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Things began to heat up in the third week of the 92^nd General Assembly. The Governor announced his long-anticipated income tax cut plan, which, unlike prior draft legislation, did not include any tax increases in the bill. The plan will save taxpayers $97 million per year once fully phased in. A Convention of States resolution narrowly passed the Senate. You can see some of the top stories from last week below, courtesy of Conduit News:

• Governor Announces Income Tax Cut Plan
• Safe Haven Baby Box Legislation Passes In Committee
• Breast Milk, Student Loan Legislation Passes House Committee
• Former State Rep Nate Bell Delays AHIM Bill

At the Governor’s press conference last week, it was announced that a new internet sales tax bill will be run separately from the income tax cut bill. That bill has now been amended to try and reach third party sellers to capture more revenue for government. It is unclear the full fiscal impact of that legislation as amended, as well as possible plans for a tax increases on gasoline, cigarettes, and removal of tax exemptions. It remains uncertain if new or increased taxes may be passed that would be more than the income tax cut proposal from Gov. Hutchinson.

New Bills to Watch:

SUPPORT – SB170 – Housing Design Freedom

By: Sen. Bart Hester (R – Cave Springs)

This bill would prevent cities and counties from passing and enforcing onerous “design standards” to which a house must adhere. Design standards may be enforced by a city or county if the structure is in a historic district or the regulations are directly related to safety code requirements or as a condition in a National Flood Insurance Program.

The type of protected design elements includes exterior building color, type or style of exterior housing material, roof structures or pitches, location, design, placement of windows or doors, the number and types of rooms, interior layout of rooms, and the minimum square footage of a structure.

Unfortunately, more cities and counties are attempting to pass new ordinances that would restrict a person’s choices in the design of their home. The added regulations can lead to increased costs for home builders and could provide less opportunities for affordable housing for Arkansans.

The bill would address the issue in cities and counties and provide more economic freedom for individuals and home builders to build the types of homes that the market will bear, and not those that a government entity dictates.

SUPPORT – SB211 – Income Tax Cut

By: Sen. Jonathan Dismang (R – Beebe)

This bill would cut the top income tax rate in Arkansas from 6.9% down to 5.9% through fiscal year 2022. The bill would save taxpayers $97 million per year once full phased in. The current 6.0% rate for middle income filers would drop to 5.9% as well.

This is the Governor’s tax cut bill and does not include any tax increases in the legislation. The bill would decrease the size of government by reducing revenue and increase economic freedom by allowing job creators and working Arkansans to keep more of their money.

SUPPORT – HB1342 – Sales Tax Cut on Used Vehicles

By: Rep. John Payton (R – Wilburn)

This bill would exempt vehicles purchased for less than $7,500 from sales tax. Currently the limit is $4,000. When vehicles are bought new the full sales tax is applied and paid. Any additional taxation on used vehicles would be double sales tax paid on the same vehicle.

This bill should result in less money flowing to state government, and thus provide more economic freedom for Arkansans. It will allow Arkansans to purchase a used vehicle without having to pay an extra 7-10% for sales tax (that has already been paid once on a vehicle). Those who might could afford a financed car at $7,000 might not be able to pay a due now sales tax bill of $700+ upon purchase of that vehicle.

SUPPORT – HB1343 – Transparency in County Government Spending

By: Rep. Spencer Hawks (R – Conway)

Requires a county clerk publish publish the county’s annual financial report on a website owned or maintained by the county. Currently, a county only has to release the report in a newspaper published in the county.

This bill would provide for more transparency of government spending at the county level. According to a report by the Arkansas Center for Research in Economics (ACRE), a 2013 report revealed that Arkansas counties are the worst in the nation in publishing public information on their websites.

This bill would provide more transparency on the county level of what government is doing with the people’s money, allowing for a more honest, open, and transparent government.

OPPOSE – SB192 – New Healthcare Council to Lobby Legislators

By: Sen. Missy Irvin (R – Mountain View)

This bill would set up a new council to “evaluate and provide recommendations to the General Assembly regarding scope of practice changes” according to the bill title. This council would consist of 23 members, mostly from state boards of licensing in healthcare.

The council is tasked with providing evaluation and recommendations on the following:

1. Practitioners seeking to establish new healthcare professions to be licensed;
2. Healthcare professionals seeking to expand or narrow the scope of practice of a healthcare profession;
3. Determine if those seeking new licensure or changing scope of practice have knowledge, training, experience, and skills to provide that proposed care;
4. Examine the impact on public health and safety, economic impact, whether the benefits outweigh the harm, and provide recommendations to the General Assembly to support legislative decision making.

Unfortunately, this bill creates a new council for healthcare professions that sounds eerily similar to a Paul Harrell Parody. The parody discusses the formation of a state board governing state licensing boards, in the name of public safety. You can listen to that parody HERE.

