If you’re a license-holding professional, it may be harder than you’d expect to move your out-of-state license to Arkansas. Licensed workers from other states often have to go through the same licensing process all over again when relocating to Arkansas. These are unnecessary barriers that could convince you to move to other states. A solution many states, including neighboring Missouri, Mississippi, and Oklahoma, along with 16 other states, have recently implemented is a process known as universal licensing recognition (ULR). ULR refers to a system in which the licenses and certifications obtained by professionals in one state are recognized and accepted as valid in another state. This eliminates the need for professionals to obtain separate licenses and certifications in each state they work in, which can be a time-consuming and expensive process.

ULR allows licensed workers from other states to automatically or expeditiously become licensed in a new state. Exact processes differ slightly between states, but typically as long as applicants have one year of experience, are in good standing, and intend to establish residence in the new state, their licensing qualifications are recognized. When someone moves to Arkansas, we don’t make them pass additional qualifications to get an Arkansas driver’s license, since we know the rules don’t differ significantly between states. The same is true of licensing, yet we often do make individuals meet licensing requirements that exceed national standards before they can work in the state. Under the current status quo, Arkansas risks losing talented professionals to neighboring states with friendlier licensing recognition policies.

One of the primary benefits of ULR is increased mobility for professionals. With their licenses and certifications recognized across state lines, they are free to work in any state they choose, without the need to go through a cumbersome licensing process. This can be particularly beneficial for individuals who are looking to relocate their careers to a new job market, as they can take advantage of opportunities in other states without the added hassle of obtaining new licenses. While state ULR laws are fairly new, that residents of counties that border states that have enacted ULR policies are more likely to seek employment in neighboring counties across state lines, suggesting that friendlier licensing policy does have an effect on where people choose to work.��

Another benefit of universal licensing recognition is the improvement of standards in the industry. By establishing a universal set of licensing standards, it becomes easier for organizations to identify and recruit top talent from around the country. ULR also helps reduce the economic burden of licensing, since license holders moving to a new state will not have to pay the often high initial licensing and exam fees another time.��

Universal licensing recognition is a powerful tool that can benefit professionals, organizations, and consumers alike. By promoting mobility and lowering barriers to good jobs, it creates a more level playing field for professionals and helps to drive progress in the industry. State and many local governments spend millions of dollars each year on “economic development incentives” to try to attract jobs and businesses to Arkansas. ULR could do just that, without spending a dime of taxpayer money .As the world becomes increasingly interconnected, ULR will become increasingly important, and it is a concept that should be embraced by all stakeholders. A legal precedent for universal recognition already exists in Arkansas, since was enacted in the legislative session of that year for the spouses of active duty military personnel. It makes sense that if universal recognition benefits military spouses, it would also benefit other individuals who are either interested or compelled to move states.��

As of February 2023, 19 states have enacted universal licensing recognition legislation.��

1. Arizona (2019)
2. Colorado (2020)
3. Idaho (2020)
4. Iowa (2020)
5. Kansas (2021)
6. Mississippi (2021)
7. Missouri (2020)
8. Montana (2020)
9. Nevada (2017)
10. New Hampshire (2018)
11. New Jersey (2018)
12. New Mexico (2016, 2020)
13. Oklahoma (2021)
14. Ohio (2023)
15. Pennsylvania (2019)
16. South Dakota (2021)
17. Utah (2020)
18. Vermont (2020)
19. Wyoming (2021)

In a recently released study by the Institute for Justice, a public interest law firm, Arkansas was ranked as the 9th most burdensome state for licensing in the country. That’s compared to neighboring states like Mississippi and Louisiana at 44th and 45th most burdensome respectively. This is in part because Arkansas licenses more occupations on average than most other states. Out of a sample of 102 licensed occupations, Arkansas licenses 71 percent, compared to the 53 percent national average. Universal licensing recognition would therefore be a particularly efficient method for effective licensing reform in Arkansas.��

