Beebe's Office Says Accord Reached on Grocery Tax-Cut

FEBRUARY 6, 2007 - Posted at 3:04 p.m. CST

LITTLE ROCK (AP) - Governor Beebe has reached an accord with House Speaker Benny Petrus on tax cut bills before the Legislature.

Under the deal, House Speaker Benny Petrus would back Beebe's plan to cut the state sales tax on groceries from six cents to three cents. In return, Beebe would support income tax cuts and support reducing taxes that manufacturers pay on utilities. Beebe wants to eliminate the grocery tax altogether.

Beebe told reporters today that the new tax package is an improvement over his proposals. But he said he was confident his sales tax cut would have passed without the agreement. Beebe says the package will bring tax relief for the poorest Arkansans.

Senate President Jack Critcher (D-Batesville) says he is comfortable with moving forward with the tax measures. He earlier said the Legislature should wait until a pair of Supreme Court masters review the state's school funding formula before proceeding. But Critcher now says it appears there will be no funding surprises.

Beebe also says the tax package should not have to wait for further word on the Lake View school funding case.


In the House, 65 members backed Beebe's tax cut but the governor did not have enough votes to get the bill out of the House Revenue and Taxation Committee. Winning Petrus' support is key, but votes still must be taken.

In today's deal, Beebe would get his immediate grocery tax cut -- reducing state income by $252 million over the next two years -- while Petrus gets the governor's support for a plan to increase the minimum income that Arkansans must earn before paying income tax. It would cost Arkansas $16 million dollars annually.

Also, Beebe would bak a slightly higher cut in the sales tax on utilities for manufacturers. Instead of a currently agreed to a one percent cut, the drop would be one-point-five percent in fiscal 2008 and two percent in 2009, for a total of $35 million  over the two years.

The typical Arkansas family will see its annual grocery bill drop by $234 under the groceries tax cut.

(Copyright 2007 by The Associated Press.  All Rights Reserved.)