Senate Revenue and Tax Committee
January 29, 2025
Senator Jimmy Hickey [00:00:50] It's two on the bottom of it. Those have actually been added. So whenever we get there. So it doesn't matter which sheet you're working off of right now. It's just at the end we will have an additional two. All right, Mr. Gehring, you just whenever you're ready. If you just recognize yourself. And we will start with the Property Tax Relief Trust Fund report. Thank you.
Paul Gehring [00:01:15] Thank you, Mr. Chair. Paul Gehring, DFA. Thank you very much. So our next report is the Property Tax Relief Trust Fund report required by statute. And we at DFA would make a recommendation that we continue to provide that report as required by statute.
Senator Jimmy Hickey [00:01:33] Okay. Any members have any question in regards to to this? I think this would definitely be a report that we want to keep. Again, we were just trying to be all inclusive whenever we put this on there. So some are going to be self-explanatory. Anybody from the audience have any different opinion on that they'd like to say? Okay, so we'll just say we're going to keep that one. Mr. Smith, you're keeping up with all of this, right? Thank you. All right. The next one is going to be the office of Arkansas Lottery. That report, is that correct?
Paul Gehring [00:02:08] That's correct, Mr. Chair. That is the monthly directors report of the Office of Arkansas Lottery. It's a monthly report required by statute. And DFA would respectfully request that that report continue as required in the law.
Senator Jimmy Hickey [00:02:21] That's also presented in the Lottery Oversight Committee. I think we see that within that committee also. Yeah. So, again, much like the last one. Probably important report that we keep. Any member have any questions on it? Anybody from the audience? Okay. We'll go to the next one. Keep that one, Mr. Smith.
Paul Gehring [00:02:48] Okay. The next report is the biennial report of boards and commission attendance. It is a bi annual report that indicates each state board and commission of the meeting dates for the previous two fiscal years, attendance record of each member and number of meetings. It is required by statute. And DFA respectfully recommends that we continue that report.
Senator Jimmy Hickey [00:03:22] Okay. And the reason that you all want to do that, is there something where those members have to attend those meetings also? Or so there is an actual reason they were doing that, because maybe they can't serve if they don't do it or something of that nature? Or do you remember?
Paul Gehring [00:03:42] Looking through the legislative history of that report, it is rather recent. This reporting requirement was-- I think, the General Assembly, one of the considerations in the statute was that the General Assembly needed to know if these boards and commissions were not holding meetings to make sure, does the General Assembly need to revisit and see if this board or commission, if they're not attending meetings. If they're not, does it need to be continuing and in existence?
Senator Jimmy Hickey [00:04:12] Okay. Any members? Senator Petty, you're recognized, sir.
Senator Jim Petty [00:04:15] Thank you, Mr. Chair. Does this report also monitor or track the term and the vacancy in a position or anything like that? Or is it strictly just the attendance of the board and the commission itself?
Paul Gehring [00:04:33] Senator Petty, I would have to go back and see, but certainly the dates of attendance and the members present are a component of the report. But I'm not sure if there is a requirement of a report of any vacancies that are unfilled. But I'll be happy to follow up with you, sir.
Senator Jim Petty [00:04:45] All right. If you don't mind, because I've been hearing of just various boards and commissions that have had extended vacancies that they can't fill for various reasons. And so I just think that if that report is going to continue, that might be good information to have.
Paul Gehring [00:05:03] Yes, sir. And also to that, that is a report that's not just a DFA report. It's all state. We do have some bodies that are considered in that report, such as we have a tax group that gets together once or twice a year to discuss changes in Arkansas law. Even though it's not a board, it's called a tax advisory council but it's considered within the scope of the reporting requirement.
Senator Jimmy Hickey [00:05:33] All members in an agreement that's a report we keep? Senator Hester, I know you had another commitment. You were able to come. So there's a report that on the boards and commissions. So biennial report and what it does is just show the attendance of those members. I think we dealt with this a few years ago. All right. So anybody from the audience have anything additional on it? And Mr. Gehring, go the next one.
Paul Gehring [00:06:03] Thank you, Mr. Chair. The next report is the annual report of the Arkansas involvement with the Multi State Tax Commission. It's an annual report due by September the 30th. It is required by statute. Arkansas is a member of the Multi State Tax Commission or one of the compact states As a part of our involvement with the Commission, primarily the Multi State Tax Commission performs multi state audits of taxpayers and then that information is shared with the member states for the states that are affected. For many taxpayers, they would prefer to go through one audit through the multi State Tax Commission as opposed to multiple audits within multiple states. This report is required by statute, but certainly if the General Assembly needed any information about the multi state Tax Commission, they could reach out to the department. So we would respectfully request that either the report be eliminated or considered for elimination or maybe be less regular than annual.
