General Assembly Concludes Legislative Work
On Wednesday, April 10th, the 92nd Arkansas General Assembly wrapped up its legislative session. The General Assembly will formally conclude the session in late April or early May when they return to adjourn sine die. The session, which began January 15th, covered a wide range of issues for the State of Arkansas and the agriculture industry.
The Governor’s top priorities, often referred to as the “Four Ts,” were all approved. These issues included 1) tax reform and tax cuts; 2) transportation funding; 3) teacher pay increases; and 4) transformation of state government. Significant legislation addressing each of these issues was approved during the session.
As a whole, the agriculture industry fared well during the legislative session by avoiding harmful legislation, largely benefiting from the Governor’s priority legislation, and by accomplishing some specific legislative goals of our own. Throughout the legislative session, the Agricultural Council of Arkansas worked closely with our allies and legislators to advance priorities of our organization.
Below is a summary of the legislation related to the “4Ts” and some of the bills we were following during the session:
Tax Reform & Relief
SB211 – Tax Competitiveness and Relief Act of 2019
Now Act 182
This new law was led by Senator Jonathan Dismang and Representative Joe Jett. It provides new income tax cuts for income earners by lowering the state’s top rate from 6.9 percent to 5.9 percent by 2021.
Generally speaking this new law is consistent with Ag Council policy as it lowers tax rates for our members and does not provide any tax increases on agriculture or farmers.
SB576 – Corporate Income Tax Reform
Now Act 822
This new law includes a package of corporate income tax reforms recommended by the Legislative Tax Reform Task Force. Many of these provisions were supported broadly by business interests, including the State Chamber of Commerce.
This new law is consistent with Ag Council policy as it lowers tax rates for for corporations from 6.5% to 6.2% in 2021 and 5.9% in 2022, and allows for businesses to carry forward net operating losses from 5 years to 8 years for losses occurring in the tax year starting January 2020 and to 10 years for losses in tax years beginning on or after January 2021. The revenue reductions under this new law was offset by requiring out-of-state-sellers to remit sales taxes for online purchases.
SB561 – Arkansas Tax Reform Act of 2019
Now Act 819
This new law provides for a variety of additional miscellaneous tax reforms recommended by the Legislative Task Force for Tax Reform. Included in this bill was a provision that would ensure greater compliance with current sales tax exemptions for purchases of ATVs for agricultural use. This provision will require reporting from dealerships citing all sales of ATVs and proof of those purchases exempt from state sales and use taxes.
More analysis on the tax law changes: http://www.doverdixonhorne.com/artaxandincentivesupdate/post/arkansas-adopts-major-tax-reforms-recommended-by-task-force
SB336 – Highway Funding (new revenues)
Now Act 416
This new law allows for new highway funding revenues by including a new wholesale fuel tax on unleaded and diesel fuel, new registration fees for electric and hybrid vehicles, and new collections from casino gaming, moved quickly through both the House and Senate. The Ag Council of Arkansas supported this measure and the ballot initiative to continue the 1/2 cent sales tax for highway funding.
HJR1018 – Highway Funding (Ballot Referral for continuation of 1/2 cent sales tax)
This resolution, which was approved by the General Assembly, allows for a ballot referendum to consider the continuation of a dedicated 1/2 cent sales tax, was also approved by the legislature. Voters will consider this ballot measure in November 2020. The Ag Council of Arkansas was supportive of both efforts to provide highway funding, which is critical for farm to market roads in Arkansas.
HB1763 – Government Transformation (Creation of 15 member cabinet)
Now Act 910
This new law was led by Representative Andy Davis and Senator Bart Hester consolidates government agencies into 15 principal departments. The bill was approved by the House with a vote of 82-0 and 33-1 in the Senate. The Governor signed it into law on April 11th.
Under this Act, the Agriculture Department will be a principal department in state government. The Agriculture Department will integrate its existing agencies (Plant Board, Livestock and Poultry Commission, Forestry Commission) into the department along with a new additional agency in the Natural Resources Commission (ANRC). This bill retains the make up structure and composition of boards and commissions, including the State Plant Board, and it preserves all special revenues for their intended purposes.
Generally speaking this bill is consistent with Ag Council policy. The Ag Council expressed general support for the transformation plan as it remains consistent with Ag Council policy.
Teacher Pay Increases
HB1145 – Teacher Salary Enhancement Act
Now Act 170
This new law led by Representative Bruce Cozart and Senator Jane English increases teacher salaries in Arkansas public schools. It increases minimum salaries for teachers from $31,400 to $36,000 beginning in 2019-2020 school year. The state set aside $60 million to ensure sufficient funds to allow for these minimum teacher salaries. The salary increases largely impact rural public schools. This new funding makes Arkansas teacher salaries more competitive with neighboring states.
Generally speaking the Ag Council supported this bill as it increases teacher pay in public schools throughout rural communities in Arkansas.
