Daily Legislative Update

Monday, April 1, 2013

78^th Day of the 89^th General Assembly

 TODAY AT THE CAPITOL

House convenes at 1:30 p.m.

Senate convenes at 1:30 p.m.

 Committee Meetings:

 JOINT:

 SENATE:

 HOUSE:

None listed.

 ISSUES

TORT REFORM

***SJR 5 by Sen. Eddie Joe Williams is a proposed amendment to Arkansas’s Constitution. Section 1 of SJR5 amends the provision of the Constitution relied upon by the Court in Bayer Cropscience LP v. Schafer to explicitly give the legislature the authority to enact “general laws regulating the award of noneconomic damages and punitive damages.” Section 2 of SJR5 makes clear that while the legislature will delegate nonexclusive authority to the Arkansas Supreme Court to develop procedural rules for courts, the legislature has the constitutional authority to reform unfair court procedures or to curb abuses of the legal system. SJR 5 is on the Joint Committee on Constitutional Amendments agenda. The State Chamber/AIA supports this proposal. _

 TAX REFORM

***HB 1966 by Speaker Davy Carter is on today’s House calendar. It would increase the income tax exemption from 30 percent to 70 percent for capital gains over $5 million that are from investments made before January 1, 2014. It would revert back to the standard 30 percent exemption for such capital gains after January 1, 2014 and create a permanent 70 percent exemption for capital gains from the sale of Arkansas property acquired after that date and owned for more than one year before the sale. A reduction of the capital gains tax has been a piece of the State Chamber/AIA Legislative Agenda for many years. _

 ***HB 1585 by Rep. Charlie Collins is on today’s House calendar to adopt an amendment adding co-sponsors. This bill would change the personal income tax rates by elevating the top tax rate from $34,000 to $44,000 and then lowering the top tax bracket from 7 percent to 6.875 percent. The bill also makes technical corrections to the tax code. _

 UNEMPLOYMENT INSURANCE

***HB 2206 by Rep. Hank Wilkins, which was filed as a shell bill, is on today’s House calendar for amendment. Amendment No. 1 amends § 11-10-210, the Department of Workforce Services Law, excluding services performed under a contract by a licensed person from the definition of “employment” and providing that the Department is under the Administrative Procedure Act. It also amends § 11- 10-308(d), requiring petitions for review of Department determinations to be filed in the circuit court in which the petitioner resides or does business under the AAPA. _

 ***SB 575 by Sen. Linda Chesterfield is on today’s House calendar for final consideration. This bill would amend various provisions related to unemployment compensation, including the addition of a definition of misconduct in connection with work as a disqualification for benefits, procedure for recovery of overpayments and more. SB 575 was filed on behalf of the Department of Workforce Services. The State Chamber/AIA supports this bill. _

 ***SB 802 by Sen. David Sanders is on the Senate Public Health, Welfare and Labor Committee agenda. This bill would specify that owner/operators providing commercial motor vehicles or drivers to a motor carrier under contract are not employees of the carrier but independent contractors for purposes of workers’ compensation law. _

 **SB 850 by Sen. Jim Hendren is on Monday’s Senate calendar for amendment. Amendment No. 3 makes technical changes to clarify effective dates. As originally drafted, the bill would reduce the rate of the Unemployment Stabilization Tax from 0.7 percent to 0.5 percent and, when assets of the Unemployment Compensation Fund are less than 0.4 percent of total payrolls during the preceding calendar, from 0.8 percent to 0.6 percent. Amendment No. 1 sets the effective date for the tax changes in this bill as 2014 rather than 2013. Amendment No. 2 adds an additional section that amends § 11-10-705(a), requiring an employer’s tax record to include a payment representing a stabilization tax payment on wages paid by the employer. The amendment also clarifies that the changes in this bill only apply to calendar years 2014 and after. _

 ***SB 857 by Sen. Alan Clark is on Monday’s House calendar. This bill would require the Department of Workforce Services to enforce provisions concerning ineligibility for extended unemployment benefits for failure to accept or seek work and to report results to the Legislative Council quarterly. Amendment No. 1 would create specific requirements for the director’s reports to the Legislative Council and require the Department to facilitate electronic reporting of unemployment benefit recipients who refuse to take jobs or fail drug tests. It also would require the Department to notify employers with instructions for reporting such cases and remove liability for an employer who makes such a report with the belief that it is true. _

 ***SB 875 by Sen. Bart Hester is on Monday’s Senate calendar for amendment. Amendment No. 2 clarifies that the changes in this bill are effective for initial claims filed on the latter of the effective dates stated in this bill. As originally drafted, this bill would reduce weekly unemployment benefits from 66 2/3 percent to 60 percent of the average weekly wage for insured employment, with a maximum benefit amount of $325 per week. Amendment No. 1 would prevent the 10 percent reduction in weekly benefits mandated by this bill from reducing an individual’s weekly benefit amount below $81. _