It is likely the practical effect of setting up this council is to allow healthcare industry titans to further control licensing and scope of practice changes in Arkansas. It would almost ensure that legislation effecting scope of practice of licensure of any healthcare profession would have a unified, organized voice backed by a fancy healthcare council’s endorsement.

There are already so many ways that the healthcare care industry gets their way in Arkansas politics. Through the political process they are routinely the highest contributors in campaign donations. The healthcare industry also has the Arkansas capitol filled with lobbyists during the legislative session. They hold large events and feedings for state legislators. With a closer and closer decline to socialized medicine, they also have tentacles entrenched in state government.

There are special rules about when a scope of practice bill must be filed (early in the session) and how an interim study proposal may be needed to run the legislation at all. This makes it harder on legislators to pass occupational licensing reform.

It is already nearly impossible to expand the scope of practice or reduce licensing burdens here in Arkansas. Setting up a new council to better organize and speak on behalf of “the industry” would be unnecessary. Instead of creating this new council, the General Assembly should allow the current legislative process to proceed. There are already enough safeguards for public safety.

Setting up this council could lead to more regulation and less scope of practice expansion for healthcare professionals. This would decrease competition, raise prices, and reduce economic freedom for Arkansans.

Week Two Scorecard

SUPPORT – HB1251 – Expanding Scope of Practice for Optometrists

By: Rep. Jon Eubanks (R – Paris)

This bill would expand the scope of practice of optometrists in Arkansas. It would add additional therapies, rehabs, ophthalmic surgery, and laser surgery procedures excluding retinal surgery under the scope of practice. Ophthalmic surgery is defined, and credentialing requirements would be established by the State Board of Optometry for the performing of those surgeries.

By expanding the scope of practice, the bill would increase the choice that a patient has. A patient can choose their optometrist to perform some types of ophthalmic surgeries. The more choice a patient has, the more economic freedom they enjoy.

SUPPORT – HB1255 – Least Restrictive Licensing Requirements

By: Rep. Jim Dotson (R – Bentonville)

This bill would require a licensing entity to adopt the least restrictive requirements for licensing, registration, or certification for those previously licensed in another state. The licensing entity would have to adopt a rule that is least restrictive that allows for state-to-state reciprocity.

This bill would allow more competition for those looking to come to Arkansas and work. Competition could lower prices or boost quality of services for consumers, and thus provide more economic freedom to Arkansans. It will decrease dependency on government and instead rely on the free market and people’s choices.

SB157 – Repeals Licensure of Electrologists – SUPPORT

By: Sen. Bob Ballinger (R – Berryville)

This bill would repeal the licensing requirement for Electrologist. Electrologists are those providing laser hair removal services. They will no longer have to go through similar education and training requirements that a cosmetologist would have to undergo.

By repealing the licensure requirement, people would be free to engage in this work without a government permission slip. This could provide more choice to consumers and thus more economic freedom. This bill decreases dependency on government to be a regulator, and instead promotes free market choices for regulation.

SB166 – Repeals Licensure of Plant Nursery Workers – SUPPORT

By: Sen. John Cooper – (R – Jonesboro)

This bill would repeal a law that required a license for a nursery worker. Currently, a nursery worker must obtain a license if they are growing for sale florist stock, trees, shrubs, vines, cuttings, grafts, scions, buds, fruit pies, and other seeds of fruit and ornamental trees.

By repealing the licensure requirement, people would be free to engage in this work without a government permission slip. This could provide more choice to consumers and thus more economic freedom. This bill decreases dependency on government to be a regulator, and instead promotes free market choices for regulation.

HB1260 – Gas Tax Increase – OPPOSE

By: Rep. Dan Douglas (R – Bentonville)

This bill would create a new sales tax on gas and diesel at the wholesale level. The tax would be a “per-gallon” sales tax. It would be calculated by taking twelve-month average wholesale selling price of motor fuel/diesel and multiplying that by 3.5%. This new wholesale sales tax on gas would be in addition to the current retail sales tax on gas and diesel, which is the highest in the region.[1] If gas prices go down, the rate from the year before will be used.

The tax increase would then be distributed 70% to the State Highway Fund, 15% to the County Aid Fund, and 15% to the Municipal Aid Fund.

The bill would separately direct sales tax revenues from the sale of used cars to funds for highways if, and only if, general revenue of sales and use tax exceeds $2,500,000,000 ($2.5 billion). In Fiscal Year 2018, general revenue from sales and use tax was $2,448,576,804.[2]

If extra revenue exists, then $30 million (in the first year) from used car sales tax revenue would go towards highways. In the second year $60 million, third year $90 million, and $120 million in the fourth and subsequent years.

This gas tax increase would grow government by raising taxes on the people and would therefore diminish economic freedom in the state.

Week One Scorecard

SJR2 – Ending Sovereign Immunity (To Allow Lawsuits Against Government) – SUPPORT

By: Sen. Dave Wallace (R – Leachville)

In 2018 the Arkansas Supreme Court ruled that the plain reading of the Arkansas Constitution Inwas clear – the state could not be made a defendant in any of her courts. This reinstituted the doctrine of “sovereign immunity” that would prohibit citizens from filing lawsuits against their state government.