Arkansas should enact universal licensing recognition legislation comparable to laws passed already in the neighboring states of Missouri, Mississippi, and Oklahoma. Fortunately, there is a bill currently under consideration by the Arkansas State Legislature that would do just that. , sponsored by Senator Ricky Hill (R-Cabot), entitled “To Create the Automatic Occupational Licensure for Out-of-State Individuals Act” would be a massive improvement over the status quo in the state.��

SB90 would require Arkansas licensing boards to recognize out of state licenses provided the license holder has been in good standing for one year. If a professional is moving to Arkansas from a state that does not license their occupation, but Arkansas does license it, the bill requires that they have at least three years of experience in the occupation to be granted licensure in Arkansas. Additionally, licensing boards would be allowed to administer jurisprudence exams to out-of-state license holders where relevant. SB90 takes it one step further than some other states, since it does not contain a residency requirement – but only 5 of the current ULR states require residency to be established (see Table 1 of ).

Our legislators should strongly consider enacting SB90. A growing wave of states are adopting universal licensing policies, and Arkansas should do the same, or risk lagging behind our neighbors. ULR is a good policy that improves professional mobility, improves industry standards, and lowers the economic and legal burdens of professional licensure.��

References:

Follett, T., Herman, Z., and Hentze, I. (2021). Universal licensure recognition. National Conference of State Legislatures.

Deyo, D. and Plemmons, A. (2022). Have license, will travel: measuring the effects of universal licensing recognition on mobility. Economics Letters. 219.��

Institute for Justice. (2023). State Reforms for Universal Licensing Recognition.

Knepper, L., Deyo, D., Sweetland, K., Tiezzi, J., and Mena, A. (2022). License to Work: A National Study of Burdens from Occupational Licensing. 3rd Edition. Institute for Justice.

Dr. Jeremy Horpedahl and I spoke with Ryan Norris, State Director of the Arkansas Chapter of Americans for Prosperity, on his . Our conversation focused on the and more broadly about both tax and spending issues in Arkansas over the past few years.

The first half focusd on the during a planned upcoming special session. The two competing plans have potential benefits for different taxpayers. For example, a household earning around the median income of $43,000 stands to save at least $200 per year. This is a modest savings on a yearly basis. However, the proposed reforms set the stage for further reductions in the individual income tax in future legislative sessions.

Dr. Horpedahl explained the need to consider other tax reform pathways. These include eliminating the tax cliffs that happen when Arkansans earn slightly higher incomes. These slightly higher incomes and are taxed at higher rates on substantially similar income levels. He also recommended indexing the standard deduction, or the amount exempt from state income taxes to inflation. Without inflation indexing, the standard deduction becomes less valuable to taxpayers over time. This is critical since ��by an annualized average of 5.3% relative to 2020. Indexing the standard deduction makes Arkansas’s tax code more consistent since “all other elements of Arkansas’ tax code are already indexed to inflation.”

The second half of the discussion centered on state spending trends and finding ways to restrict spending while maintaining essential government services. The RSA came out of the depression-era economic situation when Arkansas defaulted on its state debt. After two to address taxes and debt, legislators adopted the RSA in the 1940s to consolidate around 100 different funds and prioritize state spending into categories (for example, the 2022 budget has four categories, A through D).

Dr. Horpedahl spoke about the importance of the RSA to state spending by reminding listeners that the RSA mandates spending cuts when the state collects less revenue than anticipated. This prevents the state from spending beyond its means and prioritizes essential spending necessary for the state government to carry out its constitutional responsibilities. It is also important to remember that the legislature must fully fund Category A to ensure continued support for essential government services. The RSA does not prevent increased spending if the tax revenues come in high.

Norris then transitioned to the state’s Long-Term Reserve Fund. Dr. Horpedahl suggested that while this fund has grown significantly in the past several years, there are still loose rules governing withdrawal from the fund. The state should consider ways to limit the Long-Term Reserve Fund from being misused for imprudent purposes. I also spoke about a that requires any excess state revenue to be returned to taxpayers.

