Week In Review

State Capitol Week in Review

            LITTLE ROCK – Legislators will consider several different tax cut proposals when the General Assembly convenes for the 2017 regular session.

            The governor has proposed an income tax reduction for low-income wage earners, those earning $21,000 a year or less.  It would lower taxes for about 657,000 Arkansas residents, which is approximately 44 percent of 1.5 million people who pay state individual income taxes.

            The governor’s proposal would completely exempt anyone whose annual income is less than $4,300 a year, completely removing about 120,000 in the lowest income brackets from the tax rolls.

            Another income tax reduction that has been proposed by a senator would totally exempt wage earners whose annual income is less than $21,000 a year.

            The governor’s tax reduction would lower state revenue by about $50.5 million. The more sweeping proposal to lower income taxes would decrease revenue by about $105 million a year.

            Another bill that has been filed by a member of the House of Representatives would exempt all retirement benefits of former members of the military and their spouses’ survivor benefits. Currently, the first $6,000 of their yearly benefits are exempt from state income taxes. The governor announced his support of the measure, which would save retired military families an estimated $13 million a year.

            In the 2015 regular session the legislature approved about $100 million a year in income tax cuts, which the governor proposed and which mainly benefited about 688,000 middle class Arkansas taxpayers.

            The governor and legislative proponents of further income tax cuts have pointed out that state government has been able to continue providing vital services in spite of the revenue loss resulting from the 2015 tax cuts.

            If approved as initially proposed, the tax cuts would go into effect on January 1, 2018, meaning that they would benefit taxpayers when they file in early 2019.

Juvenile Services Contract

            The state Division of Juvenile Services, which oversees detention facilities that house young people who get in trouble with the law, has run into another obstacle in its effort to sign a new contract with a private Indiana company. A legislative committee declined to review it, which means the Division must take out-of-the ordinary procedures if it wants to continue pushing for approval of the contract.

            The contract is for about $160 million a year. The Division wants to award it to an Indiana firm called Youth Opportunity Investments. Two Arkansas organizations have had the contract and operated seven secure juvenile detention facilities. One is based in Jonesboro and one in Magnolia. They formally protested earlier this year when the Division announced it would award the contract to the new provider from Indiana.

Lottery Revenue

            November was a good month for the state lottery. Revenue was up $4.8 million over last year. In terms of total revenue, it was the best November for the Arkansas lottery since 2012.

Because of the increase in revenue, the amount available for college scholarships was up $800,000 for the month. Lottery ticket sales pay for Academic Challenge Scholarships.

Starting with the high school Class of 2016, the requirement for getting a lottery scholarship is to score at least 19 on the ACT standardized test.