By JOHN HOFHEIMER
Leader staff writer
Gov. Mike Beebe’s promise to reduce the state sales tax on groceries to 3 percent from 6 percent took a giant step forward Tuesday when the governor agreed to back increased income-tax exemptions and lower utility taxes for manufacturers.
That cleared the way for supporters of the competing earned-income credit bill to abandon it and embrace the grocery tax cuts. House Speaker Benny Petrus’ legislative package included the earned income-tax credits and the other cuts, but some insiders speculate he got what he set out for.
Managed and sponsored by Sen. Bobby Glover, D-Carlisle, the Senate unanimously approved his grocery tax reduction last week, and the governor says he has enough votes to pass the bill in the House. State Rep. Kevin Anderson, R-Rogers, was the lead sponsor of Petrus’ earned income-tax credit bill, which passed 85-12 in the House Monday but it never has a chance in the senate.
Beebe and Petrus apparently worked out their deal in (presumably smoke-free) backrooms. The House passed part of Petrus’ package, a tax cut to increase from the current $6,000 to $10,000 the amount of retirement income that would be exempt from state tax. Reps. Will Bond and Sandra Prater, both of Jacksonville, are sponsors of the governor’s grocery tax cut. It would become active July 1. Glover said Petrus’ bills would have thrown Beebe’s budget out of balance. Glover said the grocery tax cut would diminish revenues about $130 million a year.
EDUCATIONAL GAMBLE
Bond is the lead sponsor of a bill to refer to a vote of the people a constitutional amendment allowing for a state lottery to fund college scholarships, vocational education and teacher bonuses. He said this week that there appears to be good support for the bill in both houses. House Joint Resolution 1005 is titled “Proposing an amendment to section 14 of Article 19 of the Arkansas Constitution to authorize the General assembly to establish a state lottery to help fund college scholarships and teacher bonuses in this state.”
The referendum will say all money would be spent for education and would supplement, not supplant, existing monies. He said several state agencies supported the bill and that Lt. Gov. Bill Halter helping push it. The lottery bill is filed and referred to the State Agencies Committee, which will hold hearings. If approved, it would refer the question to a vote of Arkansas residents.
LENDERS FROM TEMPLE
Bond, a cosponsor of a bill intended to drive the payday lenders from the temple faces a tough fight. He said it was being amended to clarify that straight check cashing—a reasonable fee for cashing a paycheck, for instance—would not be threatened by the bill that would make usury in Arkansas a crime, punishable by fines of $300 per incident.
It would allow interest with a maximum annual interest rate of 17 percent. Opponents say payday lenders will always find a way to do business, so why not regulate them instead of outlaw them? Proponents say efforts to regulate them have been ineffective, with the foxes appointed to guard the hen houses.
