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Senate committee advances broad tax package — grocery tax substitute adopted; machinery tax cut draws fiscal concern
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Summary
The Senate Finance and Taxation Committee advanced a cluster of tax bills, adopting a substitute that removes a second penny on grocery tax and advancing a machinery sales-tax cut with a roughly $11 million fiscal note, prompting debate over revenue loss and impacts on education funding.
The Senate Finance and Taxation Committee advanced a package of tax bills that included a substitute merging grocery-tax changes with local authority to reduce sales tax on groceries and a separate proposal to lower the state sales-and-use tax on machinery.
"We don't know where the edge of the cliff is. We don't know what the economy is gonna be like in a year or 2 years," the committee chair said at the meeting as senators discussed the risks and trade-offs of tax cuts. Committee members repeatedly raised concerns about the scale of revenue reduction and the absence of explicit offsets.
The committee adopted a substitute for House Bill 386 that removes a previously proposed "second penny" on groceries and incorporates language from House Bill 387 clarifying local government authority to reduce sales tax on groceries incrementally. The substitute was adopted by roll call; the committee later gave HB 386 a favorable report on a recorded vote of 14 ayes and 1 nay.
Senators also advanced a substitute for House Bill 387 that would reduce sales-and-use tax on machinery to 1.25 percent; the sponsor's office said the fiscal note on that machinery change is $11,000,000. Committee discussion flagged the larger fiscal consequences: the grocery portion had a previously cited fiscal note of about $121,000,000, and senators noted combining measures increases the budgetary impact.
"That's $11,000,000 we can save in the budget that we don't have to try to make up just because we're trying to give business some," Senator Singleton said in debate, urging prioritizing family relief over business cuts. Senator Figures asked for clearer definitions in statutory text: "I don't see a definition of machinery. Exactly what is machinery, I think that needs to be listed in the bill."
Other tax measures advanced with little debate included: a short-term remote-worker exemption for nonresident workers who spend fewer than 30 days in the state (House Bill 379, favorable report 15-0), phased increases in IRA withdrawal exemptions (HB388, favorable), a standard deduction change (HB389, favorable), and a sales/use exemption for a state investment bank (Senate Bill 120, favorable). The eyeglasses and contact lenses sales-tax repeal (HB176) also received a favorable report.
Votes summarized in committee records: - HB 386 (substitute combining grocery/local authority): substitute adopted (vote recorded), final favorable report 14-1. - HB 387 (machinery tax cut substitute): substitute adopted; fiscal note cited ~$11,000,000. - HB 379 (remote-worker short-term exemption): favorable report 15-0. - HB 388, HB 389, SB 120, HB 176: favorable reports (vote tallies recorded in committee minutes).
Committee members asked sponsors to return with clearer statutory definitions (notably for "machinery") and with proposals for offsets or targeted adjustments to limit revenue loss. All advanced measures will proceed to the Senate floor for further consideration and possible amendment.
