January 29th Legislative Update:
The 93rd Arkansas General Assembly is entering the 4th 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 touching agriculture continues to grow. We are monitoring several bills, and we continue to represent our policy resolutions in regard to matters before the legislature.
The General Assembly continues its work with some new safety protocols to limit the spread of coronavirus. Attendance and public participation is somewhat limited. Masks are required for those attending and participating in public hearings, and social distancing protocols are established throughout the building.
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 10th.
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 is scheduled to consider HB1210 on Monday.
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."
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.
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.
HB1250 a bill by Representative Bentley to amend the Law Concerning Assessments In Certain Levee Or Drainage Improvement Districts.
HB1249 a bill by Representative Bentley to Create A Procedure For The Dissolution Or Abolition Of A Levee District.
HB1248 a bill by Representative Bentley to amend the Law Concerning Consolidation Of Certain Levee Districts And Boards.
Broadband
SB74 a bill by Senator Hill to amend The Telecommunications Regulatory Reform Act Of 2013; And To Declare An Emergency.
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.
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 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.