LITTLE ROCK — Lawmakers on Monday sent a state budget bill to the governor’s desk, rejected a measure on online sales taxes and gaveled the 85-day session into recess until formal adjournment in about a month.

The session will be followed quickly by another one: Gov. Asa Hutchinson told reporters he expects to call a special session in early May on changes he is proposing to the state’s Medicaid expansion program. The session will be narrowly targeted, he said, but he did not rule out adding other topics to the agenda.

State budget

The House and Senate gave final legislative approval to each other’s matching bills setting out a nearly $5.5 billion state budget and spending priorities for the fiscal year that begins July 1.

The House approved Senate Bill 295 in an 87-5 vote, and the Senate approved House Bill 1548 in a 23-0 vote. The chambers approved their own bills last week.

The measure mostly aligns with the proposed budget Hutchinson unveiled last year. It would increase state funding by $163 million from the current fiscal year, with nearly $113 million of the increase going to the Department of Human Services.

The budget includes funding boosts for public schools, prisons, early childhood education and foster care. It provides raises to about 25,000 state employees through an overhauled state pay plan, devotes $5 million to the creation of mental-health crisis centers intended to reduce incarceration of the mentally ill and directs nearly $16 million to the state’s rainy day fund.

Internet sales tax

Among the bills receiving votes on the session’s last day of regular business was Senate Bill 140 by Sen. Jake Files, R-Fort Smith, a measure aimed at collecting sales taxes on online purchases in Arkansas.

The bill passed in the Senate in early February, but it was stalled in the House Revenue and Taxation Committee until Thursday, when that panel passed it out in a voice vote. The measure received 43 votes in support and 50 against in the House on Monday.

A state law on the books since the 1940s requires Arkansans to report and remit a consumer use tax on purchases from businesses with no physical presence in the state, but the law has been little followed and not enforced.

Files’ bill, as amended in the House, would have required a large online seller with no physical presence in Arkansas either to collect and remit sales taxes on purchases by Arkansas customers or to report those purchases to the state for tax collection purposes.

Amazon has said it will begin collecting sales taxes in all 50 states. Many other online sellers are not collecting taxes in Arkansas, however.

Rep. Dan Douglas, R-Bentonville, who presented the bill in the House, told members the bill seeks to put brick-and-mortar stores on a level playing field with online sellers.

“Our Main Street businesses are suffering right now,” he said.

Speaking against the bill, Rep. Bob Ballinger, R-Hindsville, said that despite the tax currently on the books, Arkansans are not feeling that burden.

“If this is put in place, they’re going to feel it,” he said.

Files said later he was disappointed with the vote and said he will work between now and the next general session to find a path forward on the issue.

“We basically are making a policy decision to say because you don’t have a physical presence here, invest in the state and put people to work, we’re going to give you an advantage,” he said.

Assessing the session

After the House and Senate adjourned, Hutchinson told reporters, “In my judgment this is one of the most pro-growth, pro-jobs General Assemblies … in recent memory.”

Among other things, Hutchinson said he was pleased with the passage of a $50 million income tax cut for low-income Arkansans; a tax exemption for military retirement and survivor benefits; a 40 percent reduction in the state’s sales tax on the syrups used in soft drinks; and an outcome-based funding formula for higher education.

The session also saw passage of a bill Hutchinson backed to end the state’s dual holiday honoring the Rev. Martin Luther King Jr. and Robert E. Lee and make the day a holiday for King only, as well as a measure to reauthorize the state’s Medicaid expansion program.

Hutchinson also said he was pleased lawmakers did not approve bills that were filed that would have required people to use bathrooms that match the sex listed on their birth certificates. North Carolina experienced costly boycotts after passing such a law.

“I said from the very beginning, very clearly and without any hesitation, that this is not a problem in Arkansas, it does not cry out for a solution, it could be harmful for this state, and I’m delighted that the General Assembly did not pass any legislation in that regard,” Hutchinson said.

House Speaker Jeremy Gillam, R-Judsonia, said Monday he was especially pleased that the Legislature boosted funding for foster care. The budget lawmakers approved would increase funding for DHS’ Division of Children and Family Services by nearly $27 million.

The biggest issue not addressed in the session was highway needs, he said.

“But there’s special sessions, there’s the 2019 general session for the 92nd General Assembly, so there are plenty of great minds that are still going to be working on that issue,” he said.

Senate President Pro Tem Jonathan Dismang, R-Searcy, said he was particularly pleased that the Legislature approved using a portion of the state’s tobacco settlement funds to reduce the waiting list for home- and community-based services for the developmentally disabled.

Dismang noted that the Legislature approved the creation of a task force on tax reform that can study the issue of highway needs.

“Something not passing allows the task force to have a good look at the overall tax structures of the state” so that the issue of highway needs will not be addressed in isolation, he said.

Senate Minority Leader Keith Ingram, D-West Memphis, said the passage of bills setting the framework for the state’s new medical-marijuana program and the funding of mental-health crisis centers were among the standout achievements of the session, but the failure to pass anything on highways left “a big hole in the session.”

“We’re digging ourselves a deeper hole, and where we could be spending dollars, we’re going to spending hundreds of dollars to fix because the damage is being done every day,” he said.

The most contentious bills of the session were one to expand the places where concealed handguns can be carried, including state colleges and sports events, and a follow-up measure to allow guns to be banned at college sports events, the University of Arkansas for Medical Sciences and the Arkansas State Hospital if a state-approved security plan is in place. Hutchinson signed the first bill and told reporters Monday he would sign the second.

“It seems that the Razorbacks have a demarcation line on guns and that everybody can come to a consensus that we don’t want guns at Razorback games,” Ingram said.