February 5th Legislative Update:
The 93rd Arkansas General Assembly is entering the 5th week of its legislative session next week. While the session is still young, new bills are being filed each day, and the number of legislative items impacting agriculture continues to grow. We are monitoring several bills, and we continue to represent our policy resolutions in regard to matters before the legislature.
Below is a brief summary of legislative matters we are following. This summary will be updated throughout the legislative session, which is expected to carry on through at least April 9th.
Plant Board
So far, two bills in the legislature propose to reform the nomination and appointment process for the Arkansas State Plant Board. SB80, introduced by Senator Dave Wallace, proposes to remove various industry organizations from the nomination and appointment process for seats at the Plant Board while granting the Governor full authority to make appointments for all seats provided the individuals selected are actively and principally engaged in the business represented by the seat. Another bill, HB1210, introduced by Representative David Hillman, proposes to allow the industry associations and organizations to maintain their respective seats on the plant board while changing the process for nomination and appointment in a manner that would increase the role of the Governor in making appointments. The Hillman bill proposes a new nomination and appointment process that would be similar to the processes for agricultural research and promotion boards in that the organizations would maintain their seats on the board, but they would have to submit two nominees to serve while giving the Governor the power to appoint based on nominees submitted.
Current law states that 9 of the 16 voting members of the Plant Board are to "elected" by their respective associations with no direct role of the Governor in the appointment process.
The Senate Agriculture, Forestry, and Economic Development Committee considered SB80 on Tuesday, January 26th. The bill failed to receive the votes needed to get out of committee. The House Agriculture, Forestry and Economic Development Committee passed HB1210 out of committee on Monday, February 1st. The full House passed HB1210 on February 2nd with a vote of 97-0. The bill now goes to the Senate Agriculture Committee for consideration.
HB1210 is consistent with the policy resolutions of the Ag Council, which states that "we support changing the nomination and appointment process for Plant Board seats so they are all consistent with the processes related to research and promotion boards where the industry organizations would recommend nominees to serve and the governor would appoint."
The Arkansas State Supreme Court is currently considering litigation that directly correlates to the Plant Board's composition as it relates to the nomination and appointment process. Oral arguments are expected to be heard in the coming weeks. It's not clear on when a decision would be reached by the court.
Tax Policy
The Arkansas General Assembly is expected to consider a broad range of legislation related to tax law, with many expected to impact agriculture. We will continue to monitor bills under consideration and advocate for tax policy consistent with our policy resolutions. It's expected that both the House and Senate Revenue and Tax Committees will take considerable time examining various legislative proposals related to tax policy. Tax policies with budget impacts will likely be held until the legislature has more clearly determined its budget and how much room there is for tax changes that may impact revenues.
So far, we are monitoring a handful of bills, and we expect additional measures to be introduced in the near future. A few items we are following are listed below:
HB1314 a bill by Representative Hillman to enhance the Water Resource Conservation and Development Act. This bill proposes to expand on tax credits available for landowners looking to make land improvements and investments in eligible irrigation systems to reduce groundwater consumption. This bill is consistent with Ag Council policy resolutions, which state "the Ag Council of Arkansas agrees that the legislature should enhance incentives for landowners to make land improvements and adopt certain conservation practices that concern water. We believe the Water Resources Development and Conservation Act (ACA §26-51-1001 et seq.) needs to be enhanced by a) increasing allowable tax credits; b) extending the time in which the credits can be claimed; c) expanding the program to include new technologies that can contribute to water savings; d) extending the timeframe for filing the certificate of completion for projects; and e) making tax credits transferable."
HB1361 a bill by Representative Eaves to exclude from income for state income tax purposes income derived from certain federal disaster aid programs beginning in tax year 2019, including paycheck protection program and other COVID related emergency aid such as the Coronavirus Food Assistance Program (CFAP). Market Facilitation Program (MFP) payments in tax year 2020 are already exempt from state taxes under Arkansas law 26-51-316. This bill is consistent with Ag Council policy resolutions.
SB253 a bill by Senator Beckham to amend the sales tax treatment for certain utilities used by certain qualifying agriculture structures. The bill expands eligible utility uses in agriculture. This bill is consistent with Ag Council policy resolutions.
HB1209 a bill by Representative Jett to Create The Elective Pass-through Entity Tax Act; To Impose A Tax On Pass-through Entities; And To Exclude Certain Income From Gross Income For Pass-through Entities.
