Tax-consultant job draws 5 bids

State legislative task force to hear presentations from 4

The Legislature’s tax-overhaul task force will consider pitches next week from four companies seeking to be its tax consultant, the task force decided Thursday afternoon.

Also, in a separate tax-related legislative committee meeting in the morning, Sen. Jimmy Hickey, R-Texarkana, sharply criticized an assistant professor of economics for calling on lawmakers to consider repealing Texarkana’s state income-tax exemption. That committee is considering eliminating tax exemptions as part of a tax overhaul.

Five companies submitted bids to the Bureau of Legislative Research to be the tax consultant to the tax-overhaul task force. It was the bureau’s second request for proposals. In July, the task force decided to re-advertise for bids after expressing disappointment about getting only two bids.

The task force decided Thursday that a proposal submitted by Postlethwaite & Netterville of Baton Rouge wasn’t responsive to the latest request for proposals. The task force decided to have the four other bidders make presentations next Thursday.

The four companies are: BKD LLP of Little Rock, PFM Group Consulting LLC of Philadelphia, Quarles & Brady LLP of Washington, D.C., and WC Mitchell & Associates of North Little Rock. The maximum bid submitted by BKD is $550,000, while PFM Group Consulting’s maximum is $312,750, Quarles & Brady’s $210,000, and WC Mitchell & Associates’ is $217,550, according to the bureau.

The 16-member Tax Reform and Relief Task Force was created under Acts 78 and 79 during this year’s regular session. In that same session, the Legislature approved Republican Gov. Asa Hutchinson’s plan to cut individual income taxes for Arkansans with less than $21,000 a year in taxable income. This plan is projected to reduce state general revenue by about $25 million when it takes effect in mid-fiscal 2019 and then by $50 million each year thereafter.

An earlier income tax cut, approved in 2015, reduces the rates for taxable income between $21,000 and $75,000 a year. That tax cut was expected to reduce general revenue by $100 million a year, starting in fiscal 2017, which ended June 30.

The task force was created in part because some lawmakers favor further income tax cuts, particularly for Arkansans with more than $75,000 in taxable income. Hutchinson has said he wants to continue cutting individual income tax rates.

In the Thursday morning meeting of the Joint Committee on Economic and Tax Policy, Hickey targeted Jeremy Horpedahl, an assistant professor for economics at the University of Central Arkansas, for co-writing an opinion article published July 22 in this newspaper in which he wrote that Texarkana’s income-tax exemption “should be at the top of the list” when legislators are considering eliminating exemptions.

The other co-author was Nicole Kaeding, an economist for the Tax Foundation.

“It doesn’t matter, but that was extremely insulting to me and I promise you that that was insulting to constituents in our area,” Hickey told Horpedahl on Thursday.

Under a law enacted in 1977, residents of Texarkana, Arkansas, voted to exempt themselves from Arkansas’ income taxes and pay a 1 percent higher sales tax rate than other Arkansans. Their neighboring state, Texas, doesn’t have an income tax. Texarkana’s income tax exemptions reduce state tax collections by about $21 million a year, and Texarkana’s higher sales tax rate raises about $4.5 million a year, according to Joel DiPippa, legal counsel the state Department of Finance Administration.

Hickey said Horpedahl’s opinion piece “was extremely one-sided. … I look at this thing that I don’t want to be offensive to anybody in this state. I don’t care if it’s West Memphis. I don’t care if it’s Texarkana. I don’t care if it’s Malvern. I don’t care if it’s Conway. I feel like that I need to look at the entire picture right there, so I am not trying to tear one city apart.”

Hickey asked whether Horpedahl was approached by any lawmakers or any officials in the state Capitol about the Texarkana income tax exemption before co-writing the opinion. Horpedahl said he wasn’t. Horpedahl said that Arkansas’ tax burden is too high and that’s why Texarkana feels it needs its exemption.

“Our main point in that article actually was to say that we need to get the tax rates lower in Arkansas overall and the first place to start looking is for places with specific exemptions,” he said. “If you start taking things off the table before the conversation ever starts, you’re never going to get anywhere and the tax burden for all Arkansans is never going to get down.”