Senator Jimmy Hickey [00:07:07] Okay. Members, what's your flavor on eliminating this report or, as you say, either eliminating or making it less? I think we need to start with eliminating it first because if everybody's okay with eliminating this, and we don't have anything, I think that's probably what we're trying to get done in this. Anyone have any issues with that? Okay. Anyone from the audience have any additional thing to say on that? Okay, Mr. Smith. So that is in statute also?
Paul Gehring [00:07:47] It is, sir.
Senator Jimmy Hickey [00:07:48] Okay. Just one further thing. Any recall of whenever that was put in statue, what required that to go to the point that we did put that in statute?
Paul Gehring [00:08:04] Thank you, Mr. Chair. In my recollection from looking at the legislative history, that report was required through 2015 legislation. And I believe prior to that the Arkansas statutes at the time required presentation coming to the General Assembly and making a presentation to the legislative body about our involvement. So at that time we didn't want to hear the presentation anymore. Let's just get a report. And since that time, there really been minimal interest. Of course, from time to time, if there's a question that the members of the General Assembly have about our involvement, we provide that. But this particular report, we could we could save work time by eliminating it.
Senator Jimmy Hickey [00:08:46] Okay. All right. Anything else? All right. All right on that one, Mr. Smith. We actually need to do the legislation to eliminate it. So we'll just need to prepare a statute to repeal that part of it. All right.
Paul Gehring [00:09:13] All right. Next report, Mr. Chair, is the report of tax law changes, compliance problems, methods to expedite claims or refunds and administrative matters and other related issues related to tax. It's a statutory report, and we estimate that's five hours annually. Possibly this this report could be eliminated. I think that as time to time we receive issues in real time where we have these discussions as when as they come up with taxpayers and members of the General Assembly. So possibly the need for this report, we could save time by eliminating it.
Senator Jimmy Hickey [00:10:00] Members, any questions on this? Okay, So. Tax law changes . Where is this report actually getting sent now, whenever it's prepared? Do you even know? I mean, is that going through ALC or anything of that nature?
Paul Gehring [00:10:24] Mr. Chair, I believe it is ALC that receives that report. But I'll be happy to go back and verify that.
Senator Jimmy Hickey [00:10:35] I guess that's kind of the issue. I've been down here since January of 2013 and try to stay up on some of this. And myself, I don't even know where that report is. So I guess maybe we don't need it as long as you all are keeping this in the event that we start getting questions or something. You all can get the information for the members or a committee of the legislature.
Paul Gehring [00:11:02] That's right. And also, I believe that report also goes to the chairs of the tax committees as well.
Senator Jimmy Hickey [00:11:09] So that would be me. And again, it's not something that I will pore over and look at. All right. Yes, sir. Senator Hammer.
Senator Kim Hammer [00:11:20] Thank you. I'm trying to refresh my memory on some of these reports you get. Are they summaries or are there summary sheets that come with them or are they the full fledged reports?
Paul Gehring [00:11:29] They are summaries. Typically the issues that are discussed at the Tax Advisory Council, which is a body that members of DFA, we attend. Usually it's a once a year or twice a year, maybe more often if there are issues that are presented. And there's also members of the tax payer public that attend the meeting. They occur over on one of our DFA buildings and the agenda is formulated prior to the meeting of anything that's important to discuss. Typically we'll have a meeting after the legislative session concludes just to go over things that are important as well as to provide statistical information about how processes are going with income tax refunds. But also it's an opportunity for the tax payer public to give us information and feedback from any challenges that are in their area. And then once the meeting is concluded, we prepare minutes of that meeting. And then this report is kind of a consolidation of a summary that the meetings were held and who was in attendance.
Senator Kim Hammer [00:12:36] Okay. Let me think a little bit.
Senator Jimmy Hickey [00:12:43] Anybody from the public have any anything additional on this? Okay. So why don't we just go ahead and prepare the statute to repeal that? One thing that's come into my mind right here also and I know we're all leaning on you all, you're probably going to have to provide to Senator Crowell if he's going to be running both of these like talking points. Because whenever we get on the Senate floor and then also in the House committee and House floor, we may have members that have multiple questions about why we would eliminate this. I think some of the testimony that you've given here, I think we we probably need that so that we'll be able to explain that on the floor. Because there is some of these we could possibly get some pretty heavy duty questions on. So, but let's go ahead and prepare that one and we'll proceed that way. Okay?
Paul Gehring [00:13:39] We certainly did.
Senator Jimmy Hickey [00:13:40] We skipped that one.
