Arkansas Gov. Mike Beebe proposed a $4.9 billion budget yesterday that calls for eliminating nearly all of the state's grocery tax next year if the state's payments to three school districts for desegregation and other key obligations decline over a six-month period.
Arkansas Business is reporting finance officials told lawmakers that Beebe is calling for reducing the state's grocery tax from 1.5 percent to 0.125 percent. The cut would eliminate all state sales tax on groceries except for a one-eighth cent tax for conservation approved by voters as part of a constitutional amendment.
The Department of Finance and Administration projected the state's surplus would be $300 million, increasing its original projection by $100 million. After the Medicaid assistance, that would leave about $160 million in one-time money available for other needs. Beebe said he's looking at several areas for the surplus, including replenishing an economic development incentive fund.