Analysis from Arkansas State Chamber of Commerce: This bill will help about 40,000 Arkansas businesses reduce their federal taxes by an estimated $50 million or more while generating $4 million in state revenue. The businesses impacted are those set up as passthrough entities—the owners pay tax at the individual level on their business income. Most businesses are set up this way. Under federal law, businesses can deduct state and local taxes (“SALT”) they have paid without a cap, but the individual SALT deduction is limited to $10,000 for individuals—this is the “SALT cap.” HB 1209 would let passthrough businesses choose (elect) to instead pay Arkansas tax at the entity level, as a flat tax at the top rate of 5.9%, such that the Arkansas tax should be 100% deductible for federal purposes. The IRS recently blessed the validity of this approach in Notice 2020-75. Several states have already adopted such options, including Oklahoma and Louisiana, and more are expected to adopt them in the coming year. This bill awaits consideration in the House Revenue and Taxation Committee. This bill is consistent with Ag Council policy resolutions.
Flood Control
HB1251 a bill by Representative Bentley to amend the Law Concerning Improvement District And Protection District Reporting Requirements For Collection Of Assessments By County Collectors. This bill was approved by the House Agriculture Committee on February 3nd and the full House on February 4th with a vote of 94-3.
HB1250 a bill by Representative Bentley to amend the Law Concerning Assessments In Certain Levee Or Drainage Improvement Districts. This bill was approved by the House Agriculture Committee on February 3nd and the full House on February 4th with a vote of 75-15.
HB1249 a bill by Representative Bentley to Create A Procedure For The Dissolution Or Abolition Of A Levee District. This bill was approved by the House Agriculture Committee on February 3nd and the full House on February 4th with a vote of 75-15. This bill was approved by the House Agriculture Committee on February 3nd and the full House on February 4th with a vote of 96-0.
HB1248 a bill by Representative Bentley to amend the Law Concerning Consolidation Of Certain Levee Districts And Boards. This bill was approved by the House Agriculture Committee on February 3nd and the full House on February 4th with a vote of 95-0.
Broadband
SB74 (Now Act 67) a bill by Senator Hill to amend The Telecommunications Regulatory Reform Act Of 2013; And To Declare An Emergency. This bill proposes to expand on government entities abilities to invest in and develop broadband communications systems. This bill has passed the Senate and House, and it has been delivered to Governor Hutchinson for his signature. This bill is consistent with Ag Council policy supporting expansion of broadband services in Arkansas.
Other:
Sale of State Lands
SB241 A bill by Senator Caldwell to Amend The Law Concerning The Sale Of State Land; To Establish A Process To Sell State Land; And To Declare An Emergency.
State Meat Inspection Program
HB1315 A bill by Representative Vaught to create a State Meat Inspection Program; To Amend The Arkansas Meat And Meat Products Inspection Act; To Transfer Authority Over Meat Inspection To The Department Of Agriculture; And To Declare An Emergency. This bill is consistent with Ag Council policy, which supports establishing a meat inspection program to expand on feed markets in Arkansas. This bill was approved by the House Agriculture Committee on February 3nd and the full House on February 4th with a vote of 95-0.
Energy & Public Service Commission
SB23 A bill by Senator Johnson to establish the Electric Cooperative Corporation Self-regulation Act. This bill proposes to exempt electric cooperative utility providers from being subject to Public Service Commission (PSC) regulations.
HB1055 A bill by Representative Fite (same as SB23).
Arkansas Economic Development Commission & Trade Policy
SB252 A bill by Senator Garner to prohibit the Arkansas Economic Development Commission (AEDC) from establishing or maintaining an office in China. This bill was voted down in the State Agencies Committee on February 4th. This bill is not consistent with Ag Council policy as it aims to diminish government resources supporting the trade of agricultural commodities to one of the largest export markets for Arkansas grown commodities.
Appropriation Acts
HB1084 An Act For The Arkansas Rice Research And Promotion Board Appropriation For The 2021-2022 Fiscal Year.
HB1075 (Act 13) An Act For The Arkansas Corn And Grain Sorghum Promotion Board Appropriation For The 2021-2022 Fiscal Year.
HB1074 (Act 12) An Act For The Arkansas Soybean Promotion Board Appropriation For The 2021-2022 Fiscal Year.
HB1073 (Act 11) An Act For The Arkansas Wheat Promotion Board Appropriation For The 2021-2022 Fiscal Year.
SB37 (Act 4) An Act For The Arkansas Catfish Promotion Board Appropriation For The 2021-2022 Fiscal Year.
SB221 An Act For The University Of Arkansas - Division Of Agriculture Appropriation For The 2021-2022 Fiscal Year.
HB1178 (Act 39) An Act For The Department Of Agriculture - Arkansas Natural Resources Commission Appropriation For The 2021-2022 Fiscal Year.
SB164 An Act For The Department Of Agriculture Appropriation For The 2021-2022 Fiscal Year.