Arkansas lawmakers on Wednesday approved a $500 million tax cut package over objections from Democrats who questioned its potential impact on the state’s COVID-19 funds and called for action on teacher raises.
The majority-Republican House and Senate approved identical bills outlining the cuts proposed by GOP Gov. Asa Hutchinson after the state’s surplus reached $1.6 billion. Final votes are expected on the cuts before the Legislature adjourns its special session Thursday.
The package includes speeding up when cuts in the state’s top individual and corporate tax rates that lawmakers approved last year take effect. It also includes a nonrefundable $150 tax credit for individuals making up to $87,000 a year.
The top Democrat in the Senate questioned whether the state would be forced to repay millions in coronavirus relief funds under a federal rule prohibiting states from using that money to offset tax cuts. That rule has been permanently blocked by a federal judge but the case is on appeal.
State finance officials and Republican leaders have said the state faces little risk of that happening because the cuts aren’t being funded directly or indirectly by the relief money. Republican Sen. Jonathan Dismang said high inflation is what has helped the state build up its record surplus.
The Senate also approved setting aside $50 million for a school safety grant program that Hutchinson proposed after the Uvalde, Texas school shooting that killed 19 students and two teachers. That measure heads to the House.
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