Senate Revenue and Tax

Jan. 18, 2023

Sen Hickey: I’d like to call this Senate Revenue and Tax meeting to order. My name is Jimmy Hickey. I’m from Texarkana, and I’ll be chairing this session. I’d like to introduce Mr. Jim Petty. He’s our vice chair. And Jim, if you would, just kind of give us a little detail of your background, where you’ve been. And then after that, we’re going to go to Senator Caldwell to do an introduction, Senator Dismang, and just across the table back and forth.

 

Sen Petty: Thank you. Again, Jim Petty. I am from District 29, which is all of Crawford County and the southern and a little bit of eastern portion of Washington County. My background is in accounting. I have a CPA for– I refer to myself as a recovering CPA. I’m not on the public side anymore. And I have a business, real estate development construction business back home in Van Buren.

 

Sen Hickey: Super. Senator Caldwell.

 

Sen Caldwell: Ronald Caldwell from District 10. I live in Wynn. I’ve covered all the parts of Cross, Jackson, Poinsett, Woodruff, Monroe, Lee, St. Francis, Prairie, Arkansas, and Lonoke County. Senator Rice and I debate on who has the most acres in our districts, and he and I have the largest State Senate District in the history of the State of Arkansas. So thank you.

 

Sen Hickey: Thank you, Senator. Senator Dismang.

 

Sen Dismang: Jonathan Dismang. Senate District 8, that’s all of White County, Southern Cleveland, and just a small portion of Faulkner.

 

Sen Hickey: Senator Payton.

 

Sen Payton: John Payton, from Wilburn, Arkansas. District 22. It covers from Heber Springs to Walnut Ridge, and from Pleasant Plains to Hardy. Thank you.

 

Sen B Johnson: Blake Johnson. District 21. That’s pretty much Northeast Arkansas. I farm and this is my service.

 

Sen Crowell: Steve Crowell. District 3. I have Columbia, Lafayette, Nevada, Clark, most of Hempstead, half of Pike, and a little of Hot Springs. I have rentals and trees.

 

Sen Dees: Tyler Dees. District 35, which is Northwest Arkansas, western Benton County, western Washington County, on the border of Oklahoma and Missouri, and happy to be here. I work for Simmons Foods poultry company and honored to be on this committee with you.

 

Sen Hickey: Great. Thank you all. I also would like to introduce our staff, Brandon Smith. He’s our committee analysist and Theresa Maxwell. She helps him. Joy Leonard, over at the Bureau, she is actually the committee attorney. So I don’t believe she’s in here today, but if we have issues or things like that, she does help us with those. The item that’s going to be before us also is the rules. If everybody take a few minutes to look over the rules, and we’ll see if we have any questions. If not, we’ll have a motion to adopt those. Okay. Is there any questions on the rules? All in favor say aye. Any opposed like sign. Hearing none, will consider those passed. Just to let everybody know, whenever we get done every day, the staff, of course, will have the bills in the folders. Be sure and leave those at the tables whenever we leave. I know sometime we’ll pick them up and carry it with us. If you do happen to do that, just try to bring them back as soon as you can. But if we could, let’s try to make sure we leave them here. The way that Senate Revenue and Tax Committee we’re scheduled to meet on Wednesdays at 10:00 and Fridays at 10:00 always in this room unless there’s some unforeseen circumstance. So we’ll just plan on doing that. Of course, we know that sometime on the Friday meetings that we won’t have those.

 

Sen Hickey: Also, the way that the rules are– the way that we’ve just passed them and everything, of course, and I think I’ve talked to every one of you all in here, and kind of an agreement that everything that we do has to have a revenue impact statement. So before we’ll even consider putting it on the agenda, we have to have that. Now, it’s going to be the intent of the leadership and of this body right here is that we’re going to give a little bit of leeway because we all know that the education bill that we’re kind of waiting on will more than likely we would assume have a fiscal impact on it from everything that we hear. We don’t know that yet. Also, the prisons, as far as the yearly amount, the annual operating on that, we want to get a good hold on that before we start proceeding too far with actually passing anything that’s going to affect the tax revenue until we kind of get that basis for our cash flow. So that’s going to be kind of the way that we operate there. At this time, I’d like to introduce Secretary Walther with DFA just so he can give us a brief little input about himself and then– yes, sir, if you don’t mind at the end of the table, and then you can introduce your team. For the new members here, we work very closely in this committee with DFA. They’re kind of the backbone of all of our financial processes within the state. Secretary Walther, you’re recognized whenever you’re ready, sir.

 

Walther (DFA): Thank you, Mr. Chairman. I’m Larry Walther. By the way, I’m from Ashley County, so I’m about the only one from Southeast Arkansas around here. I’m kind of disappointed when you all went around the room. We didn’t have representation there, and I’ve been transposed up here to Pulaski County for the last few years. So I guess I’m more Pulaski now than I’m Ashley. I’m the secretary of the Department of Finance and Administration. And this committee, along with the House, Revenue and Tax are really very important committees to DFA and to our team. We worked very closely with this organization. We look forward to continuing that. I have with me Paul Gehring and Charlie Collins, who head up legal and then the revenue commissioner. So I’d like for Charlie to start with introducing your team.

