Arkansas governor signs tax, appropriation bills after special legislative session ends

Arkansas Gov. Sarah Huckabee Sanders signs a bill to fund the Arkansas Game and Fish Commission on June 19, 2024. (Mary Hennigan/Arkansas Advocate)

For the third time in 15 months, Gov. Sarah Huckabee Sanders signed legislation to lower taxes for Arkansans. This round, approved during this week’s special session, will affect approximately 1.1 million taxpayers.

Along with trimming the state’s top individual and corporate income tax rates, Sanders also signed legislation to increase the homestead property tax credit and fund the Arkansas Game and Fish Commission.

“Arkansans are looking at Washington and seeing nothing but failure,” Sanders said. “…Today they can look at Little Rock and get some of their economic confidence back.”

Financial experts say the economy is improving, but consumers may not feel that way because of pre-pandemic comparisons made at the grocery store and the high cost of housing. Sanders said “savings are more important than ever” given expensive household staples.

Tax savings among Arkansans will vary based on income, with the wealthiest of residents faring the best, according to data from the Arkansas Department of Finance and Administration.

In addition to the tax and appropriation measures, lawmakers this week also considered two resolutions from the House of Representatives opposing the proposed Arkansas Abortion Amendment and the Educational Rights Amendment of 2024. In the Senate, lawmakers took issue with one of the governor’s recent appointments. 

Tax cuts

House Speaker Matthew Shepherd, R-El Dorado, said after adjournment that Wednesday was “a historic day” with the state income tax at the lowest it has been since its inception. He also recognized the opportunity to do more.

“I think it comes down to the fundamental view of whose money it is in the first place,” Shepherd said. “I think, and I think the majority of the Legislature would believe, that’s hardworking Arkansans’ money.”

The legislation, now Act 1 of 2024, will lower the top corporate income tax rate from 4.8% to 4.3% and the top individual income tax rate from 4.4% to 3.9%, retroactive to Jan. 1 of this year. The tax cuts went into effect immediately upon Sanders’ signature.

Sanders recognized Arkansas’ current rate as the lowest in the region among states that levy an income tax.

Democratic lawmakers in both chambers were the only members to vote against the tax cuts, citing concerns that the cuts will primarily benefit wealthy Arkansans and reduce the state’s ability to fund services.

The tax cut legislation requires $290 million in general revenue to be set aside in a reserve fund in case the money is needed to make up for any decrease in state general revenue due to the tax cuts.

Democratic leaders and advocacy groups alike named several services that could be funded instead of pursuing tax cuts, such as programs to reduce childhood poverty and incentives for affordable housing.

In April 2023, the Legislature approved more than $100 million in tax cuts, reducing the top individual tax rate from 4.9% to 4.7% and the top corporate tax rate from 5.3% to 5.1%. During September’s special session, legislators lowered the top individual and top corporate income tax rates to 4.4% and 4.8%, respectively.

Looking ahead to more tax cuts, Sanders said there aren’t “any plans for special sessions at this point,” though she would continue to look for opportunities to phase out the state income tax.  Sanders said she would not comment on any legislation that may be proposed during the next regular session in 2025.

Anti-abortion resolution

Late additions to the House Management Committee’s Tuesday afternoon agenda led to a well-attended meeting and healthy debate, a trend that followed to the House floor on Wednesday.

Rep. Ryan Rose of Fort Smith, and Rep. Brit McKenzie of Rogers, both Republicans, filed separate resolutions encouraging voters to oppose two proposed constitutional amendments: the Arkansas Abortion Amendment and the Educational Rights Amendment of 2024, respectively. Citizen-led groups are gathering signatures to put the amendments on the November ballot.

Along with asking voters to oppose the constitutional amendments, the resolutions also would express the House’s disapproval of the ballot initiatives.

Several people spoke against McKenzie’s resolution opposing the “misleadingly titled” education-related amendment on Tuesday. McKenzie ultimately pulled it from the House agenda on Wednesday without discussion.

