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Arkansas governor delays plans for session on tax cuts

October 19, 2021 GMT

LITTLE ROCK, Ark. (AP) — Arkansas Gov. Asa Hutchinson on Tuesday backed off plans to call the Legislature back to the Capitol next week to take up income tax cuts as he continued negotiating with lawmakers on how much to reduce.

The Republican governor delayed the special session he expected to call for the income tax cut proposal, which he said would cost the state $321 million a year once fully implemented in 2023. Hutchinson did not say when he planned to convene the majority-Republican Legislature, though he said hoped to do so before Thanksgiving.

“We need more time,” Hutchinson told reporters.

Hutchinson’s proposal calls for reducing the state’s top income tax rate from 5.9% to 5.3% by 2023. It also calls for increasing a tax credit for those making less than $22,900 and for combining the low- and middle-income tax tables.

But Hutchinson has faced calls from some fellow Republicans to go further with his tax cut plans and to also include reductions in the corporate income tax rate. Legislative leaders said delaying the special session will give lawmakers the governor more time to work out a deal.

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“While I think that there is a proposal coming together on tax reduction that will have broad-based support, I think there’s still just some details to finalize and preparations to be made as we move into a special session,” House Speaker Matthew Shepherd, a Republican said.

Hutchinson, who is barred by term limits from seeking reelection next year, ran on a promise to cut income taxes and is pushing for the reduction as the state’s revenue has beat expectations despite the COVID-19 pandemic.

The state ended the fiscal year with a nearly $1 billion surplus and so far revenue collections this fiscal year have come in $249 million higher than forecast.

But Democrats caution about going too far with reductions.

“It’s fine to talk about tax cuts, but we’ve got to make sure we can fully fund the programs that we have,” House Minority Leader Tippi McCullough said.

The session had been planned for just days after the Legislature wrapped up a session that was intended to focus on congressional redistricting but instead had been dominated by efforts to limit or prohibit businesses from requiring COVID-19 vaccinations.

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Hutchinson said the delay could allow for some clarity regarding a Texas law banning nearly all abortions. Some Republican lawmakers have said they plan to seek an Arkansas version of the ban, which the Justice Department has asked the high court to block, when they convene.

Such a measure would require a two-thirds vote in the House and Senate to even be considered if it’s not on the agenda for the session. Hutchinson has previously indicated he didn’t plan to put such a ban on the session’s agenda, but left open the possibility of revisiting it if the court rules on Texas’ ban.

“If we get guidance (from the court) then I’m open to looking at that guidance and seeing what step Arkansas should take, if any,” Hutchinson said.