I think that price tag to do this was 120 million or something like that. Paul, is that right, if memory serves me correct? But it’s 100-some million total over the, over the course. So, I’m telling you all this, that package right there is going to be huge for business owners and farmers and ranchers in the state of Arkansas that people– sometimes you get to do something, you know, that we really, I understand, have no, you know, what the impact’s going to be, you know, back home. And sometimes we do. And sometimes things are not sexy. And, you know, this is not sexy. But I’m telling you, this will make a difference between businesses and farmers and ranchers staying in business and not staying in business. This will keep people on payrolls. This will keep– this will get the family farmer that’s struggling. You know, at the end of the day, they’re coming in and the guy’s out working 15, 16 hours outside and coming in. His wife’s got supper on the table and, you know, they put their heads down at night time. They say a prayer, and the first thing out of their mouth is, God, please let us be able to keep the farm just one more year. Just give me one more shot at this thing. Because– I’m going to start preaching here for a second. Bear with me. So farmers, what people don’t understand about farmers, for example– so if anybody– you name one profession that only has 40 chances to get it right in their career, for example. So say like an attorney, a doctor, somebody that works in a factory, somebody that builds houses. They got, they got multiple paychecks coming on. You know, they got, a lot of times, you know, whether it’s once a week, you know, twice, you know, twice a month or monthly, or they get paid by the job. A house builder, you know, they do like 20, 30 houses a year or whatever the case may be. They’ve got this money coming in and it’s rolling, right? Farmers are not like that, guys. At the end of the day, farmers have 40 chances in their career to get it right. So most farmers, they start with their daddy when they’re in, say, mid 20’s. They get out of college. They go to work as, you know, they’re 25 years old. 65 years old, you know, they start wanting to slow down like me and turn it over to their sons. So they miss– a farmer, just stop and think about this. So they miss one crop. They have a miss just on one crop, right? So it takes two crops to get back to where they was at when they missed the one. So they lose, they lose 50% in a two year period, right? But it takes 100% to get back to where they’re, where they are. This right here, this right here will put– I’m talking about literally tens of thousands, if not hundreds of thousands of dollars back in operation. And that’s how big Representative Beatty’s bill was. So I’m done preaching. 

 

Fortner Okay. Thank you. 

 

Beatty A quick follow up. 

 

Fortner Okay. 

 

Beatty 168 will be back. I can, I can guarantee you next session we’re going to bring that up and work on that. 

 

Jett Best of luck to you. And I wish you well, man. Wish you well. 

 

Fortner Representative Lundstrum, did you have a question? 

 

Lundstrum More of a comment, Mr. Chairman, if I may. 

 

Fortner You’re recognized. 

 

Lundstrum I appreciate words and words mean things. And I appreciate this bill very much. But we aren’t giving people back their money. We’re returning the taxpayers money to the taxpayer. And that’s what I appreciate about this bill. These are taxpayers’ money that have been overtaxed, and we are returning it back to those who have paid us and trusted us with us. So words like giving it back? We’re doing the right thing and returning it to the people who earned it. So I want to thank you for the bill. 

 

Jett Welcome. Mr. Chairman. If you don’t care, I would like to ask Secretary Walther, and I don’t want to open up like a great big discussion. But I’ve asked Secretary Walther because they have– you know, I’ve been lit up on this issue on the, on the, on the safe harbor money, if you will. And I just– he’s got a statement. I just want everybody to hear what he’s been telling me so that way you hear it straight from the big daddy rabbit’s mouth here, not just from me. 

 

Fortner Big Daddy, you’re recognized. If you’ll recognize yourself properly for the record. 

