Friday, January 28, 2011

Update from Government Affairs

A report from the January 22, 2011 State Legislative Forum

Every other week during the 88th General Assembly the Rogers-Lowell Area Chamber of Commerce teams with the Bentonville/Bella Vista Chamber of Commerce to host public forums for state legislators to provide an update on policy and legislation and answer questions from the audience. This past Saturday, January 22, was the first forum of the current session and around forty people joined State Representatives Tim Summers, Debbie Hobbs, Les Carnine, and Duncan Baird and State Senator Kim Hendren at the Doubletree Guest Suites in Bentonville to hear from their state legislators and ask questions about pending legislation.

The question and answer period kicked off with a discussion of public retirement plans. An audience member questioned whether elected officials should receive two years of credit in the retirement system for each year in office. Representative Carnine noted that a bill has been introduced that would eliminate this provision. Representative Summers informed the audience that many elected officials participate in Arkansas Public Employees Retirement System (APERS) where they can retire with benefits after ten years in office due to the 2-for-1 credit rule. Also, participants in APERS receive a guaranteed three percent (3%) cost of living increase each year. These sorts of rules have forced APERS to increase its employer contributions to almost 14% of each employees salary in order to fully fund the system. Representative Summers also informed the audience that there is no cap to what APERS can charge its members, which is an unsettling proposition for the cities and counties that participate in the retirement system. Representative Summers is a member of the Public Retirement Committee and will one of the legislators tasked with addressing the challenges to the myriad of public retirement systems in the state. One bill he has introduced would extend the service required to qualify for retirement by two years to 30. This two year extension would save APERS more than $20 million per year.

House Bill 1013 generated significant discussion among the audience and legislators. Representative Jim Nickels (D, Sherwood) introduced this bill, which would allow the state contractor's board to impose penalties on any contractor who knowingly uses undocumented workers. The bill would also require contractors to certify that their subcontractors do not use undocumented workers. Senator Hendren said that reason for the bill was to level the playing field between contractors. Some contractors have been accused of utilizing undocumented workers who are willing to work for less pay, which gives this contractor the advantage when submitting a bid for work. Representative Baird said that there are legitimate concerns about the bill and wondered why these rules don't apply to all employers. One contractor in the audience said that he doesn't have the authority to force subcontractors to verify that workers are documented residents and that the state should not require a state contractor's board to enforce immigration laws. Benton County Judge Bob Clinard, a former contractor, said that all contractors can do is accept the citizenship documents as presented. They do not have the ability to determine whose documents are real or fake. Representative Carnine said that the bill in its current form does not have sufficient support so he expected the sponsor to amend the bill to address most of these concerns.

The legislators also discussed highway funding. Arkansas Highway Commissioner Dick Trammel attended the forum and discussed some of the recommendations from the Blue Ribbon Committee on Highways. Representative Carnine thought that the only recommendations that appear to have any support are the ones calling for a statewide vote on a bond issue and a potential sales tax to fund new construction. These two recommendations would allow the state's voters to decide for themselves if they want to pay more for highway construction. Commissioner Trammel said the the state Highway Department only receives $240 million per year to pay for new construction projects. This small amount will not make a dent in the $20 billion in highway construction projects identified by the Highway Department. Commissioner Trammel said that if the voters want to see some of the major highway projects in Northwest Arkansas built in the short term then they should strongly consider a new sales tax to fund it.

Education was also a topic of discussion. The legislators were asked about HB1099 that provides flexibility on start dates and about legislators taking a critical view of public school's fund balances. Representative Hobbs said she supports HB1099,which would allow schools the option to start anytime between August 14 and August 26 instead of mandating an August 19 start. Representative Carnine said that the criticism on fund balances stems from a lack of clarity and uniformity in how schools present their budgets. Senator Hendren related his main criticism of public schools was the high remediation rate for students entering colleges. He said that students that must take remediation courses in college cost the state $74 million per year and that those students are less likely to get a degree. Representative Carnine added that reducing the remediation level also requires a stronger commitment from the students' parents who need to be accountable.

Johnny Haney, a member of the Northwest Arkansas Community College board of trustees, attended the forum and encouraged the legislators to vote against Senate Joint Resolution 2, which would strip the constitutional independence of public universities and community colleges and place them under the authority of the state legislature. Mr. Haney also reminded the legislators that Northwest Arkansas Community College receives significantly less state funding on a per pupil basis than many of their peer institutions and that the College would like to see all community colleges receive a more equitable distribution of state aid.