Paul Gehring [00:13:42] My apologies. So, Mr. Chair, we could go back to the update on required rule promulgation. That is a statutory requirement within our rulemaking that any rules that are required to be promulgated from the previous legislative session, the agency is required to provide a monthly report by the first of the month and then assist the bureau when they're formulating the agenda to have the status of any ongoing rule promulgation, where it's at and have we been approved by the governor's office, have we held our public comment hearing, where are we out in the process? So and we understand this doesn't affect only DFA. It's also helpful to the legislature to know I passed this law, I don't want to have to call the agency to find out where the rulemaking is. Not only can that member that passed that piece of legislation know where it's at by looking at that report, but also the members of the Rules Committee will know what is in their pipeline for review.
Senator Jimmy Hickey [00:14:49] Right. This is definitely a report that this legislature is going to want to keep. And we listen to that on a regular basis. I want to know where we're at in that process. I'd actually even go one step further, Senator Hester. I know that we were trying to be all inclusive with these. So some of the, be it Public Health or DHS, I know that they probably had this on there too. We might want to be proactive to make sure that none of those other committees actually try to take that off or have that discussion, probably on a more macro top level, I would think. Because, again, I think we understand the importance of it with the tax thing. But that will be something that needs to probably stay, in my opinion, inclusive across the whole all of agencies on the rules. Thank you for that.
Paul Gehring [00:15:44] Thank you, sir. And I apologize for skipping over that.
Senator Jimmy Hickey [00:15:46] Actually, I just know the importance to keep the thing .Just went on over it. So now we're going to be on which one? We're going to be on. Yep. Everybody see that report on pending litigation claims and assessments?
Paul Gehring [00:16:05] Yes, sir.
Senator Jimmy Hickey [00:16:06] Let's look at it.
Paul Gehring [00:16:08] Yes, sir. Mr. Chair. That's the report on pending litigation claims and assessments. Semiannual report required by statute. That is a report that applies to not just DFA, but other state agencies. That report provides the information to the General Assembly about litigation matters that have been filed against the state and what that litigation pertains to. It's also valuable for purposes of evaluating any risk to the state for any potential tax refunds or damages that the parties are claiming against the state or any matters where the state is actually the plaintiff and is seeking damages. So we believe that report is helpful and should be kept.
Senator Jimmy Hickey [00:16:50] Any members have any any questions in regards to that one? And again, Senator Hester, just like the last one, this one's, it doesn't just pertain to DFA. It's all these other agencies.
Senator Bart Hester [00:17:05] It's all of them. And people ask questions about it. It's something that's used.
Paul Gehring [00:17:13] Yes. Yes it is. And also from time to time, there are going to be matters that we are going to seek legislative approval to enter into a negotiated settlement. So it gives an opportunity for the General Assembly to have some background information while the case is progressing through the litigation process. And then ultimately, it might have come before claims for a possible negotiated settlement for approval by the committee and ALC.
Senator Jimmy Hickey [00:17:42] Right. So again, that along with the other one that we just just went back and discussed, I guess that would be one that we probably need to make sure our other chairs of the other committees understand the importance of keeping to make sure we're staying consistent across everyone. Okay, Next one's going to be report of tax litigation resolved in the previous calendar year.
Paul Gehring [00:18:08] Okay. Mr. Chair, that report is a new report that's required by statute. It was enacted in the past legislative session. Representative Cavenaugh was the primary sponsor of that bill. The purpose of that was to give the General Assembly prior to the session beginning the tax matters that have been resolved that were over $25,000 or more in controversy, just to let the members know what is being actually litigated with regards to tax in the state of Arkansas. It also provides them not just the matters that are brought to final resolution by either a trial or an appeal, but matters that we have resolved. So we certainly can continue providing that report. It is very similar to the report that we're already providing in the report that I just mentioned before this one. So in terms of our overlap of duties, we're already providing this in that previous report.
Senator Jimmy Hickey [00:19:09] So just a question from me. So you're doing two reports, basically, But so the other one says annual or this one says annually by January 10th. Is there any help to you all with the one that's right above it if we change that one to-- it is currently semiannually. Is it any help to you all or I wonder if there be any controversy if we said annually by January 10th. So you could just be all inclusive in that report what's actually ongoing and what's been settled at the same time.
Paul Gehring [00:19:41] Yeah, I think usually the helpfulness of that report is for purposes of the General Assembly. If there are areas of the law that are gray or ambiguous that are resulting in litigation, that they can start thinking about those during the session. That's why the deadline was January 10th. So it's possible that it could be issued every two years prior to the beginning of session. Then we would only have to provide it every other year as an option.
Senator Jimmy Hickey [00:20:13] Yes. Senator Hester.
Senator Bart Hester [00:20:13] Is this the report from the Tax Appeals Commission that I got like yesterday?
Paul Gehring [00:20:16] Different report, sir. This is a tax Appeals Commission report. Those are going to be matters that were resolved within the Tax Appeals Commission. Those are going to be confidential. So that's going to be statistically driven report from the Tax Appeals Commission that shows the amount of matters that were decided and the amount of that were settled. Whereas this report is actually going to have the controversy, the parties in the controversy, because it's litigation. And so essentially the taxpayer's name, where the lawsuit was filed, the resolution through the circuit court, as well as the Supreme Court if it went through that process, or if it got resolved by agreement of the parties and then the ALC approved the settlement.