 

Collins (DFA): Thank you very much, Mr. Secretary. It’s a pleasure to be here. Again, I’m Charlie Collins. I’m the commissioner of revenue. And what I did was I asked all of my managers in the tax section for the State of Arkansas to come today. And what I’m going to do is I’m going to go through our three units that we have in tax and introduce everybody. So first would the income tax folks, stand up for me. And Paul, I apologize that they’re right behind you. So in income tax were divided into two groups, individual income tax and corporate income tax. So Autumn Hemphill, she is in charge of all income tax, and then our manager over individual income tax is Judy Bowers, and our manager over corporate income tax is Scott Fryer. And so together we’ve got 75 years of experience between those folks. They know this stuff very, very well, and we look forward to working with you. But that is the entire management team of income tax. Next, I’d like to go to our sales and miscellaneous taxes. So if the folks from sales are miscellaneous would stand up. Here I do not have the entire team. The boss of the group is Deanna Munds-Smith. Raise your hand, please, Deanna. And she got a lot of experience with DF&A. She worked in audit for many, many years prior to moving into sales and miscellaneous tax. With her is Devin Tony. Devin is the boss of tax credits.

 

Collins (DFA): So any time we do tax credits, she’s keeping track of it. The question, Senator Hickey, who’s keeping track of the AEDC credits? She has a 10-year document that tracks them all. I think she have a $684 million, so every nickel where is it, and then every year legislative audit audits her and her team on that. The biggest section in this group is sales tax. Drew Smith, many of you know him. He’s not able to make this meeting. The other taxes are under Todd. And Todd is over a plethora of different taxes. Think marijuana tax, cigarette tax, Senator Hickey, the tire fees, all of those things are in Todd’s shell. Next, what I’d like to do is ask Eileen and her team to stand up. Did you raise your hand, Eileen? Eileen leads our audit group. So field audit located around the state, and they audit businesses as well as individuals across all tax types out in the state. Eileen has five managers that are out in the field. Those managers aren’t here, but the rest of her leadership team is, Rob Allen. Rob, if you’d raise your hand. He is her number two over there. Prior to that promotion, he did all the fiscal impacts in income tax. So one of the things he’s enabling us to do is broaden out our capabilities on that. And then we also have Amanda Land, who recently joined us from the Attorney General’s office. She’s got a strong legal background with DF&A and then also with the Attorney General. And she’s going to be able to really assist our auditors as they’re making plans and approaches for how we do things. So with that, Larry, thank you very much.

 

Gehring (DFA): Good morning, Committee. Mr. Chair. My name is Paul Gehring. I’m the assistant revenue commissioner for the Department of Finance Administration. I am the administrator for the office of revenue legal counsel, and I’d like to have two of the members of my staff stand up. I’m sorry, we also have our law clerk here, too. On the right, raise your hand, and that’s Stephen Cox. He recently joined our office. He is a third year law student at the University of Arkansas, School of Law. And he is going to be assisting in doing bill analysis during this current session. Next to Stephen is Alicia Austin Smith. She is our chief counsel. So she is the primary person that oversees the attorneys that work in the Revenue Division of DFA. And then to her right is Keith Linder. He is one of our supervising attorneys and one of our litigators to handle our tax litigation on behalf of DFA. Keith will also be working on legislative issues during the session. Thank you. Y’all can have a seat. So our Revenue Division attorneys, they work in conjunction with the tax administrators on the fiscal impact statements that we will be filing throughout the session on any bills that affect the revenues of the state or DFA. Just want to make a few comments about that process. When a bill is filed at the General Assembly, we are constantly reviewing every single bill or amendment that gets filed to see if a fiscal impact statement will be needed. It immediately is assigned to administrator and to revenue legal counsel, or possibly over to the Assessment Coordination Division. We work very quickly to get those fiscal impact statements completed and sent over to BLR so that they can be posted on the BLR website. From time to time an amendment to a bill will be introduced. We will also issue a fiscal impact statement based upon the amendment to that bill. If there are any questions about a fiscal impact statement, please feel free to reach out to either myself or to Commissioner Collins, and we’ll be happy to answer any of your questions. During the course of the legislative session, we anticipate that myself as well as Commissioner Collins will be here during committee to discuss the fiscal impact statements that are being issued, as well as any other issues that come before the committee. We’re happy to answer any questions, and we look forward to working with the committee throughout the 2023 session.

 

Sen Hickey: Do any of the members have any questions? Seeing none, I would like to say that– and I mean this, that this agency, they do a tremendous amount of work. They also have to work in items that are sometimes a little bit controversial or things that are not fun. Nobody wants to hear that they owe a tax and things like that. But in addition to that, Secretary Walther and there’s other members that we have worked with through the General Assembly, they’ve also been tasked during the COVID with all the ARPA funds, the CARES funds, trying to make sure they work with the consultants to make sure that those are eligible and how to bring those forth before the legislature. So there is just a whole host of things that they do. And I want to say thank you for that. So thank you for being here today. Anything else, Committee? Okay. With that, we’re adjourned.