By Rob Moritz
Arkansas News Bureau

LITTLE ROCK — Arkansas grocers are hoping that budget-conscious shoppers, pinching pennies in a slow economy, will buy more food with the penny they when a 1-cent reduction in the state grocery tax goes into effect this week, a trade association spokeswoman said Monday.

The tax cut reducing the state sales tax on groceries — halved from 6 percent to 3 percent in 2007 — to 2 percent goes into effect Wednesday, the beginning of the state’s new fiscal year.

“More and more people are eating at home because of the economy, and when they balance (the food tax cut) with the restaurant tax it’s a pretty good deal,” said Polly Martin, president of the Arkansas Grocers and Retail Merchants Association.

Many cities around the state tax prepared food and use the revenues for tourism or promotion, Martin said.

A $10 million reduction in the sales tax manufacturers pay for utilities also goes into effect Wednesday, as do hundreds of state appropriations approved by the Legislature during this year’s regular session.

Richard Weiss, director of the state Department of Finance and Administration, said Monday that he hopes to know by Thursday, when the monthly revenue report is released, how much of a budget surplus the state will have at end of the current fiscal year.

Weiss said it would be mid-August before DF&A knows how much carryover money state agencies will have, but estimated that amount at $10 million to $20 million.

Gov. Mike Beebe, who promised during his 2006 campaign to eventually eliminate the grocery tax, said Monday he is not through trying to make cuts.

“It’s gone from 6 cents on the dollar down to 2 cents on the dollar, and we’ll continue to attack it as we can,” the governor told reporters.

“One thing that families cannot do without is the essentials of life in the way of food,” he said. “In a time of a tough recessionary economy, every dime that they can save at the grocery store is helpful for them.”

Martin said that for shoppers saving $1 for every $100 spent may not sound like much, “but it adds up.”

“They can buy extra groceries, or put the money in their pockets and pay utility bills,” she said.

On the manufacturers’ tax cut, Beebe said the goal is to “to try to make sure that we stay competitive in the manufacturing business with some surrounding states and … states across the country to try to maintain or even create new jobs.”

“Anything that we can do to make Arkansas more competitive in the manufacturing arena helps not just Arkansas but helps America,” he said.

Some of the other laws that take effect Wednesday include:

—Act 308 of 2009, to make not wearing a seat belt a primary offense.

—Act 309, which reconfigures the embattled state Martin Luther King Jr. Commission by reducing its size from 26 to 13 members and having its chairman serve at the will of the
governor.

—Act 209, which raises the maximum fines cities and counties can charge for misdemeanor offenses from $5 to $20. The revenue is to go to jail costs.