Stricken language would be deleted from and underlined language would be added to present law.
Act 2 of the Second Extraordinary Session
1 State of Arkansas Call Item 1
2 93rd General Assembly A Bill
3 Second Extraordinary Session, 2021 SENATE BILL 1
4
5 By: Senators J. Dismang, B. Sample, B. Ballinger, Beckham, Bledsoe, Caldwell, A. Clark, B. Davis, J.
6 English, Flippo, Gilmore, K. Hammer, J. Hendren, Hester, Hickey, Hill, Irvin, B. Johnson, M. Johnson,
7 M. Pitsch, Rapert, Rice, G. Stubblefield, J. Sturch, D. Sullivan, D. Wallace
8 By: Representatives Maddox, Shepherd, Jett, Jean, Fortner, Ray, Barker, Beaty Jr., Beck, Bentley, M.
9 Berry, S. Berry, Boyd, Bragg, Breaux, Brooks, Brown, Bryant, Carr, Cavenaugh, Cloud, Coleman, C.
10 Cooper, Cozart, Crawford, Dalby, M. Davis, Deffenbaugh, Dotson, Eaves, Eubanks, Evans, C. Fite, L.
11 Fite, Gazaway, Gonzales, M. Gray, Haak, Hawks, Hillman, Holcomb, Hollowell, L. Johnson, Ladyman,
12 Lowery, Lynch, J. Mayberry, McClure, McCollum, McGrew, McNair, S. Meeks, Miller, Milligan,
13 Payton, Perry, Pilkington, Richmond, Slape, S. Smith, Speaks, Tollett, Tosh, Underwood, Vaught,
14 Wardlaw, Warren, Watson, Wing, Wooten
15
16 For An Act To Be Entitled
17 AN ACT TO PROVIDE FOR INCOME TAX REDUCTIONS THAT
18 PRESERVE THE STATES ABILITY TO BUILD AND MAINTAIN
19 RESERVE FUNDS AND ENSURE FINANCIAL SECURITY; TO AMEND
20 THE INCOME TAX BRACKETS AND RATES FOR INDIVIDUALS; TO
21 AMEND THE INCOME TAX RATES FOR CORPORATIONS IF
22 CERTAIN CONDITIONS RELATED TO THE STATES RESERVE
23 FUNDS ARE MET; TO CHANGE THE NAME OF THE LONG TERM
24 RESERVE FUND AND ENSURE IT IS ADEQUATELY FUNDED; TO
25 CREATE AN INCOME TAX CREDIT FOR CERTAIN TAXPAYERS; TO
26 INDEX THE STANDARD DEDUCTION TO THE CONSUMER PRICE
27 INDEX; TO DECLARE AN EMERGENCY; AND FOR OTHER
28 PURPOSES.
29
30
31 Subtitle
32 TO AMEND THE STATE INCOME TAX; TO CHANGE
33 THE NAME AND FUNDING OF THE LONG TERM
34 RESERVE FUND; AND TO DECLARE AN
35 EMERGENCY.
36
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1
2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
3
4 SECTION 1. Arkansas Code 19-5-406 is amended to read as follows:
5 19-5-406. Transfer of remaining revenues.
6 (a) After making the maximum annual allocation as provided for in
7 19-5-402:,
8 (1) The the first two hundred million dollars ($200,000,000)
9 shall be distributed as follows:
10 (A)(1) Seventy-five percent (75%) of the remaining general
11 revenues available for distribution during each fiscal year shall be
12 transferred on the last day of business in each calendar month to the General
13 Revenue Allotment Reserve Fund, there to be used for the respective purposes
14 as provided by law as stated under subsection (b) of this section; and
15 (B)(2) Twenty-five percent (25%) of the remaining general
16 revenues available for distribution during each fiscal year, but not to
17 exceed fifty million dollars ($50,000,000) each fiscal year, shall be
18 transferred on the last day of business in each calendar month to the State
19 Highway and Transportation Department Fund; and.
20 (b)(1) The Chief Fiscal Officer of the State shall determine whether
21 the balance of the Catastrophic Reserve Fund is twenty percent (20%) of the
22 total amount of general revenue funds last distributed under 19-5-402.
23 (2) If the Chief Fiscal Officer of the State determines that the
24 balance of the Catastrophic Reserve Fund is less than twenty percent (20%) of
25 the total amount of general revenue funds last distributed under 19-5-402,
26 then after the distributions under subsection (a) of this section, any
27 additional revenue, including the distributions under subdivision (a)(1) of
28 this section and any additional revenues in excess of those distributed under
29 subsection (a), shall be transferred to the Catastrophic Reserve Fund to
30 ensure that the Catastrophic Reserve Fund balance equals but does not exceed
31 twenty percent (20%) of the total amount of general revenue funds last
32 distributed under 19-5-402.
33 (3) If it is determined that the balance of the Catastrophic
34 Reserve Fund exceeds twenty percent (20%) of the total amount of general
35 revenue funds last distributed under 19-5-402, the amount in excess shall
36 remain in the Catastrophic Reserve Fund unless the General Assembly directs
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1 otherwise.
