Arkansas will move to reduce taxes

March 22, 2011

By Andrew DeMillo-Associated Press

LITTLE ROCK, Ark. | Arkansas is poised to become one of the first states in the nation to enact a significant tax cut this year, showing that sentiment for scaling back government remains potent even in places where state spending is limited and no fiscal crisis exists.

@-Text.normal:State representatives Monday are expected to approve cutting the grocery tax, the centerpiece of a $35 million tax-cut package. The action comes days after lawmakers reached an agreement with Democratic Gov. Mike Beebe on reductions of five other taxes likely to be approved later this week.

The amount of the cuts doesn’t compare with the deep reductions proposed in some larger states, especially those with fiscal problems that are trying to attract new businesses. But it shows the far-reaching impact of the anti-spending backlash in the 2010 election that swept more Republicans into office across the nation. The cuts could be enacted so rapidly in Arkansas because the state’s Democrats, including Mr. Beebeand the majority that control both chambers of the legislature, are conservative and differ little from Republican lawmakers on most fiscal issues.

“Arkansas is going to cut $35 million in taxes, have a balanced budget and adequately fund education,” said Sen. Gilbert Baker, the Republican who co-chairs the Joint Budget Committee. “There isn’t another state that wouldn’t love to have that scenario right now.”

Arkansas’ government is already modest in scale; it doesn’t offer the range of services provided by states such as Wisconsin and New Jersey, where heated battles over spending and employee compensation are under way. But officials decided to cut more anyway.

Mr. Beebe, a popular Democrat, handily won re-election last year after promising to push for more reductions in the state’s grocery tax. Since he took office in 2007, he has successfully pushed for cutting the tax from 6 percent to 2 percent.

Although the state’s residents are accustomed to lean services, Mr. Beebe said he is concerned the tax and spending restraints could go too far.

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