Senator Jimmy Hickey [00:21:03] So since you said Representative Cavenaugh actually sponsored this in the last session, on this particular one since she's the House chair of Rev and Tax, you might just, if you wanted to, why don't you just ask her if there would be an appetite for her to do it every two years. So, that's going to save y'all 16 hours.
Paul Gehring [00:21:28] Yes, sir.
Senator Jimmy Hickey [00:21:29] So if she doesn't want to do that, then I'd say we wouldn't go forward if she wants to keep doing annually for a little while. So why don't we, if it's okay with you, why don't we just have you all to contact her, ask her if it would be okay. Tell her we'll start the legislation down here since we're doing all these other ones. If you wouldn't mind doing it.
Paul Gehring [00:21:51] Yes, sir. Happy to do that.
Senator Jimmy Hickey [00:21:53] All right. Anybody in the public giving comments on that one? Right. You got that, Mark? Okay. Thank you. All right, Mr. Gehring, Go to the next one.
Paul Gehring [00:22:06] Thank you, sir. The next report is the report of the number of individuals granted an automatic occupational licensure and expedited occupational licensure. It's an annual report. That report comes from the Office of Motor Vehicle. It is statutory. Generally speaking, what we're talking about are individuals that are granted a driver's license or a commercial driving privilege by lieu of maybe they're a member of the military, etc. We are recommending respectfully that that report be eliminated because we never get questions about that report other than where's your report, please send it in.
Senator Jimmy Hickey [00:22:46] Anybody have any heartburn about eliminating that? Senator Boyd.
Senator Justin Boyd [00:22:51] Just a question. So let's say we eliminate the report. How hard would it be like if we were evaluating it for us to come to you and you do that?
Paul Gehring [00:23:03] Very easy. Usually there's a very limited number of individuals that are reported on that report that were granted the expedited licensure. And so but to obtain the information, very simple to get from our Office of Motor Vehicles. And the report also is, as noted, it's one hour's worth of work. So it's not a heavy lift to provide it. But if it's not not needed, it's not useful, it could be eliminated if the body was interested in doing so.
Senator Jimmy Hickey [00:23:36] Everybody okay with eliminating this or attempting to eliminate it? Of course, we still got to get it all the way through the process. Anybody from the audience, any questions on that one? Okay. So we're going to mark that to get the repeal done. Okay. All right. Let's go to the next one.
Paul Gehring [00:23:58] Thank you, Mr. Chair. Next report is for the Assessment Coordination Division of DFA. It's the annual report due by June 15th of all taxable property in the state, including the assessed value. This statutory report, DFA, it does require 200 hours annually. But this is a very important report for purposes of our counties and other taxpayers. So we are recommending that we continue that report as specified in statute.
Senator Jimmy Hickey [00:24:30] Probably pretty self-explanatory. Anyone have any questions on that one? Anyone from the audience? Okay. That will be a report that we keep. Okay, go to the next one.
Paul Gehring [00:24:42] Okay. Also, this is the Assessment Coordination division report. It is a statutory annual report of the changes to any part of the formula used to determine the value of land or the capitalization rate. It is a report that requires 100 hours annually to prepare. I'm certainly going to recognize that there is some usefulness of the information, but we don't have a recommendation. We don't have a recommendation to eliminate it, but we certainly don't have a recommendation that this is necessary to continue. So we're happy to follow whatever the the General Assembly decides to do.
Senator Jimmy Hickey [00:25:26] Let's have some discussion on this one. Senator Petty.
Senator Jim Petty [00:25:29] Yes. So when we talk about the capitalization rate of land, and I know you're probably not intricately involved with that and any changes. This is good to know that we're at least looking at that. I don't know how from a practical standpoint, they're actually applying that. We just had a situation where there was no determination on how they arrived at the cap rate. But do you know what the content is and who provides it each year from the Assessment Coordination division?
Paul Gehring [00:26:08] I would assume that our director, Sandra Collier, would provide that information and be able to, speak to all the contents of the report. But certainly it's in the statute for a reason. So we certainly can understand that there is a need for the information.
Senator Jim Petty [00:26:25] And I can certainly take this off line. But it was talking about cap land and cap rate. And typically you've got a cap rate associated with income producing property buildings, not just land. So is it just for land or is it land and all real estate?
Paul Gehring [00:26:47] I want to make sure that I give you the right information. So if it's okay, I could follow up with that question. Okay.
Senator Jim Petty [00:26:52] Thank you.
