LITTLE ROCK -- Democratic gubernatorial hopeful Mike Ross on Monday proposed exempting veterans' retirement pay from the state's income tax, but said he first wants to study how to phase in a cut that could eventually cost the state nearly $17 million a year.
Ross proposed the exemption as part of a series of proposals aimed at helping the state's 250,000 military veterans. It's the third major tax cut proposed by Ross, who is running against Republican nominee Asa Hutchinson.
"We could have veterans and military retirees moving to Arkansas and bringing with them a substantial paycheck in terms of military retirement," Ross said at a news conference at his campaign headquarters. "And that's money they're going to spend in the communities, stimulating the economy and helping put people to work."
Ross stopped short of offering a specific timeline for the exemption, saying he first wants an economic impact study that would look at the best way to carry out the exemption.
Current law exempts the first $6,000 of retirement benefits for all Arkansans from state income tax. State finance officials estimated a proposal last year to phase in a $40,000 exemption on veterans' retirement benefits would eventually cost the state $16.9 million a year.
Ross said he believed the tax exemption could be paid for with savings from another proposal he unveiled Monday that would expand the use of a program aimed at putting veterans convicted of certain drug-related offenses in treatment rather than prison. Ross estimated the state could save $16 million with the program.
Hutchinson earlier this month laid out a series of proposals aimed at veterans, including a plan to allow returning veterans to enroll at Arkansas colleges and universities at lower, in-state, tuition rates regardless of how long they have lived in the state. Hutchinson said in a statement released by his campaign Monday that his proposals also include finding a way to exempt veterans from the state income tax.
"I understand and recognize the importance of our veterans and the critical role they have in the future of our state," Hutchinson said. "This is why I laid out my plan weeks ago to provide support for Arkansans who sacrificed their all for our freedoms."
Ross said the veterans' tax exemption would be at the same priority of other tax cuts he's proposed. Ross has also called for a gradual reduction in individual income tax rates and also cutting the tax manufacturers pay for repairing or partly replacing machinery. Hutchinson has also proposed gradually cutting individual income taxes, starting with a $100 million reduction for middle class workers in his first year if elected.
The two are running to succeed Democratic Gov. Mike Beebe, who is barred by term limits from seeking re-election.
State Desk on 08/26/2014