Arkansas lawmakers approve governor's $50M tax cut plan

AP News
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Posted: Jan 23, 2017 5:27 PM

LITTLE ROCK, Ark. (AP) — Arkansas lawmakers approved Gov. Asa Hutchinson's $50 million low-income tax cut plan on Monday, setting the stage for a debate over deeper tax reductions the Republican has vowed to champion in two years.

The proposal to cut taxes for more than 650,000 residents making less than $21,000 cleared the House on a 90-2 vote. The Senate earlier approved an identical version of the plan on a 33-0 vote. One of the bills must be approved by either chamber before it heads to the governor's desk.

Hutchinson won the support of fellow Republicans who had wanted deeper cuts, proposing a 16-member legislative task force that would recommend comprehensive tax code changes by the fall of 2018. He also secured near-unanimous support from Democrats who had expressed concerns about cutting taxes while the state's revenue is coming in lower than expected.

"Our governor wanted to get this tax cut out, but he wanted to show commitment to doing real tax reform in our state," Rep. Mathew Pitsch, the top Republican in the House, said before the vote.

The tax cut, which would take effect in 2019, is less than half the size of the $102 million income tax cut Hutchinson championed and lawmakers approved when he took office two years ago. But it comes as Arkansas' net revenue is running $8.8 million below forecast so far this fiscal year. Hutchinson was elected in 2014 on a promise to cut income taxes across the board.

The House postponed voting on a competing $40 million plan backed by Democrats that would grant a tax credit to low-income residents. The lawmaker behind the proposal said he planned to see if Hutchinson was open to a compromise, but the governor has indicated he's not open to changing his tax cut plan.

"I do think there are probably parts of my proposal that would fit seamlessly with his," Democratic Rep. Warwick Sabin told reporters.

Democratic Rep. John Walker and Republican Rep. Josh Miller were the only lawmakers to vote against the governor's tax cut plan, but for different reasons. Walker expressed concern that the tax cut would lead to cuts in services or benefits to low-income taxpayers. Miller said he wanted to see deeper tax cuts that he says the state could afford by reducing spending.

"I support the governor with his desire to make some deep, significant cuts. I wish we could do it now. I think we could've done it now," Miller said after the vote.

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Associated Press Writer Kelly P. Kissel contributed to this report

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