Week 1: AR Legislative Report 2021
A Nation in Crisis:
The 93rd Arkansas General Assembly began its General Session on Monday, January 11, 2021. As usual, many bills were pre-filed. But we are not facing business as usual. We are a nation in crisis. Every vote by this General Assembly should be considered in light of that fact. As a result, Arkansas legislators should prioritize and address the following threats to our individual freedoms:
1) Unchecked emergency powers;
2) Lack of election integrity at all levels;
3) Arkansans will soon face large federal tax increases; and
4) Arkansans will soon face increased federal regulations.
With that common basis of understanding, we look forward to a productive General Session.
How this Report Works:
Conduit will publish our weekly Legislative Report highlighting upcoming bills which affect the economic freedom of all Arkansans.
Similar to 2019, these bills will be considered for inclusion in the annual Conduit for Commerce, Inc. (CFC) Legislative Scorecard published after the Session. This scorecard reviews the Session votes of all 135 legislators. As in prior years, Conduit uses its flag-ship Economic Freedom Filter to determine which bills are appropriate for scoring and whether votes cast are “correct” or “incorrect.”
Each week this Legislative Report will be released to the public and sent individually to all 135 state legislators. It will include new bills and updates on previously reported bills. It is intended as a tool for a better understanding of a bill–what it does, its historical context, its real-world impact, as well as any carefully crafted language used to confuse.
If a legislator reviews these weekly reports before voting, they will learn our analysis and position on these economic bills and whether it: (1) Grows or shrinks government; (2) Increases or decreases dependency on government; and/or (3) Spends money the state does not have. Conduit will also evaluate bills that support or diminish government transparency.
Starting in 2020, “Present” or “Not Voting” votes cast by a legislator may be scored by CFC as an incorrect vote. (This will also be the position of the nation organization, Club for Growth [i], for its 2020 state scorecard.) We strongly encourage legislators to take all opportunities to cast a “yes” or a “no” vote and resist the weaker “less colleague-contentious path” of voting “Present’ or “Not Voting.”
Summary of CFC Bill Analysis (see Details below):
OPPOSE
SB2 – Massive Tax Increase for Redistribution of Wealth Scheme – OPPOSE
SB10 – Redistribution of Wealth through EITC – OPPOSE
SUPPORT
SB9 – Repealing of Car Wash Water Usage Tax – SUPPORT
SB15 – Emergency Powers Duration Limited – SUPPORT
SB17 – Liability Immunity Against COVID19 Lawsuits – SUPPORT
SB23/HB1055 – Self-Regulation for CO-OP Organizations – SUPPORT
HB1011 – Repeal of Income Taxes for Those Making Under $22,000 – SUPPORT
HB1063 – Expansion of Telemedicine to Phone Calls – SUPPORT
HB1064 – Price Transparency for Medical Services – SUPPORT
HB1066 – Beer Shipping Direct to Consumers – SUPPORT
HB1068 – Expanded Telemedicine Use – SUPPORT
Bill Details:
SB2 – Massive Tax Increase for Redistribution of Wealth Scheme – OPPOSE
By: Sen. Jim Hendren (R – Gravette)
This bill will be touted by its sponsor as a tax cut bill. Do not be fooled. It is simply an attempt to back-door onto the backs of the people of Arkansas, something that would otherwise not pass. The something that would not pass is a new, fraud-filled welfare program.
The bill itself is remarkably similar to the sponsor’s failed 2019 attempt at a $100 million tax increase for a redistribution of wealth scheme through increasing taxes on smoking and vaping, including the closing of vaping small businesses. Like the federal government, this bill will establish a state Earned Income Tax Credit (EITC). This new welfare program allows people to receive money from the State of Arkansas when they file an income tax return. Unlike the terms “tax refund” or “tax credit” imply, this would be a new means by which the state of Arkansas delivers to the recipients’ new welfare payments. It is not a reduction in taxes owed nor a refund of taxes paid by the filer.
Under the bill’s redistribution scheme, the EITC would be at least five percent (5%) of the federal EITC, if funds are available, and sets no maximum cap as long as there are trust funds to cover it. With funds available, the bill actually allows the Secretary of the Department of Finance and Administration to determine the maximum paid to the claimants. It also requires the DFA Secretary to annually notify those potentially eligible to apply for the new welfare benefit.
In 2019 the EITC bill narrowly passed the Senate. The House refused to hear it. Such a new welfare program should have a harder time getting past the Senate with two new Republicans replacing Democrats and a conservative Republican replacing a liberal-voting Republican.