Other bills of interest to the Ag Council:
HB1512 – Plant Board Penalties
Now Act 423
This bill, led by Representative David Hillman, would allow the Plant Board to issue fines of $1,000 up to $25,000 for egregious violations related to dicamba and other auxin herbicides when applicator intentionally violate federal or state laws or regulations governing use. The bill was amended to include an emergency clause allowing the law to be in place for the entire growing season. This bill is consistent with Ag Council policy.
HB1854 – To Amend the Composition of the State Plant Board
Now Act 1056
This bill, led by Representative David Hillman, would amend the Plant Act as it relates to the composition of the Arkansas State Plant Board. The bill first proposed to clarify definitions related to non-voting seats from the University of Arkansas Division of Agriculture and the voting seat of Arkansas feed manufacturers, but it was amended in the Senate by Senator Ronald Caldwell to further amend the composition of the Plant Board by 1) making the shared seat of fertilizer industry and cotton oil mills a stand alone seat representing the Arkansas Plant Food Association; and 2) removing the Arkansas feed manufacturer seat and replacing it with a member of the Arkansas Oil Marketers Association to represent the Bureau of Standards.
The Ag Council supported the initial draft of this bill by Representative Hillman, but expressed reservation for adopting the amendment by Senator Caldwell. The changes recommended by Senator Caldwell were not representative of policy of the Ag Council, and the proposed changes were more substantive in nature than the initial bill offered by Representative Hillman. In addition, the Senate amendment was offered late in the session without consultation with the Ag Council prior to consideration. The Ag Council did offer alternative options to the Caldwell amendment that ultimately were not incorporated by the amendment sponsor.
HB1985 – Water Resource Conservation and Development Enhancement
Now Act 1073
This bill, led by Representatives Andy Davis and Joe Jett along with Senator Jonathan Dismang, will enhance the Water Resource Conservation and Development tax credit program by allowing credits issued to be transferred. The current program administered by the Arkansas Natural Resources Commission (ANRC) offers tax credits for landowners who invest in land improvements and water conservation systems that reduce groundwater utilization. This bill was a high priority for the Ag Council as we support significant enhancements to this tax credit program as recommended by the 2014 State Water Plan.
HB1855 – To Amend the Law Concerning Permits for the Transportation of Agronomic Crops
Now Act 859
This new law amends a recent law providing weight variance permits (up to 100,000lbs) for trucks carrying agronomic crops in their natural state to their first point of processing. The amendment provided for in this new Act will ensure that new trailer combinations carrying round cotton modules from fields to gins will be eligible to participate in the permit program operated by the Arkansas Department of Transportation. This bill was a high priority for the Ag Council of Arkansas. More information on the permit program here.
HB1846 – Arkansas Grain Grading Act
Now Act 795
This new law establishes a new regulatory structure at the Arkansas State Plant Board that would provide farmers with opportunities to challenge quality grades for grains sold at grain terminals when farmers disagree with quality grades offered by grain buyers at point of sale. This new program is designed to assist farmers concerned with inconsistent grading and discounts associated with commodities graded as damaged. It also authorizes inspections by the State Plant Board to examine adequacy in inspectors of grain at points of sale.
The Ag Council supported this measure to improve consistency in grain grading and provide another method for farmers to challenge grades and discounts offered by buyers at points of sale.
SB150 – Broadband Access & Development
Now Act 198
This new law led by Senator Breanne Davis expands the list of entities eligible to deploy broadband in Arkansas, which will allow for Arkansas to capitalize on USDA funds that the state was previously unable to access. The Ag Council supports legislation to expand broadband offerings in rural Arkansas.
SB459 – Feral Hog Eradication Expenses Appropriation
Now Act 732
This new law provides an appropriation for the Arkansas Natural Resources Commission to expend up to $3,000,000 from a Feral Hog Trust Fund for the purposes of reducing populations of feral hogs.
The Ag Council of Arkansas supports this initiative to combat and eradicate feral hogs, which have caused significant economic and environmental harm to farmlands and wildlife habitat throughout Arkansas.
SB460 – Feral Hog Eradication Act
Now Act 991
This measure proposes to establish a Feral Hog Trust Fund to support a state wide eradication program to be operated by the Arkansas Natural Resource Commission. Funding for the trust fund will be sourced from fines assessed to those violating laws related to the transportation of swine. The measure also authorizes aerial hunting of feral hogs with appropriate federal permits, and allows for the use of tracking devices to be utilized to trace feral hogs for purposes of eradication efforts.
The Ag Council of Arkansas supports this initiative to combat and eradicate feral hogs, which have caused significant economic and environmental harm to farmlands and wildlife habitat throughout Arkansas. This initiative was a key recommendation of the Feral Hog Eradication Task Force.
HB1270 – Industrial Hemp Fee for Research Program
Now Act 140
This new law provides authorization for the Arkansas State Plant Board to collect fees from participants in the industrial hemp research program for the purposes of administering the Arkansas industrial hemp research program.
HB1372 – Appropriation for Industrial Hemp Research Program
Now Act 162
This new law provides for an appropriation to the Arkansas State Plant Board to allow for the agency to spend up to $300,000 for the Industrial Hemp Research Program. Funding for this appropriation is to come from fees from participants in the program.