Senator Jimmy Hickey [00:26:56] Okay. Any other questions? I don't have a recommendation on this one, but it's 100 hours, so it is very significant. So, I mean, I think it's one of those things that if we have members that are using it or if we need it, then we need to do it or amend it or do something to try to cut down on hours. Senator Hammer.
Senator Kim Hammer [00:27:25] Just so curiosity, these reports, are any of these requested by individual members throughout the year or do you keep track of how many members might request any of these reports as opposed to just waiting to the time you got to present them?
Paul Gehring [00:27:45] Generally speaking, Senator, my experience has been that when the report is provided to the General Assembly and it's placed on an agenda for consideration, that's typically the time that we have any feedback or any communication about the report. There are going to be some circumstances from time to time where there is an interest, for example, the Property Tax Relief Trust Fund report. You know, we get asked about that from time to time throughout the year. But some reports very little to no contact.
Senator Jimmy Hickey [00:28:21] Secretary Hudson.
Jim Hudson [00:28:22] Yes, sir. Jim Hudson, Secretary DFA. I believe that is strictly land. It's not improvements upon the land, just the land. It is relatively stable, I think, year to year. So it may be one of those reports that we just kind of move from annual to maybe every five years or something like that just as a weight as to make sure we're still capturing the information. But I don't think we see much changes year to year. And the methodology more importantly, is not changing year to year, which is really what the report is driving at.
Senator Jimmy Hickey [00:28:54] That's a very good thought. Here's the thing. So we're actually gutting a statute that you're preparing this whole report. I wonder if we should just change the statute that just says that in the event you change the formulary on that, that you'll just report it to the appropriate committee of ALC. And if we did that, if you just changed that one specific formulary as it related to that and you could do that in 30 minutes.
Jim Hudson [00:29:24] Honestly, I read the report for the first time this past year, and the group was tickled to death that I had a question because nobody's ever, ever asked a question about it before.
Senator Jimmy Hickey [00:29:32] So. Okay. Anybody have any? No. Well, according to this, they're actually preparing a report annually and it's taken 100 hours to prepare. A report of changes to any part of the formula used to determine. I guess the statute itself probably dictates that they're doing something annually would be my guess. As far as studying that statute, I haven't.
Senator Jonathan Dismang [00:30:02] Yet, but I thought it just said that you're only going to provide a report on the changes.
Jim Hudson [00:30:09] I think what we're providing is a report on the methodology that we're using to value the land, which would include, you know, any changes that we're making in that.
Senator Jonathan Dismang [00:30:19] But you were asking to just report on the changes but I think that's already the report.
Senator Jimmy Hickey [00:30:21] Well, I don't know because I don't know all the language within that code, whether that language is within. I think the language within that code is requiring something more detailed. I think we're fixing to be able to figure out a way to eliminate 200 hours of DFA a year.
Jim Hudson [00:30:45] It's a comprehensive report on the methodology that we're using and highlighting the changes as well.
Senator Jimmy Hickey [00:30:50] Okay. So unless anybody has any heartburn here, why don't-- yes, Senator Petty.
Senator Jim Petty [00:30:56] Follow up question since we had some additional information there. So the methodology, if we're talking about true real estate cap rates,that's how we arrive at the value that you then assess the tax on. Cap rates are market sensitive. They go up, they go down. That is relatively easy to gather. There's a lot of sources that produce those. But the methodology itself shouldn't change. And I don't know if that was what Senator Dismang was talking about or not, but I mean, what is taking 100 hours if the methodology is not changing, the cap rates, maybe you were updating. But based on what you're saying, and I agree it should be relatively stable, what's changing or what are we reporting is taking 100 hours? I think it's valuable information because like I said a minute ago, there's some guidance out there that has no basis for the guidance on how we arrived at a cap rate for value and property. But what is in this report? And I don't want to belabor this. But the report, if we could just hold it or something, maybe?
Jim Hudson [00:32:04] Maybe we can do that. Maybe what we can do is just recirculate the report to you, let you have an opportunity to look at it, and then we can talk more as a team about what really is driving the workload on it.
Senator Jimmy Hickey [00:32:14] Senator Dismang.
Senator Jonathan Dismang [00:32:16] And one of the things I would just ask, on a report like this, yes, members occasionally if there's a problem with how we're valuing chicken houses may dig into the report. And it's a place to go look and see. But I'm also assuming it's a lot of work that you're already doing, I would think. A lot of these things, we may not be asking about it, but it's probably a benefit to DFA. And so if we're just doing away with it to do away with it because it's 100 hours and the perception is that the legislature is not looking at it doesn't mean that it's not a valuable report for the public or for DFA to have a review. I know for myself, oftentimes, requiring a look at something is good for me. Just in the real world. So I would like to, when we're walking through these, and I know I've been in here, if it provides a benefit to y'all, that's a whole nother thing. And if we're going to be doing it anyway, let's make it available to the public and move on.
