Governor Beebe's Weekly Column and Radio Address: Tax Cuts for Arkansas Families and Employers

Statement

Governor Beebe's Weekly Column and Radio Address: Tax Cuts for Arkansas Families and Employers

When I proposed my conservative balanced-budget to the General Assembly last November, it included an additional one-cent reduction in the sales tax on groceries. Revenue forecasts were already predicting a leaner state budget, but I recommended a responsible reduction in the grocery tax, not only because this tax disproportionately burdens the working families of Arkansas, but also because I promised the People of Arkansas I would do so.

The times have certainly borne out those predictions. The recession gripping our national economy is deepening, and state revenues are likely to decline further in the coming months. Despite the tough times, bills currently proposed by the state legislature for new tax cuts and exemptions total more than one-billion dollars. That's nearly one quarter of Arkansas's entire annual general revenue budget.

As much as we all like tax cuts, our budget is already stretched incredibly tight, and the State can't afford all of these cuts right now. The times require us to be especially cautious with any proposal that reduces state revenues. We know we can reduce the grocery tax, because it was included in our original budget forecast. And while I don't believe we can afford the vast majority of the other tax-relief proposals, we are making an exception to support our manufacturers and assist businesses that keep Arkansans employed.

Like the rest of the country, Arkansas is seeing increased unemployment. Nationally, 4.4 million jobs have been lost since the recession began, with the manufacturing and construction sectors hit the hardest. And while the unemployment rate in Arkansas is below the national average, we have seen job losses and plant closings that are devastating to workers and their families affected by lay-offs and loss of income.

I believe that we must adapt to the changing realities of our economic environment. For this reason, I support a measure before the Legislature that would reduce the sales tax that manufacturers pay on power and utilities. This bill is a targeted step that would ease the tax burden of these vital employers, thereby allowing them to cover their payroll expenses and keep Arkansans at work. We've studied the revenue impact, and this relief is possible, because it is limited and will not have an effect on essential state services. More importantly, it's urgently needed to help attract and retain these essential jobs.

Manufacturing and industrial-based jobs are the keys to economic stability for thousands in our State. And when those jobs are put at risk and the welfare of families is on the line, I believe that our government has an obligation to help support them. This proposal will specifically target businesses that create manufacturing positions in Arkansas, and it will help keep us competitive with our surrounding states. Above all, this legislation sends the message that we will continue to fight every single day to create new jobs and strengthen our economy and our employers here in Arkansas. And that's not a proposal; it's a promise.

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