 

Walther Mr. Chairman. Thank you. Members of the committee, I’m Larry Walther. I’m the Secretary of the Department of Finance and Administration. Last week, Representative Jett, as we were talking extensively about the safe harbor or the tax mandate that’s called in the, in the litigation and our position on that. And we provided a document that was prepared by Robert Breck, who had analyzed it from the legal standpoint. We had gone back–let me– I want to take you back just a moment. We had always known that we have to make this filing and we do it once a year– we’re in the process of doing it right now– to the Department of Treasury. And it has a– there’s just a, pretty much a, you know, here’s what you do. You go look for this. You put it on the form, and then you send it to us. And it started changing with the, the inflation rates. When we first started this, inflation rates were pretty constant and then they started going up. So it got, it got awful cumbersome, in my opinion, because how can you make decisions about what you’re doing if you’re– if this test continues to change? So Robert went back and went back to the, the original legislation and the law and the act that was passed in federal legislation and analyze it. What I’m telling you is the proposal to accelerate the tax cuts will not subject the state of Arkansas to recoupment because we are using our excess revenues, our surplus, the 1.6 billion that we had this past year, to pay for the tax cuts. What we’re doing is we’re using the ARPA money to pay for ARPA projects. This legislature had the foresight to, to, to ask– to require us to provide an appropriation request for each and every dollar we spend out of the ARPA funds. And those are identified as ARPA projects. We can only spend them on things that are specifically done that are appropriate for the ARPA money that we’re getting from the federal government. So that’s what we’re doing. So we are not using the money for tax cuts. So not only that, but we’re also watching the way we’re spending the ARPA money to be vigilant that we’re not doing it indirectly either. We’re watching each and every dollar. We’re talking to the, to the businesses and the agencies that are asking us for ARPA money, and we are making sure that the indirect is not being violated either. So we, we do not expect to have any– if– little, if any, clawback from the money we will be spending. And right now, we’re in a stay in the federal court. The Fed– the, the, the Department of Treasury cannot require us to do anything at this point in time because there’s a permanent stay as that goes through the appeals process. 

 

Fortner Thank you, Secretary Walther. Committee, do you have any questions for the secretary? 

 

Walther Thank you. 

 

Fortner Seeing none, there are a couple of people who have signed up to speak regarding the bill. I would ask you, again, to speak to the bill and be as succinct as you can so that everyone can have a turn to speak. The first one will be Bruno Showers. I hope that’s correct. If you’ll just identify yourself for the record, please. And you’re speaking against the bill? 

 

Showers Yes, sir. 

 

Fortner All right, you’re recognized. 

 

Showers Bruno Showers, Arkansas Advocates for Children and Families. Thank you for the opportunity to speak today, Mr. Chair. I’m here to express my concerns about the cost of these tax cuts and to speak against making them retroactive. Making the tax cuts retroactive and enacting new ones will cost an additional $750 million above and beyond the ongoing revenue losses that have already been priced into the budget, which is bad enough on its own, in my opinion. But my biggest concern is that we will be eliminating a safeguard that you all enacted when you passed this in December. So with the way that you all wrote the tax cuts into law in December ensured that if state revenues fell and failed to meet state budget needs between now and 2025, as the tax cuts were phasing in, they would be frozen wherever they were when our revenues failed to meet our budget needs. And we will lose that protection if we make these tax cuts retroactive. But I think that this tool to ensure fiscal responsibility is especially important right now in 2022, given our uncertain future economic conditions. The most recent forecast by DFA projects that net available revenues in FY 23 are going to fall from FY 22 and that they will fall further from 23 to 24. But I think even that is potentially optimistic because their model assumes strong economic growth through 2022 and 2023, as well as elevated wage growth into 2024. But that seems unlikely, given the fact that the Fed has announced its intent to raise interest rates to historic levels at historic pace, as well as the fact that we’ve had two consecutive quarters of GDP contraction this year. So most economists have revised their forecasts and increase the chance that there’s going to be a recession within the next few years. I don’t want to discount the fact that so many in Arkansas are still struggling with this pandemic and the fallout that it’s caused our economy. You all know as well as I do the people struggling with skyrocketing rent and housing costs, trying to juggle increased family obligations and child care with trying to get to work. But it’s not just families that are suffering. Our institutions are hurting, too. So less than a month ago, I read in Talk Business an op ed from the Center on Health Improvement talking about how there are staffing shortages and our hospitals and clinics are at a critical mass right now. Last year, a report authored by the U.S. Chamber of Commerce Foundation said that our state economy is losing hundreds of millions of dollars every year because people can’t access affordable, quality child care. And that’s also an issue of staffing and a lack of public investment, in my view, of course, in our workforce that provides for the most disadvantaged Arkansans like the people on the disability waiver waitlist or those that are in or exiting our foster care system. Those workforces have long suffered from low pay and the staffing and retention issues that it causes. And the reason I bring that up is because although I hear DFA and their, you know, lack of concern or they think that there’s a minimal risk, but there would be no risk at all if we use these state dollars to invest in these critical services and programs that help Arkansans rather than, you know, accelerating these tax cuts. And so, in summary, I know that Arkansans are dealing with elevated hardship already, but my concern is what happens if we hit a recession after we spend down our surplus to pay for tax cuts? And how is the state going to manage the twin concerns of lower revenue and increased pressure on public services? That’s, that’s all I have for you all. And I do appreciate the chance to, you know, say my piece. 

