Senate Gives Final Approval to $377 Million Tax Increase

February 6, 2004 - Posted at 2:11 p.m. CDT

LITTLE ROCK, AR - The Arkansas Senate today gave final approval to the largest tax increase in state history, a $377 million sales tax boost dedicated to public schools.

The seven-eighths cent increase will take Arkansas' sale tax rate to six cents on the dollar, not including local taxes.  Governor Huckabee said he will let the tax become law without his signature.

When coupled with an anticipated increase in the corporate franchise tax, legislators meeting in a nine-week special session have raised an extra $400 million.  The money is being pumped into a school system that Supreme Court justices declared unconstitutional in 2002.

Legislators missed a January 1 deadline to put a school reform package in place.  The high court has named two special masters to review legislative and executive efforts to improve public education.

The two tax proposals were the last major issues before legislators could end the longest Arkansas special session on record.  The session has run 61 days.  The House and Senate convened on December 8, 2003.

The sales tax increase passed the Senate on a 23-to-12 vote, the day after leaving the House on a 54-to-44 vote.