Week In Review

State Capitol Week in Review

            LITTLE ROCK – Arkansas will hold its annual sales tax holiday on Saturday, August 5, and Sunday, August 6.

Clothing and footwear that cost less than $100 per item will qualify for the exemption. However, if you buy an item that costs more than $100 you must pay the state and local sales taxes on the entire amount.

Accessories costing less than $50 qualify for the exemption.  Examples include wallets, watches, jewelry, sun glasses, handbags, cosmetics, briefcases, hair notions, wigs and hair pieces.

Here’s an example provided by the Department of Finance and Administration: a person buys two shirts for $50 each, a pair of jeans for $75 and a pair of shoes for $125.  The sales tax will only be collected on the shoes.  Even though the total price of the shirts and the jeans added up to $175, no sales tax will be collected on them because each individual item cost less than $100.

School supplies also qualify, including binders, book bags, calculators, tape, paper, pencils, scissors, notebooks, folders and glue.

Textbooks, reference books, maps, globes and workbooks will be exempt from sales taxes.  Also exempt from the sales tax will be art supplies needed for art class, such as clay and glazes, paint, brushes and drawing pads.

Bathing suits and beach wear will be exempt as long as they cost less than $100 per item. Diapers and disposable diapers will not be taxed.  Boots, including steel-toed boots, slippers, sneakers and sandals will be exempt from the sales tax as well.

Not exempt from the sales tax are sporting goods, such as cleats and spikes worn by baseball, soccer and football players.  Recreational items such as skates, shoulder pads, shin guards and ski boots will be taxed.  

Computers, software and computer equipment are not exempt and you will have to pay sales taxes if you purchase those items on the holiday.

Act 757 provides that the sales tax holiday will be the first weekend of August every year.  All retail stores are required to participate and may not legally collect any state or local sales taxes on qualified items during the tax holiday.

The legislature created the sales tax holiday by approving Act 757 of 2011.  One of the goals of the act is to help families with children in school, which is why it is commonly known as the “Back to School” sales tax holiday.  

However, everyone benefits from the holiday, whether or not they have children in school.

Highway Construction

            State highway officials opened bids for 57 projects that totaled $139.4 million. Contracts will be awarded only after each bid is carefully reviewed.

            One project accounts for almost half of the total. A low bid of $67.7 million was submitted for rebuilding the Pine Bluff bypass, which is a 10.4 mile section of Interstate 530 that makes an arc on the south side of the city.

            Another major project is to resurface 61 miles of Highway 64 in White, Woodruff and Cross Counties. The low bid was for $19.1 million.

Week In Review

State Capitol Week in Review

            LITTLE ROCK – Last year 384 Arkansas residents died from an overdose of prescription painkillers.

That is an increase of one person over the previous year, when 383 people died from an overdose of opioid pain medication. In 2014 there were 356 deaths in Arkansas due to opioid overdoses.

The Senate Committee on Public Health, Welfare and Labor heard a report from the state Health Department on the effectiveness of recently enacted laws designed to curb the alarming surge in abuse of painkillers over the past ten years.

Opioids are the most widely prescribed type of drug in Arkansas. For example, last year 236 million pills were sold in the state, compared to 102 million depressants and 712,000 stimulants.

A Health Department official told the committee that the number of opioids sold in Arkansas in 2016 was enough for every man, woman and child in the state to have taken 80 pills.

Another way of looking at the prevalence of opioid sales is to consider that for every adult over the age of 25 in Arkansas, a prescription for opioids was written.

In the past few years the legislature has enacted a series of laws to address the crisis in abuse of prescription drugs, including Acts 1208, 901, 1114, 1222 and 895 of 2015, Act 1331 of 2013 and Act 304 of 2011.

Act 304 established the prescription drug monitoring program to combat the illegal trade of prescriptions. Act 1331 prevents “doctor shopping,” a practice in which drug abusers go to numerous physicians to obtain prescriptions.

The other laws modify the drug monitoring program, for example, by allowing access to law enforcement officials and licensing boards.

