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House, Senate pass tax bills

By John Lyon and Rob Moritz
Arkansas News Bureau

LITTLE ROCK — With no votes to spare, the House passed one of the pillars of Gov. Mike Beebe’s legislative package Tuesday, a tobacco tax increase to raise nearly $86 million to fund a statewide trauma center and other health care programs.

The Senate easily passed the other, a 1-cent reduction in the state sales tax on groceries.

The House vote for House Bill 1204 was 75-24, exactly the three-fourths majority needed in the House and Senate to raise the state cigarette tax by 56 cents a pack and increase the levy on smokeless tobacco products.

The tax increase would raise $85.4 million a year, according to its sponsors.

The vote marked the second time in less than a year one of Beebe’s initiatives got a three-fourths majority vote to raise taxes, a tally virtually unheard of in the Legislature. Last spring, the House voted overwhelmingly for legislation to increase the state severance tax on natural gas for the first time in more than 50 years.

Thursday’s House vote on the tobacco tax reflected the governor’s predictions that the margin would be “very, very close.”

“I told you how tough it is to get three-fourths, and what this says is, it’s tough,” Beebe said after the vote.

HB1204 next goes to the Senate Revenue and Taxation Committee.

At the other end of the Capitol, the Senate approved the grocery tax measure, Senate Bill 88 by Sen. Bobby Glover, D-Carlisle, 32-1. The bill goes to the House tax panel.

Rep. Gregg Reep, D-Warren, the lead sponsor of HB 1204, told House members Arkansas is the only state without a trauma system. He said he knew the issue was difficult, but he urged the members not to think of it in terms of big government versus little government.

“Are hospitals big government or little government?” he asked. “Are ambulances big government or little government?”

Reep said revenue from the tax increase would fund a trauma system and aid community health centers, in-home health care for the elderly, creation of a second campus of the state’s medical school in Fayetteville, the Tobacco Control Board and cancer and autism programs.

The bill also would fund expansion of the ARKids First program to provide health insurance to children in families earning up to 250 percent of the federal poverty level instead of the current 200 percent limit, Reep said.

Over the past several days, Beebe, House Speaker Robbie Wills, D-Conway, and other House leaders had lobbied House members to support the bill. On Thursday morning, Arkansas Advocates for Children and Families held a rally on the Capitol steps in support of the bill.

A group of Republican House members had been trying to build support for an alternative plan to fund a trauma system — but no other programs — through fees on people convicted of driving while intoxicated and other offenses and the state’s insurance premium tax. That measure, sponsored by Rep. Ed Garner, R-Maumelle, has been filed but has not come up for a committee vote.

Rep. Frank Glidewell, R-Fort Smith, opposed the cigarette tax bill on the House floor Thursday as an expansion of state government. Glidewell also joked about the intense lobbying that preceded the vote.

“I thought waterboarding had been outlawed,” he said.

Rep. Stephanie Flowers, D-Pine Bluff, said providing money for a trauma system and other health programs is worthwhile, but she asked, “Why doesn’t this bill say that?”

Reep said the bill directs the money to the General Revenue Fund. Appropriation of money to individual programs will have to be done through the appropriation process, he said.

In support of the measure, Wills referred to an incident Wednesday in which Dr. Trent Pierce was critically injured in a car bombing in West Memphis. Pierce was in critical condition Thursday at Elvis Presley Memorial Trauma Center in Memphis.

“Thank God for him that that was there,” Wills said. “If that had happened anywhere else in the state of Arkansas, he would no longer be alive.”

Rep. Jon Woods, R-Springdale, who voted against the bill, said all but a few of the people who contacted him about the tax increase were against it. But Woods added, “I trust Robbie that he’s going to do the right thing with the money.”

Six House Republicans broke ranks with their party leaders to vote for the tax, along with 68 Democrats and Green Party Rep. Richard Carroll of North Little Rock. Democratic Reps. Pam Adcock of Little Rock and Stephanie Flowers of Pine Bluff joined 22 Republicans to vote against the tax.

Rep. Garry Smith, D-Camden, voted for the bill after saying earlier in the week he planned to vote against it. Smith said Thursday he has a nephew who received a head injury in an accident nine years ago and now is confined to a wheelchair and unable to speak.

“Had there been a trauma center in place nine years ago this Veterans Day, I believe my nephew could have told me today, ‘Uncle Garry, I want you to vote for this bill,’” Smith said.

Sen. Tracy Steele, D-North Little Rock, who will carry HB 1204 in the Senate, filed enabling legislation Thursday for creation of a trauma system. His bill adds details to a trauma center act that was signed into law in 1993 but never funded.

At least four members of the eight-member Senate tax committee say they support the tobacco tax bill while three say they are undecided. The measure needs five votes to win the committee’s endorsement.

Speaking for his Senate Bill 88, Glover told colleagues the $30 million hit state general revenue would take from a 1-cent grocery tax cut was already factored into Beebe’s proposed balanced budget.

“He made a commitment to the people of Arkansas,” Glover said, reminding senators of Beebe’s campaign promise in 2006 to eventually eliminate the state sales tax on food.

The Legislature in 2007 reduced the grocery tax from 6 cents to 3 cents.

“This is a vote for the citizens of Arkansas and it’s the right thing to do,” Glover said.

Sen. Jerry Taylor, D-Pine Bluff, spoke against the bill.

“I understand the campaign promise. The problem is I didn’t make that promise,” Taylor said.

——-
The Associated Press and Talk Business columnist Roby Brock contributed to this report.

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  1. Arkansas Smokers: Go Screw Yourselves | The Arkansas Project Says:

    [...] big tobacco tax hike passed the Arkansas House of Representatives today by a whisker, with 75 House worthies giving it the thumbs up. Here’s the vote count by rep. The bill is [...]

  2. Arkansas Smokers: Go Screw Yourselves! | Arkansas News Says:

    [...] big tobacco tax hike passed the Arkansas House of Representatives today by a whisker, with 75 House worthies giving it the thumbs up. Here’s the vote count by rep. The bill is [...]

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