Arkansas’ 92nd General Assembly Overview
During the 87-day session, 1,670 bills were filed, down significantly from the two previous regular sessions. The likely explanation for the decrease is the elimination of the bill-filing deadline – resulting in fewer shell bills.
Like the two previous sessions, Republicans maintained control over both the governor’s office and both legislative chambers.
The Major Issues of the 92nd General Assembly
The major issues during the session focused on the “Four T’s”: Teacher Pay Raises, Transportation Funding, Lower Taxes, and Transformation.
Increased Teacher Pay
Act 170 of 2019, formally entitled the “Teacher Salary Enhancement Act,” raises teacher pay in Arkansas. Over a period of four years, the minimum salary will become $36,000 giving Arkansas the highest minimum teacher salary among surrounding states.
Funding for the Arkansas Department of Transportation will increase by $95 million annually by levying a wholesale tax on gasoline and diesel fuel, increasing the registration fees for hybrid and electric vehicles, and allocating casino tax revenue and other state revenue. More than $10 million annually will be dispersed to cities and counties.
The legislature also approved a joint resolution to refer a constitutional amendment to the 2020 ballot that would permanently extend the state’s half-percent sales tax for road construction and maintenance, producing about $205 million annually for the state Transportation Department. $40 million would be earmarked for cities and counties.
Act 182 of 2019 will, over a two-year time period; lower the top marginal income tax rate in Arkansas from 6.9 percent to 5.9 percent. Ultimately, Act 182 will reduce the tax obligation of Arkansans by $97 million. This is the third and final tax cut in Gov. Hutchinson’s efforts to reform Arkansas’s tax code
Act 822 of 2019 addresses corporate taxes. It does four things important for businesses. First, it requires out-of-state retailers with more than $100,000 in sales to collect and remit sales and use taxes. Next, it extends the net operating losses for Arkansas businesses from five to 10 years. Further, Act 822 adopts a single sales factor apportionment for corporate taxation, allowing Arkansas based companies to shift part of their tax burden to out-of-state subsidiaries. Lastly, it mirrors the income tax decrease from Act 182 for individuals and reduces the 6.5% tax rate to 5.9% for corporations.
Act 910 of 2019, formally entitled the “Transformation and Efficiencies Act of 2019,” will reduce the number of cabinet-level agencies in Arkansas from 42 to 15. The legislation is expected to create 15 million dollars’ worth of efficiencies, beginning in fiscal year 2021. The legislation will establish the following cabinet-level departments: agriculture; commerce; corrections; education; energy and environment; finance and administration; health; human services; inspector general; labor and licensing; military; parks, heritage and tourism; public safety; transformation and shared services; and veteran affairs.
On March 27, U.S. District Court Judge for the District of Columbia James Boasberg, blocked the “work requirement” for Arkansas Works, which was approved by the Arkansas legislature during the 91st General Assembly, ruling it arbitrary and capricious. Despite the adverse ruling, the Arkansas legislature passed SB99, with the House of Representatives voting against it once, which is the State’s $8.1 billion appropriation for Arkansas’s Medicaid program. Subsequently, on April 10, the federal government appealed Judge Boasberg’s decision. The success or lack of success of the federal government’s appeal may have impact on Arkansas’s Medicaid expansion in the future.
House Bill 1876 and Senate Bill 597, better known as the Revenue Stabilization Act (RSA) distributes the state’s proposed general revenue budget of $5.75 billion based on the priorities of the governor and the legislature for the upcoming fiscal year beginning July 1, 2019. The RSA anticipates distributing more than $120 million more for the 2020 fiscal year than 2019, with approximately $68 million allocated to the Department of Human Services. There is $30 million dollars allocated for the Governor’s Quick Action Closing Fund and up to $10 million dollars allocated for the University of Arkansas for Medical Sciences’ National Cancer Institute Designation Trust Fund.
Constitutional Amendment Proposals
The Arkansas legislature can propose three constitutional amendments each legislative session, and 46 were considered during the 92nd General Assembly. The legislature passed resolutions to refer to voters in 2020. The first would amend the process for the submission and approval of proposed initiated acts, constitutional amendments, and referenda. The second proposed amendment would reduce the term limits applicable to members of the general assembly to 16 years. The third proposed amendment seeks to continue the one-half percent sales and use tax for the state’s highway system, county roads, and city streets.
For more information on legislative happenings from the 92nd General Assembly, contact our government relations team.