Special Session could bring big tax break

Lawmakers convene to consider measures

ralphhardin@gmail.com The 2021 legislative session ended months ago but it has been a busy fall for lawmakers anyway.

Already, the governor has had called one special session, back in August to try and persuade legislators to overturn a law banning mask mandates in the state. That measure ultimately failed, although a judge later did what lawmakers refused to do and issued an injunction to reinstate the power to institute the ability of local entities to issue mask mandates.

Now a second return trip to Little Rock for the General Assembly is underway, one that State Representative Milton Nicks (D-Marion) hopes will have better results.

“The General Assembly was scheduled to convene for an Extraordinary Session on Tuesday,

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State Representative Milton Nicks SPECIAL SESSION (cont.)

December 7,” Nicks explained in his weekly legislative update. “The Arkansas Constitution says Extraordinary Sessions, often referred to as special sessions, can only be called by the Governor.”

The Governor announced last week he would be calling the session to address tax cuts and several miscellaneous items of legislation.

“The tax cut being proposed would lower the top income tax rate to 5.5 percent for tax year 2022 and gradually reduce the top rate to 4.9 percent for tax year 2025,” Nicks said.

Currently, the top income tax rate is 5.9 percent.

“The proposal would also gradually reduce the corporate income tax rates to 5.3 percent by tax year 2025,” said Nicks. Taxpayers whose taxable income is at or below $23,600 and who timely file a tax return receive a $60 nonrefundable tax credit under the legislation.”

The latest general revenue report, released this week, shows year-to-date general revenue at $79.5 million or 3 percent above year ago levels.

The Governor is also expected to ask the General Assembly to transfer funds to the Restricted Reserve Accounts, approve appropriations for American Rescue Plan funds, and consider expanding tax credits for an economic development project.

“The other items before the legislature will include technical corrections in previous passed legislation,” Nicks said. “We will post all the legislation on our website.”

Article 6, section 19 in our state constitution outlines the procedure for Extraordinary Sessions. It states the Governor must specify in the proclamation the purpose for which the General Assembly is convened.

“The General Assembly cannot take up any other businesses until every item in the proclamation has been addressed or dismissed,” said Nicks. “After that, the General Assembly can extend the session for up to 15 days to take up other matters with a twothirds majority vote of both the House and the Senate.”

Saying that the proposed tax cuts will attract industry and talent to Arkansas, Governor Asa Hutchinson praised the Legislature for keeping the focus on his plan during the Special Session.

Tuesday afternoon, legislators advanced the income tax cut package, rejecting efforts to include a tax credit for law enforcement officers.

In addition to the $60 credit that will be given to lowincome taxpayers that will give a reduction in state income tax for more than 535,000 Arkansans, the tax cuts would also eliminate the state income tax liability of 104,881 low-income Arkansans.

Hutchinson was hopeful the focus will continue for the rest of the Special Session on the issues he outlined, which includes fund transfers and the creation of an Independent Tax Appeals Commission.

The Legislature still faces fights over attempts to take up other measures, including a ban on critical race theory in schools and an abortion ban like the one in Texas.

The Legislature can expand the session’s agenda once they take up items on the governor’s proclamation, but doing so would require a two-thirds vote of the House and Senate.

Senate President Jimmy Hickey said he didn’t believe there were enough votes in his chamber to expand the session’s scope. All legislative sessions are live-streamed and archived at www.arkansashouse.org.