Senate Votes to Exempt Unemployment Benefits from State Income Tax
LITTLE ROCK –The Senate has voted to exempt last year’s unemployment benefits from state income taxes, to help people who lost their jobs because of the economic impact of the Covid-19 pandemic.
Senate Bill 236 would apply to benefits paid in 2020 and 2021. The unemployment rate in Arkansas had been around four percent until the coronavirus pandemic caused widespread business closures, especially in hospitality, tourism and travel. The jobless rate spiked to around 10 percent before it began to improve.
Before the pandemic, about 44,000 people in Arkansas claimed unemployment in 2018 and 2019, a state revenue official told senators during a committee hearing on SB 236. Last year more than 281,000 people filed for unemployment, according to the Department of Workforce Services.
SB 236 will save those people more than $51 million in state income taxes when they file this year, the revenue official said.
The next step is for the bill to be considered by a House committee, and if advanced out of committee, to be voted on by the entire House.
On a voice vote, the House Judiciary Committee failed to advance a Senate bill known as the Stand Your Ground bill. It would repeal a provision in current laws that obligates you to retreat from a confrontation if you can safely do so. The bill is SB 24.
Senate and House sponsors are confident that the entire House will approve SB 24 if they can get it out of committee. The bill has already passed in the Senate, by a vote of 27-to-7.
The Senate approved HB 1195 to require pregnant women who are seeking an abortion to first call a hotline and get counseling on the availability of resources to help if she decides to keep her child. The hotline would be a toll-free number.
Sponsors say that fewer women will choose an abortion if they are fully informed about their options.
The Senate passed HB 1151 to postpone for a year the giving of letter grades to schools when the state issues school report cards. The pandemic has disrupted the ability of students to take standardized tests, which are a key factor in assigning letter grades to schools. The postponement is for the 2020-2021 school year.
The bill has passed the House and now goes to the governor.
The Senate has passed and sent to the House a bill to prohibit discrimination against people with disabilities who need an organ transplant. It is SB 155, also known as “Lila’s Law,” after a girl with Down syndrome who needed a heart transplant and was denied because of her disability.
State tax revenue in January was collected at record rates. Tax rates have not gone up, therefore the increase is an indication that the Arkansas economy is rebounding from the negative impact caused by the Covid-19 pandemic.
The state now has a surplus of about $400 million after the first seven months of the fiscal year. During the 2021 session legislators will decide how best to use the surplus. For example, the $51 million in income tax exemptions for unemployment benefits, written into SB 236, can be absorbed by the state because of the large surplus.