LITTLE ROCK, Ark. — Gov. Asa Hutchinson defended his $50 million plan to cut taxes for thousands of low-income Arkansans on Wednesday as the state House speaker floated the possibility that lawmakers may not enact any tax cuts when they return for the session next week.
The Republican governor said holding off on his plan to cut taxes for 657,000 residents making less than $21,000 a year would delay efforts to reduce taxes across the board. Hutchinson was elected in 2014 after promising to reduce income taxes, and lawmakers in 2015 approved his plan to cut taxes for middle-income residents by $103 million. Hutchinson has called the tax cut plan one of his top priorities for the session, which begins Monday.
"It’s a very conservative approach, about as modest an approach you can have and still have a commitment to reducing income tax rates and providing tax relief," Hutchinson said at a forum with legislative leaders hosted by the Arkansas Associated Press Managing Editors. "In my view, it’s the minimum, it’s the most conservative approach and we ought to do it."
Hutchinson’s proposal faces some resistance from some fellow Republicans who have called for deeper cuts that take effect more quickly. House Speaker Jeremy Gillam said it’s possible lawmakers may wait until another session to enact any reductions.
"I think one of the concepts and ideas that will be talked about will be just taking a deep breath and maybe not doing anything this time and coming back in ‘19 and seeing where we’re at or maybe in a special session," the Republican speaker said.
Hutchinson and legislative leaders also said they don’t expect another battle over the funding of the state’s hybrid Medicaid expansion as Republicans in Congress hope to follow through on their vow to repeal the law that enabled the expanded coverage. The top Republican in the Senate said he expected lawmakers to work on modifications to the program, which uses federal funds to purchase private insurance for low-income residents, but longer-term changes will have to wait until after Congress acts.
"I think Arkansas Works will probably continue," Senate Majority Leader Jim Hendren said, referring to the hybrid expansion program. "I think the modification of Arkansas works will begin even before we know for certain what the replacement model out of D.C. will be."
Hendren said the modifications could include collecting co-pays from some on the program and requirement that participants be working or in a job training program.
Hutchinson and lawmakers reauthorized the expansion through an unusual procedural move last year after facing heavy resistance from a handful of GOP opponents who called the expanded coverage an embrace of the health care overhaul they want repealed. Hutchinson said he’s asked the Trump administration to give Arkansas and other states more flexibility on Medicaid expansion, including loosening the requirement that it cover those making 138 percent of the federal poverty level.
"The battle is not trying to undo Arkansas Works," Hutchinson said. "The battle is getting broader waivers from the Trump administration, having more flexibility for the state and more controls over those numbers."
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