Crypto mining regulations, school voucher changes can be discussed during fiscal session

Some lawmakers are hoping their colleagues will consider their non-budget bills during the fiscal session that began last week.

While Arkansas has annual legislative sessions, legislation during even-numbered years is typically limited to fiscal bills. Legislators can introduce non-fiscal legislation with a two-thirds vote in each chamber.

This year, lawmakers introduced proposals to increase the homestead tax credit, limit the state’s school voucher program and roll back parts of the 2023 cryptocurrency mining law that limit local regulations.

Crypto mining

The Arkansas Data Centers Act was introduced about a week before the 2023 legislative session ended and passed both chambers with bipartisan support. Green Forest Republican Sen. Bryan King has since attempted to change the law, saying it passed with too little scrutiny.

Crypto mines are large clusters of computers that harvest digital currency. They are usually located in rural areas due to the space they take up, and require large amounts of electricity to keep the computers running and water to keep them cool.

In 2024, King proposed six crypto regulations that passed the Senate but failed in the House. He filed six nearly identical decisions this month.

Senate Resolution 7 would allow local governments to regulate crypto-mines and prohibit ownership through the list of foreign countries from which the federal International Traffic in Arms regulations prohibit import and export. Senate Resolution 8 would require cryptocurrency businesses to pay a fee to the Department of Energy and Environment for “extraordinary electrical energy use.” Senate Resolution 9 would prohibit the use of computers or software produced by foreign entities in crypto mining in Arkansas. Senate Resolution 10 would require people involved in crypto mining to be licensed money transmitters under the state’s Uniform Money Services Act. Senate Resolution 11 would require at least six months advance notice before buying or leasing any land or buildings used for crypto-mining. Senate Resolution 12 would require the Arkansas Natural Resources Commission to monitor crypto mines’ water use and administer consequences for any mine that “threatens the critical groundwater supplies of this state through an excessive use of water.”

The regulations are needed to “get it back to local control” over whether a crypto mine can be established in a community, King said.

“Is it going to stress the grid system or raise electric rates excessively, or is it going to drain water supply and raise water rates?” King said in an interview. “These are things we need to know ahead of time before they come in.”

Six of eight crypto-mining resolutions fall short in Arkansas House

Faulkner County residents filed a federal lawsuit in 2023 over excessive noise from a crypto mine built in the area after the Arkansas Data Centers Act passed.

Rep. Ron McNair, an Alpena Republican, is the sponsor of the six identical crypto resolutions in the House. McNair and King represent Harrison, where out-of-state entities have shown interest in developing a crypto mine in recent years.

Legislative Democrats have largely stayed out of the crypto regulation discussion in the 2024 fiscal session. Senate Minority Leader Greg Leding of Fayetteville still believes the fiscal session should stick to fiscal issues, he said in an interview, but King’s renewed proposals may be worth considering.

“Having regular sessions every two years doesn’t really give us a chance to respond to things, and the concern about data centers has only grown in the last two years,” Leding said.

School certificates

King and Rep. Jim Wooten of Beebe, two Republicans who opposed the creation of the state’s school voucher program in 2023, filed resolutions to limit the Educational Freedom Account program. Wooten said the high threshold for consent to get the bill introduced is “a mountain to climb for any piece of legislation.”

“There is a lot of concern [about the program] among people who advocated the voucher system,” Wooten said.

The school voucher program, which was phased in over three years and opened to all K-12 students this year, has come under scrutiny from some lawmakers for its growing costs and broad eligibility criteria.

Program participants will receive up to $7,208 for private school tuition and other eligible educational expenses next year. Up to $379 million could be spent on the program under the governor’s proposed budget.

The proposed bill would limit accounts to $5,000 per school year and bar students who were already enrolled in private school before the passage of the LEARNS Act, which created the voucher program, from receiving funds.

King said this should not affect students with disabilities who previously participated in the Succeed scholarship program, who have been absorbed into the EFA program.

Students will also need to meet or exceed set scores on an annual assessment to be eligible for government funding. King said it is necessary to “compare apples to apples” in students’ educational outcomes.

“If you go to public school, private school or home school, we need one standardized test used for that, and none of these [ability to] pick and choose your test if you’re in the EFA program,” King said.

Other proposed legislation

House Speaker Brian Evans, a Cabot Republican, said Thursday that House members were particularly interested in increasing the homestead tax credit for a third time in as many years.

Magnolia Republican Sen. Steve Crowell and Cave City Republican Rep. Bart Schulz introduced resolutions asking permission to introduce legislation to increase the credit by $75, to $675.

“I just think it’s very important, if we have excess funds and things are trending the right way, that we take care of the people of Arkansas as quickly as we can,” Crowell said Friday. He said he has not spoken to his fellow lawmakers to gauge interest in the bill.

Arkansas lawmakers continue to withhold funds for municipalities that are behind on audit reports

Meanwhile, King and Huntsville Republican Rep. James Eaton introduced a proposal to provide counties with more state funds to maintain their water, sewer and road infrastructure. The “Equal Distribution County Turnback Fund” would raise a minimum of $150 million in state tax revenue and distribute at least $2 million to each of Arkansas’ 75 counties.

Several towns and cities went months without reimbursement funds because they fell behind in submitting required audits of their water and sewer systems.

A handful of House and Senate Republicans are sponsoring a resolution that would ban restrictions on the sale of real estate interests. The proposed Arkansas law protecting property rights against sharia law would protect against “peer pressure” to comply with the provision of Islamic law that restricts property sales, said Harvey Republican Rep. Marcus Richmond, the resolution’s primary House sponsor, said.

“Even if this resolution doesn’t pass, the meeting needs to be aware so they might address it next year,” said Richmond, who is not up for re-election.

Sen. Tyler Dees, a Republican from Siloam Springs, and Rep. Howard Beaty Jr., a Republican from Crossett, has filed a proposal to amend the Industrial Development Authorities Expansion Act. If successful, it would require members of an industrial development authority to step down if they move outside the area they represent, subject industrial development authorities to local planning and zoning regulations, and eliminate their eminent domain powers.