Gov. Mike Beebe has struck a deal with the House on tax-cut plans. The broad outline:

1) The three-cent reduction in the sales tax on food will pass the House.

2) There will be a tax cut for people at the lower end of the income scale. It will cost $16 million a year to guarantee a state income tax exemption for all workers at or below the poverty line. (I don’t have that figure at the moment.)

3) Manufacturers will get more of a reduction in the sales tax on energy use, but not the whole enchilada sought in a bill filed on the subject. Beebe had proposed a one-cent reduction in the six-cent rate, at a cost of $10 million a year. They’ll get 1.5 percent the first year of the budget cycle and 2 percent off the second year, for an additional cost of $15 million over two years.


I have a question that arose among other legislators this morning. Beebe has not yet firmly committed to a budget for education. Can taxes be cut safely now without a firm education figure in mind, in addition to some idea about how the Supreme Court’s special masters might view that figure? And, if the tax cuts imperil the education budget, what other state service might have to give a bit to satisfy that pressing issue? I’m promised a comeback on this questioin before long. UPDATE: Beebe’s folks insist the education budget is firm (though there’s some uncertainly about construction spending, which is anticipated to come from the surplus) and that money exists from a variety of sources, including some unspent Medicaid money to make up additional tax cuts announced in the agreement today.

The governor is about to convene a press conference on good news on the education front, a healthy increase in scores on Advanced Placement tests. That’s good news indeed, since the number of students taking the tests has grown sharply beyond a limited pool of mostly high achieving students.

The tax news, I presume, means the death of some not-so-hot ideas in the House, like a $75-per-dependent income tax deduction and an increase in tax exemption for retirees. That diesel tax giveaway ought to get a good hard look at the death sentence, too.

News release on AP scores on the jump.