Governor Hutchinson outlined his budget for next year today and of course it calls for more income tax cuts for the wealthy.
He softens it with $50 million in tax breaks for low-income Arkansans, relatively pennies for them.
But he’s proposing a five-year plan to reduce the brand-new 5.9 percent top bracket income tax rate to 4.9 percent. This is for new residents in Arkansas, but he also said he wants to produce this same cut for residents. No estimate given on that cost, but it’s likely $125 million or so over five years if all get the cut. He insists a cut for new residents would cost only $1.5 million the first year. If he doesn’t extend it to all taxpayers, there rises the question of the equal taxation provision of the Arkansas Constitution.
The state is piling up an enormous surplus thanks to a pandemic-restricted (overly restricted) budget and I never thought, even with a return of normalcy, that much of the money would be directed to schools, public safety, prisons and the many other needs of the struggling poor in Arkansas.
No, better to help the millionaires.
It’s essentially,if it comes to pass, a 17 percent cut in income taxes for all money made above $80,000 or so. For Waltons or similar, that is not chump change. It would save a millionaire $10,000 or more a year when fully implemented, but a couple of thousand a year every year as it progresses.
Michael Wickline of the Arkansas Democrat-Gazette has a preliminary report here. The governor is proposing about a 2 percent increase in spending to a $5.84 billion general revenue budget. The increased spending would mostly offset unfunded appropriations in the budget year ending June 30, primarily for schools, colleges and human services. Wickline wrote:
Hutchinson proposed spending $227 million of $240 million in surplus funds, including transferring $100 million to the state’s long-term reserve fund, $30 million to rural broadband, $28 million to the Department of Education for academic facilities, $25 million to offset the income tax reduction, and $25 million to the state’s rainy-day fund.
Hutchinson said the state’s long-term reserve fund has grown from nothing to $185 million with him as governor, and he will present a plan that will see that balance rise to at least $420 million by the end of fiscal 2023.
In other words most of the surplus will go for tax cuts or into reserves. Reserves and tax cuts for the rich are more important than people’s needs.
Here’s his full presentation: