The Third Extraordinary Session of the 93rd General Assembly, which has been a hot-button issue since Governor Asa Hutchinson called for the session to discuss the state’s $1.6 billion dollar surplus, is finally taking place today. Gov. Hutchinson’s call is to consider lowering taxes in response to the surplus, and though many, state Democrats in particular, have made calls for the money to be put towards teacher raises, a lack of support among state Republicans meant that teacher raises will not be a part of the discussion. The two main goals, according to an announcement from Hutchinson, are to provide immediate tax relief for Arkansans and set aside $50 million for school safety grant programs.
“As inflation rises and the cost of living increases, Arkansans need more money in their pockets,” Hutchinson said. “With a record surplus in the last fiscal year, we have the ability to provide financial relief and ensure our children can be protected in their schools.”
The governor’s call includes the following items:
- Lower the top individual tax rate to 4.9% down from 5.3%, retroactive to January 1, 2022, saving taxpayers $295 million in 2022;
- Lower the corporate income tax rate to 5.3%, beginning January 1, 2023;
- Create a $150 nonrefundable low- and middle-income tax credit, saving taxpayers $156.3 million in 2022;
- Align Arkansas law with the federal depreciation schedule;
- and Transfer $50 million from the state surplus for the purpose of a school safety grant program, consistent with the recommendations of the Arkansas School Safety Commission.
These tax provisions are intended to provide financial relief to Arkansans at all income levels, while the alignment of Arkansas law with the federal depreciation schedule will provide relief to business owners by simplifying the calculation process and accelerating the depreciation of their assets.
The $50 million for a school safety grant program follows an interim report from the Arkansas School Safety Commission on Aug. 2, and will provide funding for school districts to increase their security measures on-campus.