- Associated Press - Tuesday, June 24, 2014

LITTLE ROCK, Ark. (AP) - A Pulaski County resident has filed a lawsuit challenging a state law that included a $5 million tax break for the natural gas industry, arguing that the Legislature didn’t follow proper procedures when approving the exemption during a fiscal session.

The lawsuit filed Monday by Robert Nunn alleges that the Legislature improperly approved the tax break, which was included in the budget bill for the Department of Finance and Administration’s revenue services division. The lawsuit said that the tax break should have been considered on its own and required a two-thirds majority to even be introduced during a fiscal session.

Gov. Mike Beebe vetoed the bill over similar concerns, but the Legislature overrode his decision.

Nunn’s attorney, John Burnett, told the Arkansas Democrat-Gazette (http://bit.ly/TrJee0) that the lawsuit isn’t challenging the tax break itself - just how it was approved.

“It’s an effort to make sure that the Legislature holds to the notion that when we established the fiscal session, it was only for fiscal matters,” Burnett said. “We’re really interested in the underlying constitutional issues, not just about fracking sand. That is an interpretation issue that could go either way. We’re not really interested one way or the other about whether the tax should or shouldn’t be charged. Our issue is with the process.”

Lawmakers have said they were clarifying state law to follow a Pulaski County circuit judge’s ruling that that sand qualifies as equipment, meaning taxes can’t be collected on it.

John Theis, assistant revenue commissioner at the Finance and Administration Department, said Tuesday that he expected the state to respond in court to the lawsuit, but it was unclear whether the finance agency would handle the case because the lawsuit focused on the exemption’s constitutionality.

“Because of the nature of this lawsuit, we need to evaluate whether DFA is the appropriate agency to handle this lawsuit or whether we ought to ask someone else such as the attorney general,” Theis said.

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Information from: Arkansas Democrat-Gazette, http://www.arkansasonline.com

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