 ***SB 884 by Sen. Stephanie Flowers is on the Senate Public Health, Welfare and Labor Committee agenda. This bill would amend ACA 11-10- 210(f), exempting licensed unemployment agencies that report payments to individuals through IRS Form 1099 from the provisions of the section, and makes the exemption retroactive through January 1, 2003. _

 ***SB 1112 by Sen. Robert Thompson is on the Senate Public Health, Welfare and Labor Committee agenda. This bill would repeal most of the changes made by the Department of Workforce Service’s (DWS) bill in the 2011 Regular Session. Act 1040 of 2011 extended the expiration date from 2011 to 2015 for mandatory deposits of portions of proceeds from the stabilization tax in the UI Trust Fund and Workforce Services Training Trust Fund. The language in SB 1112 addresses UI eligibility related to certain employment in an educational setting. _

 ***SB 1116 by Sen. Ronald Caldwell is on Monday’s Senate calendar for amendment. Amendment No. 2 states that the additional rate increases created by this bill only apply to calendar years beginning January 1, 2014 and thereafter. As originally drafted, SB 1116 would provide for an increase in an employer’s additional contribution assessments of the unemployment insurance stabilization tax. Amendment No. 1 sets rate calculations effective January 1, 2014. It also adds a new section, amending ACA 11-10-706(a)(2), allowing the stabilization tax to be credited to the separate accounts of each employer. _

 EMINENT DOMAIN

***SB 787 by Sen. Joyce Elliott is on the Senate Judiciary Committee agenda.
As originally filed, this bill would require that the court appoint and the condemning entity pay for legal representation for property owners in any eminent domain proceeding who do not have attorneys. It would also require compensation for property taken to include costs of relocation. Two amendments have been filed for this bill. Amendment No. 1 replaces the original bill. The amendment would require the condemning utility to pay for legal representation for eminent domain proceedings and require that all eminent domain proceedings comply with federal law unless explicitly exempted. The amendment also adds an emergency clause. Amendment No. 2 adds railroads and video service providers to the list of exempted entities. It also clarifies language providing exemptions for entities obtaining real property through eminent domain. _

 WORKERS’ COMPENSATION

***SB 813 by Sen. Jon Woods is on the Senate Public Health, Welfare and Labor Committee agenda. This bill would amend Workers’ Compensation law to require a complaint of muscle spasms to be an objective finding, with a specific diagnosis of palpable muscle spasms to qualify as a compensable impairment. _

 INDEMNITY CLAUSES

***SB 917 by Sen. Bruce Holland would extend provisions regarding the unenforceability of a construction-contract, hold-harmless clause to limit liability for death or bodily injury to the construction company’s surety or insurer. It remains on the Senate Insurance and Commerce Committee agenda. _

 THIS WEEK AT THE CAPITOL

Committee Meetings: Tuesday, April 2, 2013

 JOINT:

 SENATE:

 HOUSE:

 ISSUES

EMINENT DOMAIN

***SB 367 by Sen. Jim Hendren has been set for a Special Order of Business in the House Judiciary Committee on Thursday, April 4. As originally drafted, the bill would provide for compensation of private property owners whose property loses fair market value as a result of a government regulatory program. It would not apply to a property owner if the regulatory program does not directly apply to the property. House Amendment No. 1 requires a 25 percent decrease in the fair market value of a piece of property before the owner is entitled to compensation from the government (rather than 10 percent). The amendment also states that this subchapter does not apply to rules and regulations under the control of certain state agencies or to certain eminent domain proceedings. _

 MINIMUM WAGE

***HB 1402 by Rep. Butch Wilkins, which has been defeated once, is back on the active agenda in the House Public Health, Welfare and Labor Committee. This bill would raise the state hourly minimum wage from $6.25 to $8.25 and changes the calculation for student employees, from an effective hourly minimum wage of $5.52 to $5.36. _

 WORKERS’ COMPENSATION

***HB 2107 by Rep. Stephanie Malone would amend § 11-9-410, allowing an employer to receive a future credit in a claim for workers’ compensation benefits if the employer has been reimbursed for payment of such benefits as a result of bringing a successful action against a liable third party. The bill states that the right of an employer or carrier to recover damages against a third party is absolute and that the employer’s consent is required before any other action in tort against the third party may be taken. Amendment No. 2 instructs a court hearing a case under this section to not consider the “made whole doctrine” when considering the entitlement of an employer to an absolute lien in a third party claim regarding workers’ compensation. This bill has been referred to the House Insurance and Commerce Committee. The State Chamber/AIA supports this bill. _