Senator Jimmy Hickey [00:33:20] And I know that you had that other commitment. Their recommendation on this one is they didn't really have a recommendation. They've been telling us keep reports or they didn't see the need. This one, they were actually neutral on. But I guess that's the thing on this one since it is such a large amount. Maybe we could just go one step further and let's bring that report. Let's see what this committee is kind of thinking about it, whether or not we need to keep it, or maybe if there's a way to amend it, to streamline it, that you all can save 40 hours or whatever we need to do.
Jim Hudson [00:33:55] Yeah, I'd like get a better handle on what has changed. Like overall, if you look at a five year look back, what changed? And if nothing changed, then maybe we can just kind of shorten the frequency a little bit.
Senator Jimmy Hickey [00:34:04] Okay.
Jim Hudson [00:34:05] But we'll come back to you with a recommendation about that.
Senator Jimmy Hickey [00:34:10] We're just going to wait on some more information on it and we'll do it at a future meeting. Senator Hammer.
Senator Kim Hammer [00:34:20] So these hours that are listed on these categories, these are hours that employees are paid to produce these reports. Is that correct?
Jim Hudson [00:34:29] Yes, sir.
Senator Kim Hammer [00:34:29] So the scattering of hours is reflective over a scattering of employees. It's not one employee or two employees that are dedicated to preparing these reports. Is it assigned out to different people?
Paul Gehring [00:34:44] Yes, sir. You are correct that many of these reports have multiple employees that are working on the information to compile the report. There are some of these reports that are kind of smaller hours required where one person can be responsible for assimilating the report and getting it sent over to the General Assembly. But these larger requirements of reports generally we have a team of individuals. And then the hundred hours would be reflection of all the individuals' contribution, not just one person.
Senator Kim Hammer [00:35:16] Okay. All right. Thank you.
Senator Jimmy Hickey [00:35:21] Okay. Any further comment from the audience members? Okay. So we're going to study that one a little further. Try to help out. All right. Go to the next one.
Paul Gehring [00:35:33] Yes, sir. Next report, Mr. Chair, is the Office of Administrative Services the size of the fleet and cost effectiveness of state owned vehicles. It's required annually by September the 1st. Required by statute. DFA's recommendation is that we maintain that report as required.
Senator Jimmy Hickey [00:35:51] Okay. Senator Hester
Senator Bart Hester [00:35:55] I've recently seen an executive branch announcement that they're moving away from a lot of state owned vehicles. Is that accurate? Are you expecting that?
Jim Hudson [00:36:07] I think we'll still have a state fleet. I think what we're trying to figure out is what's the optimum size and then should we be pooling that to the greatest extent possible so we don't have underutilization in individual departments? I think we're still going to have a fleet. This may be one that once we get our strategy fully baked on the Arkansas Forward for Fleet, we may come back and say there is a better way to present this information. But that's still kind of work in progress at this point.
Senator Jimmy Hickey [00:36:37] Anyone else? Senator Hammer.
Senator Kim Hammer [00:36:42] I had a report done like eight months ago, nine months ago, where they pulled that the times of which a vehicle actually moved versus the time that it sat there, the age of the vehicle, all that kind of stuff. Like to share that with you because it seems like there are a lot of vehicles, maybe a lot is an extreme number, but they just sit there for an extended period of time. So I guess to tag on to Senator Hester's question, are you looking at the process of eliminating some of those vehicles or what are you doing to capture that?
Jim Hudson [00:37:11] Yeah, we've identified about 300 vehicles that we believe are under utilized, and we're having conversations with the departments to either substantiate how you're going to increase the utilization immediately or alternatively get it over to M&R and get it out of the inventory. So we're not going to have underutilized vehicles going forward. It's just not going to be tolerated.
Senator Kim Hammer [00:37:33] I might be wrong, but didn't recently you sent a batch of vehicles over to M&R?
Jim Hudson [00:37:38] We did. Yeah. And I've got a list for the whole state for every department and those underutilized vehicles and I'm regularly asking for updates. Has this has been M&R'ed yet? And if not, why not?
Senator Kim Hammer [00:37:50] Right. Okay. All right. Thank you.
Senator Jimmy Hickey [00:38:00] They will want to keep it. Everybody is in agreement to keeping that report. Of course, we changed something on how we're doing it. Maybe we need to add something about how we're paying employees on that mileage and things of that nature on their personal vehicles. But I guess we'll look at that when the time gets here.
Jim Hudson [00:38:17] Yes, sir. I think there might actually be some proposed legislation that we will have touching the fleet a little bit later in session, and this may get incorporated into that.
Senator Jimmy Hickey [00:38:26] Okay. All right. Is the DFA request that some of the members and myself actually know about where we are doing something with the mileage, does that relate to what Secretary Hudson's talking about, Paul?
Paul Gehring [00:38:42] No, sir. Different issue.