One final topic of discussion was the growing cost of housing prisoners at the state and local level. Benton County Justice of the Peace Dan Douglas said that it costs $40 per day to house an inmate at the Benton County Jail. However, the state only pays the county $28 per day for any state inmates that are being held in the county jail awaiting bed space at a state facility. Representative Summers said that the legislature is not currently considering a bill to raise the reimbursement rate, but they are looking at prison and sentencing reform that would move non-violent offenders out of prisons and enrolling drug offenders into rehabilitation and treatment centers instead of a jail cell.

The next legislative forum is scheduled for Saturday, February 5 beginning at 7:30 a.m. at the Doubletree Guest Suites in Bentonville.

Tuesday, January 18, 2011

Government Affairs Update

Unemployment Insurance Trust Fund

Week two of the state legislature has begun and for the most part committees continue to get organized while deferring bills for a few weeks to allow legislators more time to review and form opinions.

With few bills to consider, most of the House committees are taking up the issue of whether to live stream their meetings. I believe that the general consensus will be to approve live streaming although there is some push back from members who believe that this would hinder open discussion of the bills. Also, one House member expressed his frustration that the State spent hundreds of thousands of dollars installing video streaming equipment without first asking the House if they wanted to enable live streaming. The House will be alone in live streaming since the Senate decided not to participate. What seems so odd is that the newly renovated Big Mac building, which the state spent millions to refurbish and equip last year, is not wired for live streaming. So, committee meetings in the Big Mac will not be recorded.

If you are interested in watching either live or archived videos of committee meetings or the house legislative session go to

This week the Arkansas State Chamber kicked off their weekly legislative lunches. Following an address by Speaker of the House Robert Moore, the Chamber provided an update on one of the major issues facing the legislature in 2011 - the unemployment insurance trust fund.

Historically, the State Chamber has taken the lead on working with labor groups in Arkansas to negotiate mutually acceptable legislation on unemployment related issues. In 2011, this issue has proven to be a monumental task. Arkansas is one of more than 40 states that had to borrow money from the federal government to pay unemployment benefits to out-of-work Arkansans. To date, Arkansas has borrowed $330 million, which is minor considering the federal government has loaned the states more than $40 BILLION to pay for unemployment benefits. For a state like Arkansas though, $330 million is a major obligation that has serious ramifications for employers within the state.

So far, the federal government has loaned this money to the states interest free. However, the zero percent interest policy expires on January 1, 2011. Unless Congress passes legislation in the next year, states will be required to make their first interest payment on the loan by September 2011. As part of the repayment process the federal government is going to increase the effective federal unemployment tax rate from 0.8% to around 1.3%. This tax is charged on the first $7,000 paid to each employee. For example, if a small business employs 10 people it will pay an additional $350 per year in 2011 that will go to the federal government to reduce the borrowed amount. In looking at the entire state, Arkansas has civilian employment of 1,244,400 and applying the additional 0.5% in federal unemployment taxes to each employee would increase the tax burden on employers by more than $43 million in 2011. These additional funds will go toward making interest payments on the loan. If the state does not take action to reduce the outstanding debt the federal government will continue to raise the net federal unemployment tax rate until all of the principal and interest on the loans are repaid.

A few states have opted to issue bonds to repay the federal loans since the interest rates the states can receive on bonds is less than the rate the federal government is charging (3% for state bonds versus 4-5% charged by the government). This option is being discussed in Arkansas, but questions remain whether it would require a vote of the people or if the legislature can make that decision. This decision will ultimately come down to the revenue stream that is pledged for repaying the bonds. If the revenue stream is a tax then it would require a vote of the people. If the revenue stream is considered a "fee" then it might be possible to sell bonds based on legislative action. Bonding is an issue that will require significant research and a lot of political soul searching for legislators.

Raising unemployment taxes is one way to repay the trust fund. Another is to reduce the amount paid out of the trust fund by either reducing benefits or reducing the number of unemployed workers. Everyone agrees that returning Arkansans to work is the best option to begin addressing the unemployment trust fund challenges. Reducing unemployment benefits does not appear to be a possibility because the federal law passed just prior to Christmas last year that extended unemployment benefits for thirteen months included a provision that prevents states from reducing unemployment benefits. When the question was asked if Arkansas had to abide by these federal rules, it was humorously noted that, "This is a federal law, which trumps state law every time. That question was settled in 1865."

