Tax cuts evaluated by legislature

LITTLE ROCK -- The Arkansas legislature convened the 2017 regular session with tax cuts, Medicaid and medical marijuana are at the top of its agenda.

Also, legislators will consider a package of bills that would change the state's child welfare system and how neglected children are placed in foster care.

Two types of tax cuts have been proposed. The governor wants to lower individual income taxes for lower income families. Wage earners whose income is less than $4,300 a year would pay no state income taxes at all. They currently pay a rate of 0.9 percent.

Taxpayers with incomes between $4,300 and $8,399 would pay state income taxes of 2 percent, down from the current 2.4 percent. The next bracket would affect people earning less than $12,600 but more than $8,400. Their rate would go down from 3.4 percent to 3 percent.

People making between $12,600 and $21,000 a year would pay state income tax at a rate of 3.4 percent, down from the current 4.4 percent.

In all, the cut would save Arkansas taxpayers about $50.5 million a year when they take full effect. State tax officials estimate that the cuts would benefit 657,000 Arkansas taxpayers, about 44 percent of the 1.5 million people in the state who pay income taxes.

About 120,000 people would be completely exempt from paying income taxes because they earn less than $4,300 a year.

Middle class taxpayers would receive smaller reductions.

Several lawmakers had pushed for a broader income tax cut that would benefit all taxpayers, not just those in the lower brackets. They rallied behind the governor's plan when he proposed the creation of a tax force to work on a comprehensive overhaul of the state's income tax system in the future.

Another tax cut is being proposed for military veterans. It would exempt from all state income taxes their retirement income and save veterans who live in Arkansas about $13 million a year. Current law exempts the first $6,000 of veterans' retirement benefits.

Last November, Arkansas voters approved a constitutional amendment to legalize medical marijuana. Setting up a system of growing and dispensing it will take time.

The House Rules Committee endorsed House Bill 1026 to postpone by 60 days the series of deadlines in the amendment. The bill gives the Health Department and the newly created Medical Marijuana Commission more time to adopt regulations.

The legislature will write a budget for the largest state agency, the Human Services Department, which will include funding of the Medicaid program. Medicaid pays for medical services for low-income families, people with disabilities and people in long term care facilities.

Throughout the country, the growing costs of Medicaid have strained state budgets. Adopting a budget for Medicaid and DHS will have a ripple effect on the budgets of smaller agencies in state government.

The legislature will consider a package of bills affecting another division within the Human Services Department, the child welfare and foster care system. At least seven bills have been introduced and more are expected.

Also, lawmakers will consider proposals to create three detention centers that specialize in stabilizing inmates going through a mental health crisis. Along the same lines, legislators will consider proposals to enhance training of law officers to better equip them to handle people who get arrested while suffering from a mental health crisis.

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Editor's note: Arkansas Senator Cecile Bledsoe represents the third district. From Rogers, Sen. Bledsoe is chair of the Public Health, Welfare and Labor Committee.

Editorial on 01/18/2017