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Beebe vetoes sand tax exemption

Gov. Mike Beebe on Monday used his line-item veto power to veto a section of a budget bill that would exempt the sand used in oil and gas drilling from the state’s sales tax.

The House and Senate are scheduled to convene Wednesday for the official end of the session and could vote on whether to override the veto.

The Legislature approved the exemption as part of House Bill 1048, an appropriation for the Revenue Services Division of the state Department of Finance and Administration. The Special Language Committee added the exemption to the bill as an amendment.

“Substantive changes to Arkansas law that have no relation to appropriations, such as Section 16 of HB 1048, should rarely be considered during fiscal sessions,” Beebe said in a letter to legislators. “If they are to be considered at all, it should be done through the process the people established in our constitution, and not through ‘special language’ amendments to unrelated appropriation bills.”

Under state law, a two-thirds majority vote of both chambers of the Legislature is required to take up any non-budget bill during a fiscal session. Sen. Jonathan Dismang, R-Beebe, who proposed the amendment, said Monday that it did not require a two-thirds vote for consideration because it was merely a clarification that Arkansas’ sales tax exemption for manufacturers’ equipment applies to drillers’ sand.

“What we’re trying to do is clarify what legislative intent was,” he said.

A Pulaski County circuit judge ruled earlier this month that the exemption for manufacturers’ equipment applies to drillers’ sand, but state officials have said they will appeal the ruling. The exemption for sand is projected to cost the state $5 million a year.

Dismang said he is assessing the level of support for a veto override, but he noted that the appropriation bill received the three-fourths majority vote in both chambers needed to approve any appropriation, a higher hurdle than the simple majority vote in both chambers needed to override a veto.

“It passed both houses with more than enough votes needed and does have the support of both Democrats and Republicans,” he said.

House Majority Leader Bruce Westerman, R-Hot Springs, issued a statement Monday criticizing Beebe for the veto.

“Gov. Beebe has made a bad choice that threatens Arkansas jobs from our state’s natural gas industry in a time of high unemployment, and when domestically produced (liquefied natural gas) is being touted as a potential trade tool to combat Russian influence in Europe,” Westerman said.

Senate President Pro Tem Michael Lamoureux, R-Russellville, said Monday he believed there was support in the Senate for an override.

“I’ve heard several members say that we shouldn’t be collecting the tax in the first place,” he said.

This is the third time during Beebe’s two terms in office that the Democratic governor has issued a line-item veto. During the 2103 regular session he vetoed three bills in their entirety, one requiring voters to show ID at the polls and two setting new restrictions on abortion, but the Republican-controlled Legislature overrode all three vetoes.

The stricter of the two abortion measures sought to ban most abortions at 12 weeks or later into a pregnancy. On Friday, a federal ruled the ban was unconstitutional but left standing standing a provision of the law requiring a check for a fetal heartbeat before any abortion at 12 weeks or later.

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