Beebe says election victory shows support for grocery tax cut

Gov.-elect Mike Beebe on Thursday said his victory in November's election shows public support for cutting the state's grocery tax, and that he's not discouraged by reluctance from legislative leaders over his proposal.

"The people of Arkansas followed this race pretty good and they knew what they were doing," Beebe told members of the Arkansas Associated Press Managing Editors Association at a forum on the upcoming session.

"I don't think they were just going to the polls without paying attention," said Beebe, who campaigned on phasing out the six-cent tax on groceries. "I think we deserve to give our voters a lot of credit for knowing what's going on, and we shouldn't underestimate their interest in this issue."

Beebe offered few details of his proposal to phase out the tax, which he said he will unveil during a joint session of the House and Senate on Wednesday. Beebe said he has not yet drafted any bills for the tax cut, but said he's already had several legislators volunteer to become sponsors of the legislation.

Beebe addressed the group after incoming House Speaker Benny Petrus and incoming Senate President Jack Critcher expressed reluctance about eliminating the tax, which generates about $250 million annually.

"I'm concerned about eliminating $250 million or $280 million or whatever that figure may be from general revenues," said Critcher, D-Batesville. "I'm afraid we're going to get ourselves into a box. My preference would be to take a look at the wants and the needs, throw the wants into a river and fund the needs. See how much money we have left then and put the bulk of that into a rainy day fund."

Petrus said removing the sales tax on groceries wouldn't necessarily provide relief to middle- and low-income Arkansans who need it the most. Petrus has suggested that other methods, such as instituting an earned income tax credit for the state, may help more people.

"There's people who probably need more relief than just $99," Petrus said, referring to estimates of how much annual savings some Arkansans could see from such a cut. "You can look at the income tax brackets or the earned income tax credit. I just think we can target it more and do more to help the people we truly want to help."

Lawmakers return to the state Capitol Monday, with several tax cut proposals already circulating and fiscal officials predicting an $843 million surplus by the end of this fiscal year.

Critcher said one of his biggest concerns with the upcoming session is funding for the state's roads and highways, but said he doesn't believe the surplus should be used for those improvements.

Critcher said he would support removing an exemption that stops the state from collecting sales tax on fuel sales. Critcher said the additional sales tax could come on top of the per-gallon tax already collected by the state.

While offering the idea, Critcher said he did not plan on proposing legislation to eliminate the fuel sales tax exemption. However, he said he would support the idea if it was offered by another legislator.

"Absolutely, it's a tax increase," Critcher said.

Critcher later said, "Our roads have got to be addressed. It's an economic issue and it's going to require a lot of money."

Beebe said he believes enacting the grocery tax cut will be difficult without the support either Petrus or Critcher.

"That's why I continue to beg, plead, cajole, argue and try to enlist their support," Beebe said. "I view this as a partnership, but I also view the governor's office as requiring leadership."

Critcher and Beebe said they support the idea of a rainy day fund, or money set aside in case of a shortfall in state revenues. Petrus said he supports setting money aside, but said that could be done by frugal budgeting practices.

"It's hard for one Legislature to set aside money for another Legislature to use at a future date," Critcher said.

Beebe said the top call for use of the surplus would be for repairing school buildings around the state, and he said he expects the amount needed to rise well above the $250 million originally estimated for facilities.

Beebe said a portion of the surplus would also be needed for economic development and for higher education needs.

Beebe would not say whether he would continue appealing a Pulaski County judge's decision that outgoing Gov. Mike Huckabee cannot withhold documents regarding the resignation of a state Parole Board member.

Petrus said he is working on a package of bills focusing on ethics reform, including a proposal to reduce the maximum allowable contributions an individual can make to a candidate from $2,000 to $1,000 in an election cycle.

"I think it's so much money in these campaigns that's not needed," Petrus said. "In the last governor's race, it hit almost $10 million. That's a lot of money."