Governor Beebe talks cutting the grocery tax with Region 8 News

BLYTHEVILLE, AR (KAIT) - Governor Mike Beebe's proposal for a balanced state budget includes eliminating the state sales tax on food, provided other obligations in the budget decline over a six-month timeframe.

The $4.9 billion budget plan proposes a reduction of the grocery tax from 1.5 percent to 0.125 percent, which would cost the state an estimated $69 million.


"We've been able to get the food tax down from six percent to one and a half. So, we've knocked four and a half of the six off," said Governor Beebe.


The proposed cut would not eliminate Arkansas Constitutional Amendment 75, a one-eighth cent food sales tax Arkansas voters approved in 1996 for statewide conservation funding.  "One-eighth was put on by the people in a Constitutional amendment. We can't touch that one."


To make up for a $138 million shortfall in the state Medicaid budget, Governor Beebe said the proposed cut would not take effect until after the state's settlement payments to three Little Rock-area school districts from a 1989 desegregation lawsuit end.


"I've put a plan in place that will get it off as soon as basically the (desegregation settlement agreement) money requirement stops," he said. "Automatically, when that ends we'll be in a position to get rid of the last one and three-eighths."


Arkansas Attorney General Dustin McDaniel filed a motion requesting a federal judge release the state from the desegregation settlement agreement with North Little Rock, Little Rock, and Pulaski County school districts, claiming that the three districts have met the desegregation requirements.


Governor Beebe said if the cooperation he has seen in the Arkansas House and Senate is any indication of what is to come concerning state budget talks, he is "cautiously optimistic."


"Leadership has already reached out across the aisle and they're working with each other," he said. "Both bodies seem to be working together, Democrats and Republicans working with each other, and if they'll continue that I don't have any fear that they'll be able to get things done."

The balanced budget proposal also "calls for a 4.4% increase in spending for Fiscal Year 2013. It calls for a 3.7% increase in spending for Fiscal Year 2014," and "a 2% cost of living increase to state employees," according to the Arkansas House of Representatives web site.

Department of Finance and Administration Director Richard Weiss submitted the proposal to the Arkansas Legislative Council and Joint Budget Committee November 15.

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