Understanding the new make-up of the Senate may be the reason the bill sponsor has resorted to his old blueprints for getting tax increases and welfare programs enacted by “a conservative Republican” legislature. Let me explain:
Under this bill, the “conservative Republican” sponsor has now evolved the “We can’t pass a tax cut in AR unless we pay for it with a tax increase….” blueprint to “We can pass new welfare benefits if we pay for them with tax increases.”
Another previously successful piece of his tax increase bill blueprint is to include a “conservative talking point” for the re-election of his “conservative Republican” legislator friends. For this particular bill, this new talking point is that the bill cuts taxes by increasing Arkansas’ very low standard deduction from $2,000 to $3,200 and eliminating the 2% tax bracket for those making below $8,900. (Of course, these tax cuts could easily pass in a stand-alone tax cut bill since Republicans hold more than a super majority in both Chambers.)
One of the ironies of this new welfare, tax increase bill is that it hits hardest those the welfare piece is to help by imposing a new privilege tax on vaping and a new 20% increase (special) tax on cigarettes. According to the CDC, those below the poverty level smoke and vape at higher rates than the general population.
Not only is a new welfare program a bad idea, the EITC program itself is riddled with fraud at the federal level. The state will be no different if not worse. It is estimated that between 21 and 26 percent of all EITC claims at the federal level are paid in error. In taking more money from those it is claimed to help, this bill, if passed, will only expand government bureaucracy and increase government dependency.
Conduit has previously opposed this redistribution of wealth and government growth scheme and will do so again…no matter the claims of it being a tax cut bill (directed to the unsuspecting voter.) Conduit stands opposed to this attempt to create a new welfare program, raise taxes, expand government, and increase dependency on government.
Considering the numbers of true “conservative Republicans” in both chambers, this bill should never make it to either floor for a vote!
SB9 – Repealing of Car Wash Water Usage Tax – SUPPORT
By: Sen. Gary Stubblefield (R – Branch)
This bill repeals a 2019 law that instituted a new tax/fee based on the amount of water is used in car washes. There was great dismay and conflict over larger car wash companies and smaller ones during the 2019 session with the larger car wash companies winning out on the final language in the law. This law would repeal the requirement of registering with the state if you use a public water system in your car wash and then paying a tax/fee based on how much water is used. This should reduce the tax liability for car washes and allow them to reinvest that money back into their company, employees, and community giving them more economic freedom.
SB10 – Redistribution of Wealth through EITC – OPPOSE
By: Sen. Dave Wallace (R – Leachville)
This bill is a standalone establishment of a new welfare program–a state Earned Income Tax Credit (EITC). (However, it does not include enticements for Republicans to vote for it like its sister bill, SB2.)
This new welfare program allows people to receive money from the State of Arkansas when they file an income tax return. Unlike the terms “tax refund” or “tax credit” imply, this would be a new means by which the state of Arkansas delivers to the recipients’ new welfare payments. It is not a reduction in taxes owed nor a refund of taxes paid by the filer.
Under the bill’s redistribution scheme, the EITC would be ten percent (10%) of the federal EITC amount. It also requires the DFA Secretary to annually notify those potentially eligible to apply for the new welfare benefit.
As mentioned in SB2 above, the federal EITC program is riddled with fraud. In Arkansas, we could expect an even greater fraud rate than 26% of all claims, as Arkansas agencies have shown no increased ability to stop fraudulent behavior among its welfare programs…. even when expanding government to do so.
Conduit has previously opposed this redistribution of wealth and government growth scheme and will do so again. Conduit opposes new welfare programs, raising taxes, and increasing dependency on government. The EITC program itself is riddled with fraud at the federal level. It is estimated that between 21 and 26 percent of all EITC claims at the federal level are paid in error.
SB15 – Emergency Powers Duration Limited – SUPPORT
By: Sen. Dan Sullivan (R – Jonesboro)
This bill would limit the amount of time an emergency order issued by the Governor can stay in place. The bill would set the limit at 30 days which could be shortened by the Governor or extended only by a vote by the General Assembly or Legislative Council. The emergency orders issued in response to the COVID-19 pandemic has been continued indefinitely and has limited the ability of businesses to reopen and the economy to rebuild. This limits the economic freedom of everyone, especially small businesses struggling to make it through the pandemic with government forced lockdowns. The bill would limit the length of time of a declared emergency but allows a pathway to extend it, if necessary. This pathway most importantly includes input from the people’s elected state representatives and senators.