 

Fortner Thank you, Mr. Showers. Committee members, does anyone have questions? Representative Beatty. 

 

Beatty In your remarks, you referenced that the projections for DFA showed a decrease in revenue in the coming year in 2023. In analysis of those, did it state that the decrease in revenue would not be sufficient to cover the budget or did it also produce that there would be a surplus in those years?

 

Showers It produced that there would be a surplus, which is the reason I bring up that, you know, that forecast in May, I think, would be significantly changed if they redid it. And that’s sort of the– sorry, but why I would like for us to kind of pump the brakes on this and wait until January so that we have a better picture of the economic outlook in the future. 

 

Beatty And you also said in your comments the word if we go into a recession. 

 

Showers Yeah. 

 

Beatty Would you not acknowledge by the definition of a recession that we’re in a recession now? 

 

Showers Depends on the country you’re in. The National Bureau of Economic Research is the one that determines whether or not the U.S. is in a recession. And I guess they haven’t yet made that determination. 

 

Beatty I was just asking if you would make that determination. 

 

Showers Oh, me? I would just follow the experts there. 

 

Beatty Exactly what we do here. 

 

Fortner Are, are there any other questions from the committee? Representative Wooten. 

 

Wooten Are you aware that we have a catastrophic disaster fund? 

 

Showers Yes, sir. 

 

Wooten And that it’s in excess or almost equal to or will be equal to what the surplus is this year? 

 

Showers Well, it’s mandated to be 20% of general revenue– 

 

Wooten That’s not what I– I asked you a question. 

 

Showers Well, it’s not going to be that big. 

 

Wooten You’re not answering my question. 

 

Showers Well, I know that it’s $1.2 billion. 

 

Wooten Are you aware that we have a surplus, plus we have a catastrophic fund set aside– 

 

Showers Yes. 

 

Wooten –to hedge against inflation and stuff. We cannot control what Washington does, but we can control what Arkansas does. And you, you’re, you’re saying that we’re in financial trouble if we go through with this tax cut, which has already been approved. We’re just moving it up. Is that correct? 

 

Showers I’m sorry. I don’t quite understand the question. 

 

Wooten Are you, are you saying that Arkansas is in financial trouble if we adopt this plan? 

 

Showers Well, as I said in my remarks, I do think it increases our risk. Yeah. 

 

Wooten Thank you, Mr. Chairman. 

 

Fortner Okay. Thank you. Is there any other questions from the committee? Thank you, Mr. Showers. We appreciate your time. 

 

Showers Yeah. Appreciate y’all. 

 

Fortner There is no one signed up to speak for. There is one more to speak against. That’s Dr. Evans. Recognize yourself for the record, please. 

 

Evans My name is Dr. Syard Evans. I’m the CEO of Arkansas Support Network and the president of the Arkansas Waiver Association. 

 

Fortner Go ahead, you’re recognized. 