Senator Jimmy Hickey [00:38:44] Fair enough. Just make sure that that wasn't somehow tied in there.
Paul Gehring [00:38:48] Different issue entirely. Yes, sir. Okay. The next report is the Revenue Division report of employees in extra help positions for more than seven months. It's an annual report required by special language, approximately two hours to prepare. Our recommendation is, respectfully, that we eliminate that just to save the time.
Senator Jimmy Hickey [00:39:15] Okay. Let me ask you this. On the special language with that, you're going to have to come before special language. Well, there's actually a report that special language is requiring that you're going to have to come before the special language committee to take it out. So why don't we just deal with that particular one in special language and we might just whenever we're in there just reiterate what we're doing as far as trying to eliminate reports and we need to do it that way. Probably it and the next one. But we'll go ahead and discuss the other one.
Paul Gehring [00:39:51] Same issue. Yes, sir. And then the next was one of the reports that is required by the revenue division, federal income tax changes. It's required by Arkansas statute.
Senator Jimmy Hickey [00:40:05] I'm sorry, Paul. This is on your new sheet you have. So if you're looking at your old one from last time, these two won't be on there. It'll be on the new sheet. So I don't know which report everybody's looking at. So it's the DFA Revenue Division Federal income tax changes.
Paul Gehring [00:40:19] That's correct. Okay. And also, one thing that's important is federal tax changes can be incredibly complex. Of course, our members of our tax sections, we keep abreast of things that we need to be aware of certainly for administration of the Arkansas income tax. The issue is that in terms of the value of this information and the amount of time that would be required to commit to it, we would recommend, respectfully, that we discontinue that report.
Senator Bart Hester [00:41:02] Who's the user of that report? It's federal.
Paul Gehring [00:41:07] That's a fair point. Senator Hester, I think that typically, if you are going to be interested in federal tax changes, you would go to the Internal Revenue Service.
Senator Bart Hester [00:41:16] That's my thought.
Paul Gehring [00:41:17] Also there are large companies that are dedicated to providing these resources to tax practitioners. I think our individual should be tasked with providing information regarding our own states tax laws as opposed to trying to summarize federal tax law.
Senator Jimmy Hickey [00:41:38] Senator Petty.
Senator Jim Petty [00:41:39] Just a little more about the report. Is it just summarizing the federal tax changes or then identifying the differences in the Arkansas and federal tax?
Paul Gehring [00:41:52] That would that could potentially be the usefulness of the reports of identifying the disparity between the two, because as a state that selectively adopts the Internal Revenue Code, certainly right now we like to be as current as possible. But it's the up to the General Assembly to adopt any changes. Those federal tax changes that are adopted are considered during the session. If they rise to the level of importance, for example, the federal changes on depreciation and expensing property, that was an issue that was important to the General Assembly in previous session where we had a much less generous provision than the federal government had provided. But there are so many provisions in the federal tax code where we are out of step. The federal tax code is such a moving target, from time to time, it would be very difficult to encompass in that report all of this, the disparities between the two and instead focus upon those that are important from time to time. If a member of the General Assembly wanted us to evaluate what it would cost to make a change, that we can be tasked to do so with being provided with a draft bill.
Senator Jim Petty [00:43:12] Well, I agree with Senator Hester, though. If it's just summarizing the federal taxes, it's a no brainer. But if it's for some reason a past General Assembly or whatever is is trying to capture the differences or major differences in Arkansas and federal, I think that that maybe there's something there we don't know about.
Senator Jimmy Hickey [00:43:33] Senator Hester.
Senator Bart Hester [00:43:35] Can I ask a question of staff? You guys can see when this was originally requested or directed, do you keep notes on why the member asked? Do you keep that? You don't. So we couldn't look back and see what the member was.
Senator Jimmy Hickey [00:43:53] DFA, do you know? That's a good question. Oon this particular code, looks like it's been there.
Paul Gehring [00:44:00] Looks like it was 1989. And also it does require this look at how it may affect Arkansas taxpayers differently. But certainly that would be a pretty large undertaking to provide.
Senator Bart Hester [00:44:20] That was before the Internet.
Senator Jimmy Hickey [00:44:22] Okay. So any anybody have any? Without objection, then we're going to just say that this is going to be one we're all prepared to eliminate. Everybody okay with that? Anybody from the audience have anything to weigh on that? I'm going to reiterate, though, I do think that it's kind of like the statement you just made that stuck in my head. You know, the federal tax law is a huge monster that differs from us in tons of ways. And trying to incorporate all that into one report is just almost, I don't even know how you do it. So the thing is whenever we're doing those talking points, whenever Senator Crowell is going to be presenting these and also in the House. Because I could see some members probably have questions on that whenever they first see it. I think those explanations are going to be of utmost importance to us whenever we get on the floor. All right. And then fortunately, this new sheet has a line item. So I guess we're on 42.