There are specific steps that Arkansas could take to provide meaningful tax relief. The state should build on currently proposed income tax reforms, consider ways to guard LTRF balances, and keep Arkansas competitive with its neighboring states. Adopting these reforms puts the Natural State in an even stronger fiscal position.

See more of ACREs work on taxes, transparency, and occupational licensing reform below:

– Dr. Jeremy Horpedahl provides a non-partisan summary of Governor Hutchinson’s 2019 tax reduction plan on Capitol View.

– Dr. Horpedahl explains the necessary steps for Arkansas to eliminate its individual income tax.

– Dr. Jeremy Horpedahl proposes alternatives to increasing the sales tax to fund road construction. He cites equity and tax competitive concerns since Arkansas has a relatively high sales tax, relative to its neighboring states.

Occupational Licensing Review Committee Kicks Off Second Session – ACRE Policy Analyst Zach Burt summarizes his testimony on Seed Dealer Licenses before the Occupational Licensing Review Subcommittee.

– ACRE Policy Analyst Joyce Ajayi explains the need for increased transparency of school district budgets to discourage opportunistic behavior of financially burdened teachers.

How much cash and property was seized by law enforcement in Arkansas since 2010?

ACRE Director and BT����Associate Professor of Economics Dr. David Mitchell explained how often and how much property was taken through civil asset forfeiture since 2010 at a state Senate Judiciary Committee meeting at 1 p.m. Friday, December 18 at Room A in the MAC Building at the State Capitol.

Mitchell Testimony

Mitchell testified Arkansas has averaged about 1400 seizures per year, or about four per a day, since 2010.

��Mitchell said:

It is something that happens all the time. It’s not a rare occurrence. It happens all the time.”

Mitchell testified that over $68 million in currency has been seized by law enforcement since 2010. That’s about $75 million if numbers are adjusted for inflation to 2020 dollars.

Mitchell said:

Most of the currency seizures are relatively small amounts. Almost half of the currency seizures are under $1,000. The median is $1,045.”

The following chart shows the size of currency seizures, illustrating that they are mostly small amounts.��

Prosecutor Responds

of 2019 replaced civil asset forfeiture with a criminal procedure with some big exceptions. The law prohibits the state from seizing cash or property without a conviction first unless an exception applies. These include:

• being granted immunity or reduced punishment in exchange for testifying or assisting a law enforcement agency or prosecution
• fleeing or failing to appear in court
• abandoned or disclaimed ownership in the seized property
• agreed in writing with the prosecuting attorney to give up the property

The law was signed by Gov. Asa Hutchinson on March 15, 2019. It was sponsored by State Senator Bart Hester R-District 1 and State Representative Austin McCollum R-District 95. It and with .��

ACRE Affiliated Researcher and Bowen School of Law student Aaron Newell discussed the reform in an op-ed entitled “” in the Arkansas Democrat-Gazette on June 20, 2019.

Bob McMahan, Prosecutor Coordinator for the Office of the Prosecutor Coordinator, discussed Act 746 and why civil asset forfeiture is an “important tool” for prosecutors and law enforcement.

McMahan said:

The prosecutors actually assisted in the drafting of that specific piece of legislation to address at the time one of the most important concerns of the legislature to make sure that there was a conviction prior to forfeiture. We not only endorsed that, we assisted in the drafting of that. Forfeiture is an important tool for prosecutors and law enforcement. These are assets that are taken in conjunction or used with a crime. It’s a way to dismantle drug operations. It’s certainly a way to get after drug dealers by taking property.”

Sylvester Smith Testimony

Sylvester Smith, a defense attorney and President of Change Agents Inc., explained how civil asset forfeiture was used on the property of one of his clients, Patricia Tackett, in Hot Springs and asked for the legislature to consider certain changes to the law in order to make it easier for “innocent people” to reclaim property seized by law enforcement.��

Smith said:

I think civil forfeiture is a legit tool for prosecutors to use to stop these illicit enterprises of various natures. However, the system needs to be fixed because innocent people are getting caught up in it.”