The Ag Council supports this research program and funding to administer this program through reasonable industry fees from participants as it offers potential for new economic opportunities for the agriculture industry.
SB453 – To Provide Funding for Waterways Commission and McClellan Kerr Navigation System
Now Act 561
This new law led by Senator Lance Eads establishes a trust fund at the Arkansas Waterways Commission to invest in the McClellan-Kerr Arkansas River Navigation System. Funding for this fund can come from a variety of sources, including penalties and fees, state funding and federal funding. The bill further requires certain ad valorem taxes for water transportation to go towards this fund for the navigation channel and grant accounts for ports, intermodal systems, and waterways development.
The Ag Council supports this measure as it will help deliver more funds for investment in critical agricultural transportation infrastructure, including the Arkansas River System and other transportation infrastructure utilized for the movement of grain and other agricultural commodities and products.
SB145 – Renewable Energy Development (Net Metering)
Now Act 464
This new law led by Senator Wallace aims to expand the entities eligible for net metering and allow for additional financing options for developers of solar arrays. The Ag Council supports policies that encourage farmers, agricultural businesses and rural communities to develop solar energy.
HB1407 – Truth in Food Labeling (Rice)
Now Act 501
This new law led by Representative David Hillman would establish new labeling laws and require the Arkansas Department of Agriculture to enforce food labeling standards relating to beef and rice. The bill was approved by the House and Senate. The Ag Council supported this measure to limit misleading and false labeling related to agricultural commodities.
SB563 Truth in Food Labeling (Rice)
Now Act 741
This new law led by Senator Bruce Maloch is a companion bill to HB1407 and would instruct the State Plant Board to establish new food labeling regulations and require the Arkansas Department of Agriculture to enforce food labeling standards relating to beef and rice. The Ag Council supported this measure to allow the Agriculture Department to establish rules to limit misleading and false labeling related to agricultural commodities.
SB450 – Farm Machinery Warranty Protection
Now Act 588
This new law led by Senator Blake Johnson proposes to enhance consumer protection related to farm machinery by providing warranty protections for those who purchase new farm equipment. This measure is generally consistent with Ag Council policy regarding protecting the consumer interests of farmers, and we expressed support for this bill.
SB408 – Real Estate Disclosure at Closing for Right to Farm
Now Act 515
This new law led by Senator Pitsch proposes to require at closing of a real estate transaction a notice to buyers that Arkansas is an agricultural state and a right to farm state in an effort to provide notice that new title holders are aware of the likelihood of farm operations being in the area of the property. This measure is consistent with Ag Council policy regarding preservation of farming rights in Arkansas, and we expressed support for this bill.
SB196 – Opportunity Zone Tax Incentive
Now Act 201
This new law led by Senator Ingram provides similar state tax treatment to investments into opportunity funds aimed at economic development investments in opportunity zones, many of which are located in the Arkansas Delta and other rural areas. Opportunity Funds and Opportunity Zones were created under the Tax Reform and Relief Act of 2017 by Congress, and allows for investments of capital gains and other funds to avoid capital gains taxes if invested in qualified opportunity funds and opportunity zones. This new law is consistent with Ag Council policy aimed at expanding incentives towards rural development investments, and we expressed support for this bill.
HB1876 & SB597 – Revenue Stabilization Act (RSA)
Now Act 1024
The Revenue Stabilization Act provides a schedule of funding for state priorities for the upcoming fiscal year beginning June 1. The budget bill for the state includes a potential one-time increase in funding of up to $3 million in additional funds for the University of Arkansas System’s Division of Agriculture. The Ag Council of Arkansas supports this funding increase and making it permanent.
SB162 – Appropriation Bill for the Arkansas Agriculture Department
Now Act 544
This measure establishes spending levels for the Arkansas Agriculture Department and related agencies, including the State Plant Board, Forestry Commission and Livestock and Poultry Commission. It provides a budget and spending authorities for employee salaries, equipment, operations and maintenance and other expenses. The Ag Council supported this measure as it provides funding for services important to the agriculture industry of Arkansas.
SB421 – Appropriation Bill for Capital Improvements for the Arkansas Agriculture Department
Now Act 730
This measure provides an appropriation for capital improvement investments for the Arkansas Agriculture Department for a variety of needs including a new office building(s), laboratories, other property and equipment. Ability to expend these funds is dependent on funds provided to the Department from the State or other funding sources.
The Ag Council supports this measure to ensure that the Agriculture Department is equipped to serve the needs of the agriculture industry into the future.
HB1650 – Workers Comp Third Party Liability Recovery
This bill led by Representative Ladyman sought to provide a way for workers compensation insurance providers like AgComp to recover payments to claimants in the event the injured was harmed by a faulty product or machine and was able to recover payment for medical, lost wages, and other payments covering losses related to injury. This bill was narrowly approved by the House Committee on Health, Welfare and Labor, and it failed on the House floor. This bill was consistent with our policy to support the Ag Comp program and ensure its financial well-being, and we’ve expressed support for this bill.
In addition to HB1650, there were several other bills we monitored throughout the session that did not become law.