Gov. Asa Hutchinson had an easy week at the end of his hardest year dealing with the Legislature.
The governor called lawmakers into special session last week and got exactly what he wanted, the largest tax cut in Arkansas history, and none of what he didn’t, which was anything else.
The centerpiece of the $500 million tax cut is a reduction in the top income tax bracket rate from the current 5.9 percent to 4.9 percent by 2025. Among the other provisions is a $60 tax credit that the governor said would eliminate state taxes paid by more than 100,000 low-income Arkansans.
The top rate will fall that low only if state government doesn’t have to withdraw money from the state’s catastrophic reserve fund, which is basically its savings account.
Regardless of what one thinks about the tax cuts, that last part was a prudent move. We don’t really know how much of our economy is real, and how much depends on the trillions of dollars borrowed by the federal government during the COVID-19 pandemic.
Legislators also approved $150 million in recycling tax credits over 10 years to attract a proposed $3 billion U.S. Steel project in Mississippi County, which already has one U.S. Steel facility. Arkansas is competing with other states to win this new one.
This was the fourth tax cut package the governor has signed into law since he was first elected. He signed a middle-class tax cut in 2015, a cut targeting lower-income earners in 2017, and one reducing the top rate from 6.9 percent to 5.9 percent in 2019.
Democrats generally opposed this year’s tax cuts, arguing that they mostly benefited higher-income Arkansans and that the money would be better used to address needs such as child care. But Democrats only compose about a fourth of the Legislature, so their proposals didn’t go far.
The governor was adamant that the special session focus only on those tax cuts, but several lawmakers sought to broaden the scope, which requires a two-thirds vote. Among the proposed bills was one by Sen. Jason Rapert, R-Conway, that would have brought a version of Texas’ anti-abortion law to Arkansas. That law allows any citizen to sue anyone who performs or abets a banned abortion and, if successful, receive a $10,000 cash award.
Lawmakers instead went with the governor and quickly adjourned. It’s been a long year, and they’ve spent a lot of time in Little Rock for what is supposed to be a part-time position. Special sessions traditionally have focused only on the governor’s call. Major legislation proposed by lawmakers typically comes during a regular session, which lasts a few months every two years, rather than during a rushed special session. And Christmas is approaching.
Hutchinson could do little wrong with the Legislature when he first was elected governor in 2014. His ascension marked the Republican Party’s takeover of Arkansas politics, and his fellow Republicans mostly followed his lead throughout his first term and the first half of his second.
The ground shifted during the first part of the COVID-19 pandemic, when he exercised extraordinary executive powers. Republican lawmakers, some of whom were skeptical of lockdowns and masks, began to rebel and assert themselves.
By this year’s legislative session, the governor was playing a lot more defense than previously. His veto of a bill that outlawed transgender medical procedures for young people was summarily overridden. Later in the year, he called legislators into special session asking them to give schools more leeway in having mask mandates. They completely rejected it. I’ve never seen a governor lose so badly in a special session that he called.
The governor has one year left in office, and in 11 months we’ll have a governor-elect. Hutchinson only has to work with the Legislature once more, during next year’s fiscal session. These are designed to focus on budgetary issues, but, as in a special session, legislators may expand their scope with a two-thirds vote.
In the past, they’ve been reluctant to do so for the same reasons they’ve not expanded special sessions, including this most recent one.
Certainly some will try. Hutchinson will hope they generally don’t succeed. In the year he has left, he’d prefer breaking ground on $3 billion steel plants.