Smith suggested changing current law which requires an owner to prove they had no “knowledge or consent” of their property being used by someone to commit a crime in order to reclaim said property from law enforcement. Smith said he’d like “knowledge or consent” to be changed to “knowledge and consent” to further protect innocent property owners.��

A copy of the data and graphs he used in his presentation to committee members can be viewed . You can watch the meeting (Mitchell’s presentation begins at 1:42:27 p.m.).

By Caleb Taylor

How much cash and property was seized by law enforcement in Arkansas?

ACRE Director and BT����Associate Professor of Economics Dr. David Mitchell will answer this and more at a state House and Senate Judiciary Committee meeting at 1 p.m. Friday, December 18 at Room A in the MAC Building at the State Capitol.

A copy of the data and graphs he’ll explain to committee members can be viewed . A copy of the meeting agenda can be viewed . A link to livestream the meeting will also be posted on the .��

ACRE researchers have previously discussed reforms to civil asset forfeiture and how often the practice takes place in Arkansas

of 2019 replaced civil asset forfeiture with a criminal procedure with some big exceptions. The law prohibits the state from seizing cash or property without a conviction first unless an exception applies. These include:

• being granted immunity or reduced punishment in exchange for testifying or assisting a law enforcement agency or prosecution
• fleeing or failing to appear in court
• abandoned or disclaimed ownership in the seized property
• agreed in writing with the prosecuting attorney to give up the property

The law was signed by Gov. Asa Hutchinson on March 15, 2019. It was sponsored by State Senator Bart Hester R-District 1 and State Representative Austin McCollum R-District 95. It and with .��

ACRE Affiliated Researcher and Bowen School of Law student Aaron Newell discussed the reform in an op-ed entitled “” in the Arkansas Democrat-Gazette on June 20, 2019.

Former ACRE Fellow and BT����Schedler Honors College alumna Maleka Momand authored, “Guilty Until Proven Innocent: Civil Asset Forfeiture in Arkansas,” a policy brief supervised by BT����Assistant Professor of Economics and ACRE Scholar Dr. Jeremy Horpedahl.

Our infographic describes forfeiture in Arkansas through 2018�� based on data from Freedom of Information Act requests to the Drug Director of Arkansas. Mitchell’s presentation updates and expands on this data based on Newell’s continued research.

For more of ACRE’s work on this issue, you can check out “Civil Asset Forfeiture in Arkansas,” a summary blog post of research by Momand in May 2017.

ACRE also invited Angela Erickson to speak about civil asset forfeiture as part of our Distinguished Speaker Series on September 19, 2017.��

Erickson is a former senior research analyst at the Institute for Justice (IJ) and a co-author of (2nd ed.) in which Arkansas receives a D-. Her work has been cited by the Obama White House, the U.S. Supreme Court, numerous newspapers including the Washington Post and the Wall Street Journal, and by research published in several academic journals. You can watch her talk on .

Legislators took a big step towards finalizing their tax reform priorities for the 2019 session.

Arkansas Tax Reform & Relief Legislative Task Force members voted August 7th to pursue a comprehensive tax reform proposal that would reduce the top personal income tax rate to 6.5 percent and consolidate its three rate schedules.

The top personal income tax rate is currently 6.9 percent. The estimated cost of the plan in lost revenue to the state is approximately $276 million annually.

These rate and table reductions are similar to the reform suggestions outlined by ACRE Scholar Jeremy Horpedahl and Tax Foundation experts in their book, ‘.’ In the book they outlined two plans that would consolidate the income tax tables from three to one, reduce the top tax rate to either 5 or 6 percent, and lower other tax rates as well (see ).

“Road Map” authors describe Arkansas’s current rate schedule as “incredibly cumbersome” filled with “tax cliffs” where “a small increase in income results in a dramatic increase in tax liability.” Consolidating rate schedules also means some of the tax cuts in the plan will go to middle income taxpayers in addition to high income taxpayers.