SB17 – Liability Immunity Against COVID19 Lawsuits – SUPPORT
By: Sen. Dan Sullivan (R – Jonesboro)
This bill would provide liability protections for businesses against lawsuits blaming them for exposure to COVID-19. The new law would provide that businesses are immune from liability for exposure to COVID-19 at their place of business unless they acted willfully, recklessly, or intentionally against protecting people. It is a presumption they acted correctly if they followed major health and safety guidelines in responding to COVID19. The last thing a struggling business needs during the pandemic are frivolous lawsuits claiming someone got COVID at work, and their boss needs to pay for it. This provides an avenue for people to still sue if the business is reckless but provides a safe harbor for those doing the right thing and adhering to health and safety protocols. This is needed to protect against frivolous lawsuits and protect the economic freedom of small businesses in Arkansas.
SB23/HB1055 – Self-Regulation for CO-OP Organizations – SUPPORT
By: Sen. Blake Johnson (R – Corning) / Rep. Lanny Fite (R – Benton)
This bill would remove electric cooperative corporations from under the regulatory authority of the Public Services Commission. Instead, it would allow for a self-regulating structure in which they can regulate themselves among the members of the cooperative. The commission would keep some jurisdiction over items like placing of power poles, taxation, and hearing issues related to quality of service. This is a positive deregulation bill that allows private, free people to regulate themselves (as the owners of the cooperative) in the best interest of the members with member input and decision-making authority vested in a board of directors chosen by members. It is foreseeable that this would reduce costs to the consumer owners for their utilities for a multiple of reasons. This is something that has been done widely across the U.S. for some time.
HB1011 – Repeal of Income Taxes for Those Making Under $22,000 – SUPPORT
By: Rep. Joe Jett (R – Success)
This bill would exempt from income tax any income of person’s making less than $22,000. It is unclear the fiscal impact at this time, but it should be noted that this bracket of people usually pays the least in taxes and qualify for the most welfare programs. However, on net, it should reduce the amount of money flowing to the government through taxation and leave that back into people’s pockets and in the economy, which is a net positive.
HB1063 – Expansion of Telemedicine to Phone Calls – SUPPORT
By: Rep. Aaron Pilkington (R – Clarksville)
This bill would expand telemedicine services to include an initial consultation and treatment via telephone. Currently this is prohibited under the telemedicine act. This would allow those without the ability to do a video call to be able to access telemedicine services be phone calls. Doctors could provide medically needed prescriptions but not a non-controlled drug. This provides more choice, more competition, more convenience, and the potential for lower costs for consumers.
HB1064 – Price Transparency for Medical Services – SUPPORT
By: Rep. Aaron Pilkington (R – Clarksville)
This bill would require medical providers to submit reimbursement rates (what they are paid) for providing medical services. This information would then be published on the insurance departments website for the public to see. There would be fines against medical providers for refusing to provide the information. This price transparency is great for consumers to know who charges what for common procedures and should allow more competition on prices among competing medical providers. Ideally this will help lower costs for consumers and reveal why medical costs are so high.
HB1066 – Beer Shipping Direct to Consumers – SUPPORT
By: Rep. Aaron Pilkington (R – Clarksville)
This bill creates a new permit that allows microbreweries to sell and ship beer directly to consumers, including those out of state. It would allow the sell and shipment of beer directly to people’s home who are of legal age. It sets parameters for the permit and limits the sale and shipment during regularly allowed hours already established for the sale of alcohol. (One Caveat: To our knowledge, this will not increase the use of alcohol in our state.) But this should give microbreweries more economic freedom in sell their product both in state and out and provide customers more choices as to how they receive products.
HB1068 – Expanded Telemedicine Use – SUPPORT
By: Rep. Aaron Pilkington (R – Clarksville)
This bill would expand where telemedicine can begin by allowing a person’s home to be an originating site to receive telemedicine services. Currently, telemedicine access in Arkansas is limited due to restrictions on what begins a relationship between a patient and medical provider, including an originating site definition that does not currently include a person’s home. This would expand that and conceivably allow these professional relationships to begin with a telemedicine visit when done from a person’s home. The bill also allows group meetings via telemedicine including group therapy. This provides more access and less restrictions on people’s use of telemedicine in the state and thus increases their economic freedom and choice in the marketplace.
[i] https://clubforgrowthfoundation.org/wp-content/uploads/2020/05/2019-Arkansas-House-Scorecard-FINAL.pdf
In their first Arkansas scorecard, Club for Growth, a national organization with goals and philosophies similar to CFC, advised Arkansas legislators that it would be scoring a “Present” or “Not Voting” vote as an incorrect [i] vote starting in 2020. The 2019 Club for Growth State Legislative Scorecard found that legislators’ scores were very similar to those of the CFC 2019 scorecard.
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