 

Evans Thank you for the time to speak today. I return. I was here in December. I am extremely excited to hear so many references of the DD waiver. When I testified in December, my ask at that time was similar to my ask today was that we have an in-depth look at the service systems in Arkansas that are inadequately funded currently and that we commit to funding those, those service systems prior to giving tax cuts, particularly tax cuts that go in, in, in a range that benefit the wealthiest Arkansans to a much greater degree than everyday Arkansans. I am thrilled for any initiative that’s going to benefit farmers. I’m the daughter of a third generation dairy farmer and understand that plight all too well. But I also know that when we look at the largest percentages of the tax cuts that were passed in December and the acceleration that this bill will have to the tax cuts, the majority of this money is going to the top tier earners in Arkansas. I am here to continue to put on the table the needs of the disability community in Arkansas and specifically the direct support professional workforce that provide services to those individuals. When I was here in December, I said we have reached a capacity where we are not able to compete for workforce and we cannot provide supports to the 5,000, approximately 5,000 Arkansans with developmental disabilities who have been approved for home and community based waiver services. And we are now facing the change. When I was here in December, we had a waiting list that got talked about a lot. And I said in my testimony at that time, We want that waiting list funded. We want every Arkansan that has a disability to receive the services that they need to be able to live quality lives in their communities. However, the provider infrastructure cannot support additional folks. We can’t support the folks that are currently approved for waiver services. In that time between now and December, the only change that we’ve seen was that approximately $37 million was moved from the Medicaid Trust Fund, was allocated from the Medicaid Trust Fund to fund out those folks on waiver. There has been no increase in reimbursements from the passes to DD providers. We are still offering very close to a minimum wage reimbursement for direct support professionals. And we are competing with 15, 16, $17 an hour reimbursements for fast food and retail entry level positions that come with a reduced stress and much less complex job duties. We can’t support the folks who need support the most. And prior to accelerating tax cuts and reducing revenue, our ask is that we invest in the service systems that Arkansans with disabilities have every right to receive and that the state has a right to provide to them. We have worked collectively with other providers and other associations to bring forth initiatives that we we know would make an impact in our service industry. We’ve offered up suggestions of career laddering and we have laid out practices from other states that would be beneficial and were met with responses from the state that say that DDS and DHS do not have the capacity to implement those types of programs, that they’re good ideas and they see the value in them, but their departments could not implement those initiatives. So while we may have a surplus and while we may have these dollars here today, they’re on the backs of the folks that rely on our service industry. Those dollars need to be spent in the investments for our state to operate service systems the way that they should be, and to make sure that we have capacity to take care of the most vulnerable Arkansans. And our ask would be that before we redistribute surplus, particularly to the wealthiest Arkansans, that we make that investment. 

 

Fortner Thank you, Dr. Evans. Are there any questions from the committee? Seeing none, thank you. 

 

Evans Thank you for the time. 

 

Fortner Representative Jett, would you like to close? 

 

Fortner Thank you, Mr. Chairman. And Members, I would just say I appreciate the members– or citizens of Arkansas coming and speaking in opposition to the bill. I think our democracy needs to have open debate and open dialog in a clean, common sense, respectful manner. And I appreciate the way both you presented yourself today. So thank you very much. The only thing I would push back on is this, this is not just for the wealthy folks. I demonstrated a while ago that people making $24,000 is getting a pretty significant tax cut out of this. And plus, everybody knows this tax cut is already on the books, regardless of what we do today. The only thing we’re doing is speeding this up. So with that, Mr. Chairman, I’m gonna be closed. And I’ll make a motion for do pass. 

 

Fortner I have a motion for do pass. All those in favor, say aye. Opposed? The ayes have it. Congratulations. Your bill has passed. 

 

Jett Thank you. Thank you, committee members. 

 

Fortner I want to thank everyone for your patience with me today. And we will be meeting tomorrow at the call of the chair. We’ll let you know as soon as we know the time. So thank you all for coming.