2 (2)(c) Any additional revenues available after the distributions in
3 subdivision (1) subsection (b) of this section shall be transferred on the
4 last day of business in each calendar month to the General Revenue Allotment
5 Reserve Fund, there to be used for the respective purposes as provided by
6 law.
7
8 SECTION 2. Arkansas Code 19-5-905(a)(12), concerning the uses of
9 funds in the Securities Reserve Fund, is amended to read as follows:
10 (12) After all distributions and transfers under this section,
11 less one hundred thousand dollars ($100,000) under 19-3-521(a)(2), for a
12 transfer by the Chief Fiscal Officer of the State on the last business day of
13 the fiscal year of the fund balance to the Long Term Catastrophic Reserve
14 Fund.
15
16 SECTION 3. Arkansas Code 19-6-486 is amended to read as follows:
17 19-6-486. Long Term Catastrophic Reserve Fund.
18 (a) There is created on the books of the Treasurer of State, the
19 Auditor of State, and the Chief Fiscal Officer of the State a special revenue
20 fund to be known as the Long Term Catastrophic Reserve Fund.
21 (b) The Long Term Catastrophic Reserve Fund shall consist of such
22 funds as may be provided by the General Assembly.
23 (c) The Long Term Catastrophic Reserve Fund shall be used to
24 distribute moneys to one (1) or more funds or fund accounts in the Revenue
25 Stabilization Law, 19-5-101 et seq.
26 (d)(1) After determining the estimated amount of general revenue that
27 will be available for allocation to the state agencies under the Revenue
28 Stabilization Law, 19-5-101 et seq., and after making the determination
29 required by 19-5-1227(c) and prior to making any transfers deemed necessary
30 by the Chief Fiscal Officer of the State in 19-5-1227(d), the Chief Fiscal
31 Officer of the State may transfer funds from the Long Term Catastrophic
32 Reserve Fund in the event a revenue shortfall exists to meet the state's
33 financial obligation to provide an adequate educational system for the state
34 and to provide for the effective operation of state government. In the event
35 the Chief Fiscal Officer of the State determines that a revenue shortfall
36 exists as defined as a circumstance when the official forecast of gross
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1 general revenue certified by the Chief Fiscal Officer of the State is
2 projected to increase less than three percent (3%) over and above the gross
3 general revenue collections of the previous fiscal year due to changes in
4 economic conditions, he or she the Chief Fiscal Officer of the State may then
5 transfer funds from the Long Term Catastrophic Reserve Fund, as approved by a
6 vote of at least two-thirds () of the members of the Legislative Council or
7 at least two-thirds () of the members of the Joint Budget Committee, to
8 various funds and fund accounts, as deemed necessary, in the Revenue
9 Stabilization Law, 19-5-101 et seq., for the purpose of meeting
10 unanticipated shortfalls in state general revenue.
11 (2) Or the Chief Fiscal Officer of the State may transfer funds
12 from the Long Term Catastrophic Reserve Fund to the Economic Development
13 Superprojects Project Fund for projects authorized under Arkansas
14 Constitution, Amendment 82, as approved by the Governor and at least two-
15 thirds () of the members of the Legislative Council or at least two-thirds
16 () of the members of the Joint Budget Committee.
17 (e)(1) Upon recommendation by the Chief Fiscal Officer of the State,
18 the Governor may determine that circumstances exist that meet the
19 requirements for the utilization of the Long Term Catastrophic Reserve Fund
20 as set out in this section, and the procedures set out herein under this
21 section shall apply.
22 (2) When the Governor determines there is a need requiring
23 transfer from the Long Term Catastrophic Reserve Fund, he or she shall
24 instruct the Chief Fiscal Officer of the State to prepare and submit written
25 documentation to the Legislative Council or the Joint Budget Committee. Such
26 documentation shall include:
27 (A) Sufficient financial data that will enable the
28 verification of the existence of an emergency and the amount necessary to
29 address the need for long term reserve funds from the Catastrophic Reserve
30 Fund;
31 (B) A proposed distribution of moneys from the Long Term
32 Catastrophic Reserve Fund to one (1) or more funds or fund accounts in the
33 Revenue Stabilization Law, 19-5-101 et seq., or to the Economic Development
34 Superprojects Project Fund, or both; and
35 (C) A statement certifying that no other funds are
36 available that could be transferred in lieu of the funds in the Long Term
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1 Catastrophic Reserve Fund.
2 (3) Such documentation Documentation under subdivision (e)(2) of
3 this section shall be submitted to the Legislative Council or Joint Budget
4 Committee for approval prior to before the implementation of the proposed
5 distribution.
6 (4)(A) The Chief Fiscal Officer of the State, after having
7 sought and received prior approval of at least two-thirds () of the members
8 of the Legislative Council or at least two-thirds () of the members of the
9 Joint Budget Committee, shall cause the required transfers to be made on his
10 or her books and on the books of the Treasurer of State and the Auditor of
11 State from the Long Term Catastrophic Reserve Fund to the appropriate funds
12 and fund accounts in the Revenue Stabilization Law, 19-5-101 et seq., or to
13 the Economic Development Superprojects Project Fund, or both.