 ***SB 515 by Sen. Cecile Bledsoe would amend Workers’ Compensation Law, providing that an employee who retains a compensable injury is entitled to benefits during the healing period only if the employer does not have work available with the employee’s medical restrictions. This bill received a Do Pass recommendation from the Senate Public Health, Welfare and Labor Committee, but has not yet been considered by the Senate. _

 ***SB 589 by Sen. Jon Woods received a Do Pass as Amended recommendation from the Senate Judiciary Committee, but has not been put on the Senate calendar. Amendment No. 1 restricts the scope of this bill to firefighters and law enforcement officers only, removing mention of medical and other emergency personnel. The amendment also removes the provision that would increase temporary and total disability from 26 to 52 weeks (as was included in the original bill). As originally drafted, this bill would have defined an emergency responder for purposes of workers’ compensation for mental injury or illness as a compensated person or volunteer who is acting in an assigned role in public safety and emergency services. It would also have increased temporary total disability from 26 to 52 weeks. The State Chamber/AIA is opposed to this bill. _

 UNEMPLOYMENT INSURANCE

***SB 542 by Sen. Missy Irvin is on the House Public Health, Welfare and Labor Committee agenda. As originally drafted, the bill would require the Department of Workforce Services (DWS) to track false statements and misrepresentation by applicants for unemployment benefits and report to the Legislative Council. Amendment No. 1 would prohibit termination of unemployment benefits from false statements or misrepresentations made by the claimant outside of the current benefit year. The amendment would shorten the statute of limitations to allow for temporary disqualifications for reporting false statements from 5 years to 2 1/2 years. It also would remove the new tracking and reporting requirements, and would require DWS to provide reports of unemployment insurance claim fraud upon request by the Legislative Council. _

 INDEMNITY CLAUSES

***SB 762 by Sen. Jeremy Hutchinson would prohibit enforcement of indemnity or hold harmless clauses in motor carrier transportation contracts. An amendment was filed that would exclude insurance contracts from the rules created in this bill. SB 762 received a Do Pass recommendation from the Senate Judiciary Committee, but the bill has not been considered by the Senate. _

 UNITARY COMBINED INCOME TAX REPORTING

***HB 1845 by Rep. Jim Nickels would define tax haven and unitary business and require corporations with nexus to Arkansas engaged in a unitary business with another corporation to file a combined income tax report. This bill is on the House Revenue and Tax Committee agenda. The State Chamber/AIA is opposed to this bill. _

 EMPLOYEE HANDGUNS ON COMPANY PROPERTY

***HB 1269 by Rep. John Catlett remains on the deferred list in the House Judiciary Committee. The bill would prohibit an employer from basing an employee’s employment status on concealed handgun licensure and would require employers to permit employees with handgun licenses to possess a handgun locked inside a vehicle in the employer’s parking lot. It includes exemptions for certain properties owned by chemical, oil, or gas companies and for property owned by a person other than the employer that is subject to a mineral lease. It also precludes liability of an employer for damages resulting from an employee’s possession of a handgun and states that the employer does not have a duty to patrol or secure the parking area. In response to State Chamber/AIA member comments, we are opposed to this bill.

 STATE CHAMBER/AIA TAX BILLS

TAX REDUCTION FOR MANUFACTURERS AND IPPs

***HB 1218 by Rep. Lane Jean and Sen. Bill Sample remains on the House Revenue and Tax Committee agenda. It has been amended to remove the final step of the proposed excise tax reduction on one portion of the sales of utilities to manufacturers in NAICS codes 31-32-33, reducing the tax on sales of utilities to facilities that use combined-cycle gas turbine technology to 1 percent by 2015 (but not 0 percent, as in the last engrossment of the bill). The bill also continues the phased reduction of the excise tax on the purchase of natural gas used in the production of electricity. However, the one-eighth (1/8) of one percent conservation tax and the temporary sales tax of one-half (1/2) of one percent highway tax would not be eliminated for manufacturers or independent power producers. _

 TAX REDUCTION FOR REPAIR AND REPLACEMENT PARTS

***SB 334 by Sen. Jake Files and Rep. Tommy Wren remains on the Senate Revenue and Tax Committee agenda. This bill would provide a refund of sales and use taxes for expenditures on repairs and replacement of certain machinery and equipment used directly in manufacturing. As originally drafted, the bill set a six year schedule for gradually increasing the refund to 100 percent in 2018. However, the one-eighth (1/8) of one percent conservation tax and the temporary sales tax of one-half (1/2) of one percent highway tax would not be eliminated. _

 It is not too late to contact your legislators and tell them about the importance of these job-creating and job-protecting tax reductions to your business. You may find contact information on the General Assembly’s website.