SJR2 is a proposed constitutional amendment that would allow the state to provide causes of action under law in which a person COULD sue the state. Absent this type of change the doctrine of sovereign immunity could be used more routinely to block any and all lawsuits against the state.

This proposed constitutional amendment would provide for a more honest and open government providing strong incentives for the state to treat all persons equally and to stay within the constitutional confines found in the Arkansas constitution. This type of measure is also needed to ensure that illegal exaction lawsuits may continue. Illegal exaction lawsuits are brought to prevent government from illegally spending taxpayer money.

SB52 – No Pensions for Criminal Government Employees – SUPPORT

By: Sen. Mark Johnson (R – Little Rock)

2018 saw the culmination of rampant corruption investigations into former Arkansas legislators for bribery and fraud. The best-known incidents included the trial, conviction, and sentencing for former State Senator Jon Woods who got over 18 years in prison for his corruption charges. Investigations continue and indictments are still coming.

This legislation would strip the pension/retirement benefits for public employees who are convicted a felony that is tied to their public position. For example, because former Sen. Jon Woods’ felony convictions were due to his position as a state senator, he would have his pension benefits stripped.

This bill would provide even stronger incentives for public officials and public employees to reject temptations for illegal and corrupt behavior, thus providing a more open and honest government.

SB118 – Protecting Free Speech on College Campuses – SUPPORT

By: Sen. Kim Hammer (R – Benton)

SB118 would protect free speech on college campuses in Arkansas. The legislation would address what are commonly called “free speech zones” where colleges try to contain free speech within defined areas of a campus. Free speech zones would be prohibited under the bill. The legislation would prohibit colleges from suppressing free speech including ideas and opinions they find offensive, jarring, conservative, liberal, or otherwise objectionable. Colleges would no longer be able to prohibit organizations and others from getting prior permits in order to exercise their free speech rights. Colleges could not charge security fees based on the content of a speech and could not disinvite a speaker because the college may not like the content or viewpoint of a speaker.

This legislation would provide for a better marketplace of ideas and stop the silencing of conservative speakers on college campuses. Students would have a cause of action to enforce their free speech rights against government actors. This legislation would provide a more open, honest, transparent government that is accountable to the people.

HB1002 – New Internet Sales Tax – OPPOSE

By: Rep. Dan Douglas (R – Bentonville)

HB1002 is essentially the same as SB140 of 2017 (which failed last session). In 2018, the U.S. Supreme Court upheld similar legislation passed in South Dakota allowing for an internet sales tax under certain conditions. HB1002 is tailored to that same law upheld by the Supreme Court. While it may now be constitutional, passage of a new internet sales tax is by no means required. Like Obamacare Medicaid Expansion, it is up to each state on whether they want to pass a massive tax increase or not.

What you need to know about the Internet Sales tax is that it is a TAX ON YOU, not on out state remote sellers. YOU pay the tax. It also grows government at all levels – state, county, and city. Passage of the law would mean that there would be less money in the pockets of Arkansans and thus the economy, and instead in the coffers of city, county, and state government. The Governor has already assumed that an Internet Sales Tax will pass this session and included the increased revenue into the budget. It is likely that the language in HB1002 may be incorporated into other tax legislation as part of the Governor’s tax reform plan.

The Internet Sales Tax is simply a way to grow government and raise tax revenue. It will decrease economic freedom for Arkansans. Very few elected officials campaigned and were elected on a promise to pas a new internet sales tax on the people of Arkansas. Many even promised the opposite – to not raise any taxes and to lower taxes.

HB1060 – Adding Continuing Education Requirements for HVACR Licensees – OPPOSE

By: Rep. Roger Lynch (R – Lonoke)

This same type of legislation was filed by Sen. Jeremy Hutchinson (now indicted) last session. The bill would require continuing education requirements for heating, ventilation, air condition, and refrigeration (HVACR) licensees. The bill allows the HVACR licensing board to set up a program, assess fees, and set hour requirements for continuing education. To have a license renewed they must show completion of the continuing education requirement.

This new requirement is increased regulation on HVACR licensees. While some in the field may advocate for the legislation, some may use it has a sword to stifle out competition. The increase compliance costs would be passed along to consumer through increased prices or lower quality service. Without less competition and increased compliance costs prices will rise and consumers will lose. This reduces economic freedom and leans on government intervention rather than a free marketplace.

According to the state legislative website Roger Lynch is “Self Employed – Heating, Air Conditioning”.

 

 

 

Footnotes:

[1] https://taxfoundation.org/state-gas-tax-rates-july-2018/

[2] http://www.arkleg.state.ar.us/bureau/fiscal/Publications/H.%20%20Tax%20Handbook/2018%20Tax%20Handbook.pdf