14 (B) In no event shall the amounts transferred in any
15 fiscal year to the funds and fund accounts in the Revenue Stabilization Law,
16 19-5-101 et seq., by this section cause the general revenues to exceed the
17 maximum allocations authorized in the Revenue Stabilization Law, 19-5-101
18 et seq.
19 (f) Determining the maximum amount of appropriation and general
20 revenue funding for a state agency each fiscal year is the prerogative of the
21 General Assembly. This is usually accomplished by delineating such maximums
22 in the appropriation acts for a state agency and the general revenue
23 allocations authorized for each fund and fund account by amendment to the
24 Revenue Stabilization Law, 19-5-101 et seq. Further, the General Assembly
25 has determined that creating the Long Term Catastrophic Reserve Fund and
26 establishing the procedures for the transfer of funds to various funds and
27 fund accounts in the Revenue Stabilization Law, 19-5-101 et seq., or to the
28 Economic Development Superprojects Project Fund, or both, provides for the
29 efficient and effective operation of state government if a revenue shortfall
30 is determined to exist. Therefore, it is both necessary and appropriate that
31 the General Assembly maintain oversight by requiring prior approval of the
32 Legislative Council or Joint Budget Committee as provided by this section.
33 The requirement of approval by the Legislative Council or Joint Budget
34 Committee is not a severable part of this section. If the requirement of
35 approval by the Legislative Council or Joint Budget Committee is ruled
36 unconstitutional by a court of competent jurisdiction, this entire section is
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1 void.
2 (g) During each fiscal year, after the provisions of 19-5-1004(b)(2)
3 are complied with, the Chief Fiscal Officer of the State shall replenish the
4 Long Term Reserve Fund by transferring no more than fifty percent (50%) of
5 the balance in the General Revenue Allotment Reserve Fund or an amount equal
6 to all transfers made under this section during the fiscal year immediately
7 preceding the fiscal year in which such replenishment is made under this
8 section, whichever is less, to the Long Term Reserve Fund.
9
10 SECTION 4. Arkansas Code 26-26-310(b)(2)(D)(iii)(b), concerning the
11 certification of the amount of property tax reduction, is amended to read as
12 follows:
13 (b) Except as provided in subdivision
14 (b)(2)(D)(iii)(a) of this section, the revenues credited to the Property Tax
15 Relief Trust Fund in excess of the amount determined under subdivision
16 (b)(2)(D)(ii) of this section shall be transferred from the Property Tax
17 Relief Trust Fund to the Long Term Catastrophic Reserve Fund.
18
19 SECTION 5. Arkansas Code 26-51-201(a), concerning the rate of tax
20 levied on the income of individuals, trusts, and estates, is amended to read
21 as follows:
22 (a) For tax years beginning on and after January 1, 2014, a A tax is
23 imposed upon, and with respect to, the entire income of every resident,
24 individual, trust, or estate. The tax shall be levied, collected, and paid
25 annually upon the entire net income as defined and computed in this chapter
26 at the following rates, giving effect to the tax credits provided hereafter,
27 in the manner set forth:
28 (1) On the first four thousand two hundred ninety-nine dollars
29 ($4,299) of net income or any part thereof, nine-tenths percent (0.9%);
30 (2) On the next four thousand one hundred dollars ($4,100) of
31 net income or any part thereof, two and five-tenths percent (2.5%);
32 (3) On the next four thousand two hundred dollars ($4,200) of
33 net income or any part thereof, three and five-tenths percent (3.5%);
34 (4) On the next eight thousand four hundred dollars ($8,400) of
35 net income or any part thereof, four and five-tenths percent (4.5%);
36 (5) On the next fourteen thousand one hundred dollars ($14,100)
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1 of net income or any part thereof, six percent (6%);
2 (6) On net income of thirty-five thousand one hundred dollars
3 ($35,100) and above, seven percent (7%);
4 (7) Every resident, individual, trust, or estate having net
5 income greater than or equal to twenty-two thousand two hundred dollars
6 ($22,200), but less than or equal to seventy-nine thousand three hundred
7 dollars ($79,300), shall determine the amount of income tax due under this
8 subsection in accordance with the table set forth below:
9 From Less Than or Equal To Rate
10
11 $0 $4,499 0.75%
12 $4,500 $8,899 2.5%
13 $8,900 $13,399 3.5%
14 $13,400 $22,199 4.5%
15 $22,200 $37,199 5%
16 $37,200 $79,300 5.9%
17
18 (8) Every resident, individual, trust, or estate having net
19 income of less than twenty-two thousand two hundred dollars ($22,200) shall
20 determine the amount of income tax due under this subsection in accordance
21 with the table set forth below:
22 From Less Than or Equal To Rate
23
24 $0 $4,499 0%
25 $4,500 $8,899 2%
26 $8,900 $13,399 3%
27 $13,400 $22,199 3.4%
28
29 (9)(A) For the tax year beginning January 1, 2020, every
30 resident, individual, trust, or estate having net income of more than
31 seventy-nine thousand three hundred dollar