Governor examines 2nd-term priorities
Another tax cut among key goals
Gov. Asa Hutchinson said Wednesday that he’s hoping for bipartisan support in the Legislature for his four major plans — another income tax cut, an increase in the minimum pay for teachers, a government reorganization and a highway plan.
Talking with reporters in the governor’s conference room at the Capitol, Hutchinson also discussed voter approval of casinos and changes in legislative seats.
A day after the general election, the Republican governor said GOP lawmakers holding a supermajority in the House — at least three-fourths of the seats — and almost having a supermajority in the Senate could help him pass tax-cut legislation that requires 75 percent approval.
“In terms of the next rounds of tax cuts, there is a couple different ways you can present the legislation,” Hutchinson said.
“It could be with a simple majority [vote for a] tax cut or it could be with a tax cut
that requires a three-fourths vote and, certainly with the results of the election, it gives you a little bit more comfort that you will be able to pass major legislation, even if you need to have a three-fourths vote,” said Hutchinson, who on Tuesday easily won re-election to a second term.
The governor wants to phase in cutting the highest tax rate from 6.9 percent to 5.9 percent and reduce the number of tax tables from three to one.
Hutchinson’s plan would require 75 votes in the 100-member House and 27 votes in the 35-member Senate because it also would raise tax rates for some, according to state officials. They’ve said the increased rates would be offset by increases in standard deductions.
The overall plan is projected to trim revenue by nearly $192 million a year.
A plan developed by a legislative task force would reduce tax tables from three to one and cut the top rate from 6.9 percent to 6.5 percent. State officials project that this plan would reduce revenue by $276 million a year. It would require a majority vote of lawmakers.
CASINOS’ IMPACT
On another issue, Hutchinson said that “we will work hard to implement” a constitutional amendment approved Tuesday on casinos. He opposed the amendment, Issue 4, which authorizes the state Racing Commission to issue licenses for four fullfledged casinos.
“My first budget meeting today showed a $40-plus million dollar gap because that amendment passed [and] that reduced the tax rate, so we have to adjust for that down the road and so who knows what it will be like long term,” he said. “But in the short term, there is a cut in our revenue. There is a cut in the tax rate for the operators in Arkansas, but we are going to make it work.
“That doesn’t change my commitment and the ability to do tax cuts, but there is a revenue impact for that Issue 4 passing,” Hutchinson said.
In August, state Department of Finance and Administration officials projected the state would receive $36 million less a year in fiscal 2020 and 2021 and then $14 million less in fiscal 2022 under Issue 4.
They attributed the projected revenue drop to two factors: Oaklawn Racing and Gaming in Hot Springs and Southland Gaming and Racing in West Memphis being taxed at a lower rate; and the assumption that new casinos near Pine Bluff and Russellville wouldn’t open until fiscal 2022.
“We’ve always acknowledged that there may be a short-term decrease in general revenue during construction of the new facilities,” Nate Steel, counsel for the Driving Arkansas Forward committee that sponsored Issue 4, said Wednesday.
“However, DF&A’s $40-million figure assumes no growth in revenue at Oaklawn and Southland from fullscale casino gaming. It also assumes that no additional casinos will be operating in the next fiscal year,” Steel said in a written statement. “I anticipate that Oaklawn and Southland will see significant growth from casino gaming. And since the licensing process is required to be in place within 120 days, operators should be generating revenue by late next year. Either way, there is no question that the amendment will significantly increase general revenue in the long run.”
“As we have seen over the last few years, our business continues to grow, and with the expansion of [electronic games of skill] and casino gaming, we fully anticipate that will continue, resulting in Southland paying more to the state,” Glen White, a spokesman for Southland’s parent company, New Yorkbased Delaware North, said.
“The sooner the state regulations are completed, the sooner the new games will begin delivering additional revenue,” White said in a written statement.
Jennifer Hoyt, a spokesman for Oaklawn Jockey Club, said, “Since this was a question for voters, Oaklawn took no position prior to the election.”
“Now that voters have spoken, Oaklawn will move forward as legislation and regulation permits, and continue with preparations for the 2019 live racing season, which begins January 25,” Hoyt said in a written statement.
ELECTION RESULTS
Based on Tuesday’s election results, the state House of Representatives will have 76 Republicans and 24 Democrats and the Senate will have 26 Republicans and nine Democrats in the regular session that starts Jan. 14.
After the 2016 election, the House had 73 Republicans and 27 Democrats, but then three Democrats switched parties, boosting the GOP ranks to 76 and cutting the Democrats’ number to 24. The Senate had 26 Republicans and nine Democrats in the 2017 regular session.
Two Republican representatives lost Tuesday. Fayetteville Democrat Denise Garner ousted Rep. Charlie Collins, R-Fayetteville, and Springdale Democrat Megan Godfrey defeated Rep. Jeff Williams, R-Springdale.
Two Democratic House incumbents also lost Tuesday. Bald Knob Republican Craig Christiansen knocked off Rep. Michael John Gray of Augusta, who is the chairman of the state Democratic Party, by 98 votes. Cherokee Village Republican Marsh Davis beat Rep. Scott Baltz, D-Pocahontas.
Rep. Mark McElroy of Tillar, who went from Democrat to independent during the filing period, lost to Dermott Democrat Don Glover.
Hutchinson said both Collins and Williams “both had difficult districts and changing districts, and that caught them both.” He said Collins has been an extraordinary ally and a leader on state tax policy.
The governor said he endorsed the opponents of Democrats Gray and Baltz.
“I guess the biggest story line is the chairman of the Democratic Party met defeat last night in a legislative race, and that goes to show how difficult that position can be and mixing that with your own legislative race,” Hutchinson said. “I saw Michael John Gray at lunch. He always was a joy for me to work with, even though he was the leader of the other side, so I wish him well in every way, and those are just the tough local politics.”
Gray said he’s disappointed with the outcome, but “we knew there was a chance of losing” a race targeted by the state Republican Party.
He said he plans to schedule an election for state Democratic Party officers in January.
“Today, my intention is to run for re-election,” he said. “I think there is a lot to do moving forward, and I’m looking forward to being part of that.”
Doyle Webb said he plans to seek re-election to his sixth two-year term as state Republican Party chairman during the party’s State Committee meeting on Dec. 1 in Little Rock. Hutchinson supports Webb, said Hutchinson spokesman Jamie Barker.
As for the re-election of Rep. Mickey Gates, R-Hot Springs, who has pleaded innocent to charges of not filing or paying state income taxes, Hutchinson said, “Obviously, he is well-received in his district.
“The voters looked at this and said we are going to vote for Mickey Gates, and so the voters have spoken. And I presume he will be seated as a member of the General Assembly.”
At his news conference, Hutchinson said he believes that he won more votes for governor than any other gubernatorial candidate in the past 30 years.
Based on the unofficial results on the secretary of state’s website Wednesday, Hutchinson garnered 573,800 votes, collecting 65.48 percent of the votes cast in his race against two challengers. That was the highest total and percentage since gubernatorial candidates began running for four-year terms in 1986.
In 2010, Gov. Mike Beebe, a Democrat, received 503,336 votes and 64.42 percent of the vote, according to the secretary of state’s website.