LITTLE ROCK — Gov. Asa Hutchinson on Wednesday signed into law a $50 million income tax cut for Arkansans earning less than $21,000 a year, his key policy goal for the session.

In a ceremony at the state Capitol attended by lawmakers who helped pass the legislation, Hutchinson signed matching Senate and House bills containing the measure, which he said is significant, first, because it will put more money in the pockets of about 650,000 Arkansans.

“Secondly, this is a boost to the economy because those Arkansans will spend this money. And thirdly, it gives us a more competitive rate,” he said.

The tax cut, set to take effect Jan. 1, 2019, is half the size of the $100 million income tax cut for middle-income Arkansans that Hutchinson successfully pushed for in 2015.

“This is the most conservative and responsible tax cut that we could have and continue down the path of lowering our rates,” Hutchinson said.

“It is $50 million. There were many that wanted a higher level of tax cuts,” he said. “There were many other different tax bills. We focused on this and said this is what we can afford, and we will put it in the second year of the biennium so that we are making sure that we are responsible in our path toward tax cuts.”

State revenues have been below forecast for the fiscal year to date.

“Because projections are not as scientific as we would like — there is an art form there — you always want to be somewhat cautious, and I am mindful of the history of Arkansas and the importance of a balanced budget and a conservative budget. For all those reasons, and for the irregular month-to-month reports, I said let’s take a conservative approach to it this year,” Hutchinson said.

The governor noted that another part of his policy agenda, a proposed income tax exemption on military retirement and survivor benefits, is tied to the proposed elimination of several tax exemptions to balance its cost.

The legislation Hutchinson signed Wednesday also calls for the creation of a 16-member legislative task force to study future tax reforms.

The task force will have 16 members, including the House speaker, the Senate president pro tem and the majority and minority leaders in each chamber, or their designates; and five members of each chamber, to be chosen by the House speaker and the Senate president pro tem.

The task force will make recommendations in a preliminary report due Dec. 31 and a final report due Sept. 1, 2018.

Hutchinson, who is expected to announce a re-election bid later this year, said that “my long-term goal is to get the (top income tax) rate down in Arkansas to 5 percent.”

The top income tax rate in the state currently is 6.9 percent.

Hutchinson said he also expects the task force to study other possible tax reforms, likely including an earned income tax credit, an idea that was proposed in legislation this session by Reps. Warwick Sabin, D-Little Rock, and Sen. Jake Files, R-Fort Smith, but was rejected by the House Revenue and Taxation Committee.

Under the legislation the governor signed Wednesday, tax rates for Arkansans whose net taxable income is less than $21,000 a year will change in the 2019 tax year as follows:

From 0.9 percent to zero for people earning $4,299 or less a year; from 2.4 percent to 2 percent for people earning between $4,300 and $8,399; from 3.4 percent to 3 percent for people earning between $8,400 and $12,599; and from 4.4 percent to 3.4 percent for people earning between $12,600 and $20,999.

For Arkansans with incomes between $21,000 and $75,000, the income tax rate will change from 0.9 percent to 0.75 percent for income up to $4,299, to avoid a “cliff” effect when a taxpayer shifts from one tax bracket to another.

Hutchinson thanked legislators who worked to get the bill passed, particularly the sponsors of the matching Senate and House bills, Senate Majority Leader Jim Hendren, R-Sulphur Springs, the governor’s nephew, and House Majority Leader Mathew Pitsch, R-Fort Smith.