According to the Health Department, the new laws have been effective in reducing “doctor shopping” by half. The number of drug users who went to at least seven physicians or at least seven pharmacies in 2016 was half the number who did so in 2015.

The problem is getting worse, however. The rate of drug-related injuries and deaths due to overdoses has more than doubled since 2000, increasing from 5.1 per 100,000 people to 13.4 per 100,000 people.

The epidemic is not only a challenge for law enforcement and drug abuse treatment programs, it is a strain on the resources of social service agencies. Specifically, it has affected foster care and child welfare programs because the spiraling abuse of opioid prescriptions has resulted in growing numbers of children being removed from their homes.

In 2015 drug or alcohol abuse by the parents was the reason given for removing children from their families in 34.4 percent of all child abuse and neglect cases nationwide. That compares to 18.5 percent in 2000.

In certain areas the problem is even worse. In Ohio last year, drug abuse was the reason cited in more than half of the cases in which a child was removed from his or her family.

Experts are learning that due to the potency of opioids, the recovery period from addiction is longer than it is for cocaine and meth, and the possibilities of a relapse are greater.

When addicted parents spend longer periods in rehab, their children must spend longer periods in foster care. That adds strain to the already over-burdened foster care system.

Week In Review

State Capitol Week in Review

            LITTLE ROCK – Thanks to conservative budgeting and a rebound in consumer spending, the state ended Fiscal Year 2017 with a surplus of $15.7 million.

            Individuals and businesses were spending more, so sales taxes were strong at the end of the fiscal year. Employment figures were strong, which meant that Arkansans were paying income taxes.

            The strong finish to the fiscal year is an abrupt turnaround from late April, when state agencies were notified they had to trim about $70 million from their spending plans due to concerns about a slowdown in revenue. Arkansas operates under a balanced budget law, therefore agencies must reduce spending when revenues fall off.

            Because of the strong finish to the fiscal year, all but $10 million of April’s budget cuts were restored.

            At the end of the fiscal year, the state spent about $5.35 billion in net general revenue. That is about $19 million less than the previous year.

            In Fiscal Year 2017, which ended on June 30, Arkansas collected $2.337 billion in sales taxes. That is an increase of 2.1 percent over the previous year. The state sales tax rate is 6.5 percent and went unchanged from 2016 to 2017. That means the 2.1 percent increase in sales tax revenue represents growth in spending by consumers and businesses. Cities and counties also collect sales taxes, but the revenue from those collections is not part of the state’s final report on Fiscal Year 2017.

            Income tax collections for the fiscal year totaled $3.2 billion. That is 2.1 percent above the previous year.

            Corporate income tax collections were $434 million, which was almost 11 percent below the previous fiscal year.

Corporate income tax collections traditionally are volatile and hard to gauge because of the timing of moves that corporations make in order to take advantage of state and federal tax laws. 

In spite of the difficulty of predicting corporate activity, the $434 million in corporate income taxes collected was 1.1 percent above what budget officials had forecast.

            Public schools receive the largest portion of state taxes. They are budgeted to get $2.19 billion this year. The Department of Human Services (DHS) administers Medicaid, the food stamp program, drug and alcohol abuse centers, treatment of people with disabilities and long term care for senior citizens. DHS will get about $1.55 billion of state taxes this year and even more from federal taxes.

            The operation of prisons will cost the state more than $341 million. Parole, probation and work release will cost an additional $79 million. The state distributes about $700 million a year to colleges and universities. 

            According to the National Conference of State Legislatures, 22 states had to adjust spending this fiscal year to meet budget shortfalls. The financial status of most states is stable, but a majority of states report their main challenge is to meet a growing demand for services at the same time that their revenue stream is flat.

            States whose economies rely on energy sources, such as oil and gas, are dealing with flat revenue caused by relatively low energy prices. Low commodity prices are a concern in states that depend heavily on agriculture. The uncertain future of Medicaid is a source of concern for many governors and state budget officials.