A separate plan by Gov. Asa Hutchinson to reduce the top individual income tax rate from 6.9 percent to 6.0 percent without reform of the rate schedules received the second-highest amount of support from the task force.

Cost Estimates

Task Force members spent Monday, August 6th listening to a lengthy presentation from Dr. Peter Evangelakis, a senior economist with Regional Economic Models Inc. (REMI) of Amherst, Massachusetts, on the of Arkansas’s .

Dynamic scoring attempts to model economic growth changes when projecting the budgetary effects of policy changes. Static scoring doesn’t attempt to forecast changes in economic behavior resulting from policy changes. Matt Boch, a tax attorney with Dover, Dixon and Horne, “generally indicated that the state could expect that the net costs of its proposed tax cuts and reforms should be somewhat less than the static revenue impacts projected by the Department of Finance and Administration (“DFA”), but not by much: up to 6% depending on the specific proposals and modeling assumptions.”

Horpedahl told the task force on August 6th regarding REMI’s analysis:

In large part I think what their model is saying kind of confirms a lot of what we’ve been saying all along which is that most of these tax cuts, especially if they’re a net cut, will provide some increase in economic activity and some increase in employment. They aren’t large enough to pay for the tax cuts. There’s been some concern at least initially that what came out of this task force might be something like what came out of Kansas. These models make it clear that none of these proposals are like that. They’re reasonable enough where they’re going to cause some new economic activity but they’re not going to cause any large holes in the budget.”

Horpedahl also said the tax cuts could have a larger impact on capital than REMI estimates.

Horpedahl said:

It’s not just that businesses will have more money so they’ll invest more. It’s that there would be an increase in productivity from the tax cuts so that people will work more and be more productive.”

You can read the full response to REMI’s estimates by Nicole Kaeding, Special Projects Director at the Tax Foundation, .

Other Approved Tax Reform Proposals

There were numerous other proposals approved by the task force last week that are recommendations in “Arkansas: The Road Map To Tax Reform.” Corporate income tax changes recommended in “Road Map” that were approved on August 7th include increasing the carry-forward period on net operating losses and reducing the corporate income tax rate. Repeal of the “throwback rule” and inventory tax reform were also “Road Map” recommendations that were passed by the task force.

One of the most-debated proposals was over whether to earmark sales tax revenue from remote sellers for income tax cuts in light of a recent Supreme Court ruling, South Dakota v. Wayfair Inc. For more information on this ruling, check out our blog post on this subject on June 29th.

Other tax reform proposals approved by task force members on August 7th include:

Sales Tax

• – Sen. Hester

• – Sen. Hester

• – Rep. Cavenaugh

• – Sen. Irvin

• – Sen. Hendren

• – Rep. Dotson

Income

• – Rep. Johnson

• – Rep. Dotson

• – Sen. Hendren

• – Rep. Dotson

• – Rep. Jett

Property

• – Sen. Ingram

• – Sen. Hendren

Excise

• – Rep. Johnson

• – Rep. Irvin

Next Meeting

Task force members will meet again on August 22 and 23 to review a final report including their recommendations for tax reform and relief changes to be considered in the 2019 legislative session.

The Arkansas Tax Reform and Relief Legislative Task Force during the 2017 legislative session to:

• Modernize and simplify the Arkansas tax code
• Make the Arkansas tax laws competitive with other states in order to attract businesses to the states
• Create jobs for Arkansans
• Ensure fairness to all individuals and entities impacted by the tax laws of the State of Arkansas

Members of the task force have a September 1st deadline to submit a report to the Governor, Speaker of the House and President Pro Tempore of the Senate that contains the task force’s recommendations for tax reform. More of ACRE’s research on taxation can be found here. For media coverage of recent task force meetings with Horpedahl check out by KARK’s Jessi Turnure and by the Arkansas Democrat-Gazette’s Michael Wickline.