Paul Gehring [00:45:26] That's right. This is the last report that we have on our list that's a DFA report. It is required by our regulatory division from the Alcoholic Beverage Control. It's a report that's provided under statute to discuss ABC permits, alcohol manufacturing, taxes collected and fees collected. It would require an investment in time to provide the report. Minimal interest that we've received in the report individually. Certainly there may be members of the General Assembly that are interested in that information. But given the time required versus the level of interest that we've seen, respectfully, we would recommend that would be discontinued.
Senator Jimmy Hickey [00:46:13] Yes, sir. Senator Hammer.
Senator Kim Hammer [00:46:15] Okay. So a while ago I asked, and we got diverted a little bit about how many requests do you get from legislators or from the bureau who might be using, legislators using that. Is this going to be and ongoing annual thing every time we come together? I won't be here next time but you all will. Is this going to be back each time, this report?
Senator Jimmy Hickey [00:46:37] Well that's what's happening now because of statute. So what we're doing is asking them to repeal it so it'll be totally eliminated.
Senator Kim Hammer [00:46:44] Right. But I mean, this type of report is going to be presented to tax and revenue every time we come into session.
Senator Jimmy Hickey [00:46:51] No. As, Senator Hester, we had been proactive. He's done this across-- I don't want to speak for you, but he's done this across all of our committees. So this is just like a cleanup right now. So, no, it will not be.
Senator Kim Hammer [00:47:09] Well, the reason I'm asking--
Senator Jimmy Hickey [00:47:11] Extraordinary.
Senator Kim Hammer [00:47:13] Where I was going with this in the future, I don't know if it would serve any value or not, but I'm thinking if you guys don't get a request from BLR or legislator throughout the year and these reports are being produced, some very legitimate, some ongoing process to determine whether they're of value or not. I mean, if you told me we didn't have one single legislator or one single request from BLR on report whatever, I might kind of consider how important is it then based on the actual interest in it other than it's going to be produced and maybe that information is going to be asked in the annual report once presented.
Senator Bart Hester [00:47:53] That is on column G, if anyone's asked about it in the prior years. They say no or yes. That was one of my original questions, like are members asking about this, is someone using it.
Senator Kim Hammer [00:48:08] Okay, I'm sorry I didn't see the heading at the top or anything.
Senator Bart Hester [00:48:13] I didn't have a heading. It's hard to know what that is, but that was what column G was, are members asking about this.
Senator Kim Hammer [00:48:21] Gotcha.
Senator Jimmy Hickey [00:48:22] That's good information to have since we're on the last one, because I've asked staff, I said, what is that over there mean. That's on you, Senator. A heading would have been nice. At first I thought those were DFA's recommendations.
Paul Gehring [00:48:38] No, sir. Yeah, some of these, they would not match up.
Senator Jimmy Hickey [00:48:44] Yes, sir. Okay. Anybody from the audience have any any questions on the last one? So that will be we something we need to do the repeal though. So if we can get that prepared and again, talking points might be.
Paul Gehring [00:49:01] Yes, sir. And if so, we will be certain to circle back with the sponsor of the legislation to make sure that we have a summary of each report that would be helpful for when the bill is presented in committee and on the floor.
Senator Jimmy Hickey [00:49:16] Super. Okay. Senator Hester.
Paul Gehring [00:49:20] Well, I will say one of the big one on our budget books, we've already had an initial meeting on that. We'll see if there's any movement there. I understand the impetus, but we'll see if there's any movement. We are working on it.
Paul Gehring [00:49:39] And just a point of clarification. The talking points would be tied to those that we're going to either repeal or change how often the report is provided, correct?
Senator Jimmy Hickey [00:49:51] Yes.
Paul Gehring [00:49:52] Yes, sir.
Senator Jimmy Hickey [00:49:54] So one other thing. As we went down through there, there might be some that we were going to go back and look at. I think we've skipped over some. I hope somebody here was keeping up with that, I think. Okay. So, Brandon, Mr. Schmitz was keeping up with those. So if you want to, we'll just let you all gather that information and then just, at your convenience, just if you'll get with Mr. Smith and we'll get that back on the agenda. So if y'all want to do it next week or the following week, just whatever's best for you. Sure. We'll get back to you. Okay. Good work. We appreciate it. Yeah. Thank you.
Paul Gehring [00:50:29] Thank you.
Senator Jimmy Hickey [00:50:32] Okay with that, there's nothing else on the agenda today. Right. As you can see at the very top of the report, we have some of the other with the AEDC, tax appeals. They'll be here next week to discuss theirs, just like DFA. And I sat down and did this. So next week we'll just plan on finishing ours up. Other than what the few that DFA is going to come back with some extra information. All right. With that, we're adjourned.
