A top state House Republican is moving to have the state speed up tax breaks for the insurance industry.
The proposal by Minority Whip David Livingston of Peoria introduced Nov. 18 would drop the effective tax on insurance premiums from 2 percent now to 1.7 percent in 2021.
Legislative staffers have estimated the lost revenues at $35 million.
Livingston is defending the move, pointing out that lawmakers just last year approved the same reduction.
But House Minority Leader Eric Meyer, D-Paradise Valley, pointed out that was supposed to occur over a full decade, a move designed to minimize the impact on state revenues.
More to the point, Meyer said it belies what GOP leaders were saying just weeks ago when they insisted there wasn’t enough money in the budget to settle a lawsuit with public schools. He said that’s how they justified using state trust land proceeds instead.
And Meyer said that the move comes amid pressure not just to improve overall K-12 funding but also to restore cuts to the university system and provide additional dollars to the Department of Child Safety.
“We’ll have less funds to do that with accelerating tax cuts,” he said.
Livingston, however, sees the issue of having money to accelerate tax cuts through a different lens.
“I guess if the choice is spending more money or giving more money back to the people who pay for it, I will always give it back to the people.”
Livingston said the industry is due the tax breaks.
He pointed out that lawmakers have previously approved sharp cuts in corporate income taxes. Those measures reduced revenues this fiscal year by close to $70 million, with another $77 million next budget year and $74 million the year after that.
Insurers pay no corporate income taxes, instead giving the state a percentage of premiums. He said the measure approved earlier this year and his plan to speed up the process this coming session are simply a matter of fairness.
But the move would have immediate, albeit relatively small, fiscal implications.
The reduction already approved for next budget year would cut state revenues by $1.3 million; HB 2002 would boost that to $5.1 million.