“I don’t think that should be interpreted as a weakness in the majority of the House’s support for the LEARNS Act,” Shepherd said upon adjournment. “I think it’s just a combination of factors.”

But the abortion-related resolution was discussed.

“Some have said that this resolution is interfering with the initiative process,” Rose said in his opening statement. “I think that’s about as absurd as trying to say that the resolution we passed … in support of Israel during the fiscal session would be interfering with the war in the Middle East.”

Democratic Reps. Andrew Collins of Little Rock and Deborah Ferguson of West Memphis both spoke against the resolution.

“The big concern I have with this is that we are purporting to tell the voters, the citizens who elected us, how to use their vote,” Collins said. “…I just don’t think that is appropriate, I don’t think it’s warranted, and I do think it comes off to a lot of people, myself included, as arrogant.”

Ferguson, who said she was a member of healthcare providers supporting the constitutional amendment, said she supported people having a choice for what to do with their pregnancy.

“I’m glad the resolution was brought because I want the public to be aware that canvassers are gathering signatures now to pass the amendment, and you can contact me if you want to know how to sign a petition,” Ferguson said.

Republican Reps. Julie Mayberry of Hensley, Hope Duke of Gravette and Wayne Long of Bradford all spoke in support of the anti-abortion resolution.

Their speeches included references to their faith and stories of friends who chose to give birth even while knowing their child would have health issues or die a short time after.

At the post-session signing ceremony, Sanders voiced her support for the resolution as well.

“I’m never going to apologize for being pro-life,” she said. “Arkansas is the most pro-life state in the country, and I’m proud of that fact. I think we need to continue to look for every opportunity we can to solidify our position there.”

Property tax credit

Sanders also signed legislation on Wednesday increasing the homestead property tax credit from $425 to $500. The credit is available to property owners on the property that is their primary residence, reducing their real property tax liability, which is paid at the county level.

The Senate approved identical homestead tax credit bills, now Act 3 and Act 5 of 2024, with bipartisan support Tuesday and Wednesday. Sen. Jim Dotson, R-Bentonville, did not vote on either bill.

The House passed the Senate-led bill without discussion on Wednesday. Rep. Denise Garner, D-Fayetteville, voted present.

Lawmakers previously increased the tax credit from $375 to $425 during the 2023 legislative session.

Game and Fish Commission

Funding the Game and Fish Commission was a primary reason for this week’s special session, following lawmakers’ failure to reach a compromise during a May fiscal session.

The bill raised the director’s maximum salary to $170,437 and added legislative oversight for any raise greater than 5% of the director’s current earnings through the end of the upcoming fiscal year. 

Austin Booth currently acts as the commission’s director and has a salary of $152,637.

The bill garnered no discussion from the Senate or House floor, though lawmakers did share some criticisms of the failed appropriation bill during a Monday meeting of the Joint Budget Committee’s Special Language subcommittee.

Sanders signed the bill, now Act 2 of 2024, Wednesday flanked by several members of the Game and Fish Commission.

Gubernatorial appointments

In the final moments of the Senate’s business during the special session, lawmakers approved by voice vote all but one of Sanders’ recent appointments to state boards and commissions.

Sen. Dan Sullivan, R-Jonesboro, abstained from the vote; his wife, Maria Sullivan, was appointed to the Arkansas Educational Television Commission.

Senators debated one appointment separately: Tammy Browning, a Hot Springs real estate agent whom Sanders appointed to the Arkansas Real Estate Commission.

The Senate Rules Committee, which is responsible for approving gubernatorial appointments before presentation to the full Senate, recommended that the chamber reject Browning due to concerns that her appointment didn’t follow the correct process, said committee chairman Sen. Clint Penzo, R-Springdale.

On a split voice vote, the Senate sent Browning’s appointment back to the Rules Committee for further consideration.

CORRECTION: An earlier version of this story contained an incorrect corporate tax rate for April 2023 and has been updated.

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