House Revenue & Taxation panel advances four bills, hears testimony on credits for caregivers, paid family leave and data centers

The House Committee on Revenue & Taxation voted to advance four bills on Oct. 12 and held hearings on several other tax proposals, including a proposed tax credit for unpaid family caregivers and a state employer tax credit for paid family leave.

The committee, chaired by Representative Kavanaugh, conducted voice votes on four measures that day and discussed fiscal impacts, amendments and administrative responsibilities for other bills that were only heard and not voted on.

Why it matters: Several of the measures the committee advanced affect how state tax policy interacts with veterans, military fines, property re-assessments and large data-center incentives. Several of the bills the committee only heard would create new tax credits that agencies said would require new administrative processes and caps to limit program cost and fraud.

Most important actions

Votes at a glance - House Bill 13-86 (Representative Kavanaugh): Establishes a uniform definition of "substantial improvement" for assessment purposes (25% threshold; disaster rebuild exception). Motion to pass made by Representative Kavanaugh; committee approved by voice vote. Outcome: approved (voice vote). Note: committee record shows no roll-call tally; vote taken by voice.

- House Bill 11-29 (Representative Zack Gramlich): Changes the acreage definition for veteran homestead protections to align with the Homestead Act (60 acres). Motion to pass was made and seconded; committee approved by voice vote. Outcome: approved (voice vote).

- House Bill 14-97 (Representative Stetson Painter, as amended): Adds the Department of Military to the list of agencies that can collect on fines by set-off against state tax refunds (amendment adopted to refine claimant-agency language). Committee approved the bill as amended by voice vote. Outcome: approved (voice vote).

- House Bill 14-44 (Representative Aaron Pilkington): Revises and expands the state's data-center incentive definitions and creates a category for "large-scale" data centers with minimum investment and Arkansas compensation requirements; the committee approved the bill by voice vote after discussion. Outcome: approved (voice vote).

What the committee heard (no final vote taken)

Caring for Caregivers tax credit (House Bill 10-76, Representative Ashley Hudson) Representative Ashley Hudson presented a proposed refundable income-tax credit for unpaid family caregivers (two-tiered: $2,000 to $3,000 depending on circumstance) with an annual statewide cap of $1,500,000. The committee adopted an amendment that would require caregivers to apply to the Division of Finance and Administration (DFA) for an eligibility certificate; DFA would issue certificates until the annual cap is exhausted on a first-come, first-served basis. Paul Gehring of DFA told the committee the department would need to track applications and asserted current DFA processes for nonrefundable credits and audit staff would be used to limit fraud; DFA said administering the credit would require additional staff and would operate under the annual cap.

Paid family-leave employer tax credit (House Bill 10-18, Representative Ashley Hudson) Representative Hudson also presented a voluntary employer tax credit that would equal 25% of wages paid during paid family leave, capped at $4,000 per employee per year. DFA provided a fiscal estimate that the credit could reduce general revenue by roughly $850,000 under the assumptions DFA and the Joint Committee on Taxation employed; DFA noted the bill places no overall cap on credits in its base form and that the $850,000 figure is the agency's best estimate.

Data-center incentive and administrative duties (House Bill 14-44, Representative Aaron Pilkington) Representative Pilkington proposed clarifying and expanding the state's existing data-center exemptions, lowering some qualifying-investment thresholds (for a category the bill calls "large scale" and for smaller large projects) and explicitly excluding cryptocurrency operations. The bill transfers oversight duties from the Department of Commerce to DFA for verifying qualified expenditures and compensation requirements; DFA testified that transferring those duties would require new staff and programming costs to administer sales-and-use tax exemptions and ongoing verification.

Storm-shelter tax credit (House Bill 13-66, Representative Denise Sennett) Representative Denise Sennett presented a proposal modeled on an Alabama statute to provide a tax credit (up to $3,000 per primary residence) for installation of qualified storm shelters meeting FEMA criteria; DFA estimated the state cap at $2,000,000 per year and estimated implementation programming costs.

Other items discussed - Representative Gramlich explained the intent of HB 11-29, noting earlier code language inadvertently changed homestead acreage limits and affected veterans. He said the bill aligns state code with the Homestead Act definition (60 acres). - Representative Painter explained HB 14-97 and the amendment adopted to add the Department of Military as a claimant agency for set-off against state tax refunds to collect certain military-justice fines.

Committee discussion and agency concerns DFA witnesses repeatedly told the committee that new tax credits, sales-and-use exemptions and the transfer of verification duties to DFA would require additional staff, tax-system programming and ongoing audit work. DFA and committee members discussed fraud risk and first-come, first-served allocation under statutory caps. The Arkansas Alzheimer's Association and AARP provided testimony supporting the caregiver credit and described the financial and time burdens borne by family caregivers.

Ending note Several bills advanced by the committee require further action on the House floor; other bills remain under study with fiscal-impact questions and administrative follow-up for DFA and the Arkansas Economic Development Commission (AEDC). The committee did not take roll-call votes; the four approved measures were advanced by voice vote and will move to the next stage in the legislative process.