Beebe budget continues to pare sales tax on food | Arkansas Blog

Beebe budget continues to pare sales tax on food

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Gov. Mike Beebe presented his proposed $4.9 billion state budget today, soon to be wooled around by the new Republican majority.

Roby Brock at Talk Business reports.

Key element: A near elimination of the sales tax on food, based on triggers pegged to state revenue growth (for example, the state would have to pay less for Pulaski County desegregation and also pay less in rebates to local tourism facilities, such as convention centers). It would take the current. 1.5 percent rate to .125 percent over two years if everything fell into place, a $69 million spending reduction. Beebe has a slightly improved forecast on revenue growth, enough for a 2 percent pay raise for state employees, but this comes with a warning that the economy remains uncertain.

This anticipates, however, that Republicans won't try to pass a windfall capital gains tax cut (which overwhelmingly benefits rich people) or, worse for state revenue, a change in the state income tax that also produces a windfall for the wealthy. Such cuts would have to be paid by reductions in spending elsewhere.

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