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Arkansas Senate OKs $5.75B budget, tax cuts

Arkansas Senate OKs $5.75B budget, tax cuts

April 13th, 2019 by Arkansas Senate Information Office in Arkansas News

LITTLE ROCK—The Arkansas legislature completed the 2019 regular session after finalizing a balanced budget of about $5.75 billion in general revenue for next fiscal year. That is about $124 million more than will be spent during the current year.

The state general revenue fund is mostly generated by sales taxes, individual income taxes and corporate income taxes.

The legislature enacted a trio of tax cuts. Act 182 will save Arkansas families more than $97 million a year in lower personal income taxes. It will benefit about 579,000 taxpayers with net taxable incomes greater than $38,200.

Act 808 lowers property taxes for more than 716,000 homeowners, by increasing the homestead property tax credit from $350 to $375. Each year, Arkansas homeowners will save an additional $12.5 million because of Act 808.

Act 822 will lower income taxes by about $57 million a year for businesses when it is fully in effect. It lowers the top rate for income above $100,000, and it extends to 20 years the carry forward period in which they can claim net operating losses.

Much of the lost state revenue will be made up from sales taxes on Internet retail purchases. The act does not change sales tax rates, but clarifies that they will be collected equally from online retailers as they are collected from "bricks and mortar" stores.

The legislature enacted a long-term highway program. Act 146 will generate $59 million a year for the state and $12.6 million a year for both cities and counties to maintain and build roads and bridges.

It levies a new wholesale sales tax on gasoline and diesel, which will result in an additional 3 cents a gallon on gas and 6 cents on diesel.

The new state rate for gasoline will be 24.5 cents a gallon, and for diesel, it will be 28.5 cents. In the future, increases will be limited to 0.1 percent per
gallon.

The bill levies additional registration fees on electric vehicles of $200 and hybrid vehicles of $100. In 2018 there were 18,777 hybrids registered in Arkansas, and 802 electric vehicles registered. Their owners paid $17, $25 or $30 to register, depending on the weight of the
vehicles.

Also, $35 million a year from new casino taxes will be transferred to state highway projects.

The second component of the highway program will depend on Arkansas voters. The legislature referred to the 2020 ballot whether to make permanent the current temporary half-cent sales tax. Revenue from the half-cent is allocated for highways.

If voters approve, the half-cent will generate $293.7 million a year. Cities and counties will each receive $44 million, and the state Transportation Department will get the remaining $205 million each year.

If voters reject the extension, the sales tax will expire in 2023. It was approved in a statewide general election in 2012 by a margin of 58 percent to 42 percent.

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