HB1030, which would cap the sales taxes on trucks and trailers in Arkansas, may be in trouble. However, an effort is under way to salvage the bill, and in the meantime, affected truckers are getting some help from Oklahoma, which has extended its registration deadline.
The bill was a victim of the state's revenue shortfall, according to Lane Kidd of the Arkansas Trucking Association. Initially, it was estimated HB1030 would cause a shortfall of $3 million to $4 million a year in the state treasury. The shortfall would likely get smaller as truckers and fleets began to move their trucks back to Arkansas because of the lower tax rates HB1030 would create.
A compromise that would save the bill is already being crafted. Sen. Jerry Bookout, D-Jonesboro, who is guiding the bill through the Senate, said the Committee on Revenue and Taxation was scheduled to take up an amendment to the bill the morning of Feb. 26 that would transfer all vehicle title fees from the highway fund to the general fund. The amount would be roughly the same as the shortfall, $3 million, making HB1030 revenue neutral.
Initially, the state's highway department indicated it would not oppose the measure. The amount represents a fraction of the highway budget, which runs in the range of a billion dollars a year - "a drop in the bucket overall," Kidd said.
However, since the compromise was first crafted, a number of events have derailed the attempt to save the bill. First, the committee could not meet because of the lingering effects of the snowstorm that struck the area this week. Many committee members were not able to get to the capitol.
Then, the highway department's support for the compromise wavered, and a second compromise was also rejected. That effort involved taking $4 out of a $5 transfer fee and moving that money to general revenue. The highway department has opposed that proposal, Bookout said.
"We're trying to figure out a way that we can make it revenue neutral because Arkansas, like everybody else, is having a heck of a time with their finances," Bookout said. "We're trying to figure a way we can entice the truckers to come back home and at the same time make it revenue neutral.
"We'd like for them not to have to pay sales tax at all."
Sources in Little Rock said the bill's supporters had hoped to add the amendment on the floor of the Senate the afternoon of Feb. 26. However, that will not happen at this point; the bill is now back in committee, Bookout said, and will be taken up by that body, possibly as late as Wednesday, March 5.
HB1030 passed the House 84-13 on Jan. 29. But it apparently stalled in the Senate, where a vote by the full body was recently delayed and it was referred back to the Senate Committee on Revenue and Taxation Feb. 25.
The timing of the bill was considered critical for Arkansas truckers who had base plated out of state in the past. Oklahoma officials had not been allowing out-of-state truckers to renew their Oklahoma tags until they settled their policy on owner-operators. The Oklahoma tags were scheduled to expire March 1, forcing truckers to return their tags to their home states.
But that looming deadline is no more. The Oklahoma Tax Commission sent a notice Feb. 26 extending the March 1 registration deadline to April 1, 2003.
HB1030 would cap the sales tax on trucks bought or sold in the state. If the bill passes, only the first $1,000 from the sale of a truck will be taxed in the future and only the first $500 from the sale of a trailer will be taxed. The news service said that under current rates, that would cap the state sales tax on a truck at $51.25 and on a trailer at $25.62.
The bill had contained an amnesty provision, allowing Arkansas truckers who base plated elsewhere in the past to return to the state without paying back taxes. The Arkansas attorney general issued an opinion that the amnesty was unconstitutional, and it was removed.
The Arkansas Department of Finance and Administration has said it intends to collect back sales tax on those trucks returning home at the current tax rates, which for some truckers could create a tax bill running thousands of dollars.
Arkansas is one of only seven states that charges truckers the full amount of sales tax on the sale of tractors and trailers, according to the bill's sponsors.
In addition, officials of the International Registration Plan, or IRP, have indicated the trucker's previous plates were not illegal - which would mean they would not owe back tax in Arkansas. The IRP is a registration reciprocity agreement among states and provinces providing for payment of license fees on the basis of total distance operated in all jurisdictions.
In a letter sent to Arkansas officials Jan. 27, Robert Pitcher of IRP Inc. said Arkansas truckers who had previously base plated in states such as Oklahoma had done so legally under the multistate agreement's rules at the time.
"This letter is to inform you that the board has never taken a position that motor carriers registered under Oklahoma law as in effect prior to April 15, 2002, were not legally registered, or that registrations issued to such carriers were invalid under the plan," Pitcher wrote in the letter.
--by Mark H. Reddig, associate editor