Senate OKs more time for farmers’ tax credits

The Senate on Wednesday approved a bill that would extend the carry-forward period for income-tax credits allowed for water impoundment in reservoirs.

Senate Bill 729 by Sen. Eddie Cheatham, D-Crossett, would change the Water Resource and Conservation and Development Incentives Act, which gives a tax credit to farmers who install or restore reservoirs. The credit can be as much as $90,000, but farmers can take only as much as $9,000 in any taxable year. The carry-forward period, now nine-consecutive taxable years, would increase to 15 years under the bill.

The change is projected to reduce general revenue by $400,000 in fiscal 2017, then rise to $800,000 in fiscal 2021 and each fiscal year thereafter, according to the state Department of Finance and Administration.

The bill was discussed earlier in the day in the Senate Revenue and Taxation Committee.

Paul Gehring, assistant revenue commissioner of policy and legal, said there are $2.4 million in expired income-tax credits for water impoundment from fiscal 2016 that would be available in fiscal 2017 under the bill.

He said the department projects one-sixth of these credits would be used in fiscal 2017.

But Ben Noble, a lobbyist for the Arkansas Rice Federation, said that because farmers’ incomes are down, they are not going to be able to use the income tax credits. He asked for more time for the farmers.

The committee chairman, Sen. Jake Files, R-Fort Smith, said he wants the finance department to revisit the bill’s projected general revenue impact.