In summation, there is no easy solution and fixing the problem will take time and sacrifice from all parties. We will update you as this issue develops.

My Experience in Little Rock - Take #2

Last week started with a nasty snow storm in central and south Arkansas that made traveling around the Capitol city treacherous. Now the weather report is calling for snow and ice on Wednesday/Thursday in Northwest Arkansas. This should make for a fun trip back home on Thursday. Mother Nature has not been kind so far this session.

The TEA Party was in the Capitol today and I am going to post some pictures on Facebook for those that are interested. They probably had 20-30 supporters in the Capitol Rotunda this morning.

I am still holding the line against the "Session 17" although it has to be through dumb luck instead of a calculated attempt to watch what I eat and maintain an exercise regime. For example, at the State Chamber reception tonight one of the items on the buffet was some sort of glazed bacon. I didn't know there was a way to make bacon MORE harmful to your cholesterol level, but the State Chamber found a way. Kudos to them by the way - it was delicious.

Monday, January 10, 2011

Opening Day of the 88th General Assembly

Welcome from Government Affairs!

This is the first in a series of blog posts intended to inform readers about activities of the 88th General Assembly during the 2011 regular session. I will be representing the Chamber and its membership at the Capitol throughout the session where I will advocate for our legislative agenda. I am also going to have a section at the end of each post relating some of the non-legislative experiences I have while I am in Little Rock representing the Rogers-Lowell Chamber. I hope you find the information useful or at least entertaining, please feel free to leave comments!

I will also be sending out several email updates each week providing information on state, local and federal legislation that the Chamber is monitoring. If you would like to receive those emails contact me at

Legislative Review
Today was opening day of the 88th General Assembly and saw the swearing in of 99 State Representatives and 35 State Senators. One State Representative seat remains to be filled (District 24) by a special election in March after the voters elected Republican Keith Crass who passed away shortly before the November 2 election.

One of the gallery's favorites during the the swearing-in ceremony was the planned and impromptu performances by country music singer Billy Joe Shavers. Shavers is good friends with House Speaker Robert Moore (D, Lake Village) who invited him to sing the national anthem. Due to delays in swearing-in the Senate, Shavers graced the Chamber and packed galleries with a-capella versions of a few of his classic songs. To listen to a few of them go here and here!

Snowy weather and dangerous road conditions led to the delayed opening of the Senate as State Senator Steve Harrellson (D, Texarkana) had to be flown into Little Rock this morning to attend the swearing in ceremonies. There were still a few empty seats in the House and Senate as legislators struggled to make it to the Little Rock on Sunday and Monday. Those arriving from south Arkansas had an even more difficult time getting to the Capitol than those from the North as I-30 eastbound was closed for an extended time Sunday.

After a forty-five minute delay, the House members were sworn-in and unanimously elected Speaker Robert Moore. Speaker Moore addressed the Chamber and hearkened back to his grandfather who almost 100 years ago to the date received the gavel as Speaker of the House in the exact same House Chamber. Speaker Moore humorously warned his fellow House members that if they felt a little uneasy in their seat today it was probably the ghost of "Big Daddy" watching over his grandson. In his speech, Speaker Moore encouraged the membership to set aside partisanship and do what is right for all Arkansans arguing that history will judge their efforts. He noted that prison reform, transportation and taxes are a few of the important issues that the legislature will address and cautioned them that there is "no free lunch" when dealing with tax cuts and budget issues. To watch the entire speech go here for part one and here for part two!

After Speaker Moore's welcome, chair and vice chairs were appointed for the House Committees. There were a few Northwest Arkansans appointed to leadership positions. Speaker Moore appointed Representative Jonathan Barnett (R, Siloam Springs) as chair of the Transportation Committee and Representative Mary Lou Slinkard (R, Gravette) as Vice Chair of State Agencies Committee. The Transportation Committee will most likely be tasked with implementing some of the Blue Ribbon Highway Commission's recommendations. The State Agencies Committee is another critical post since these legislators will be in charge of Congressional redistricting. Fort Smith's Stephanie Malone will chair the Aging, Children, and Youth Committee. To review the makeup of each House Committee visit the Chamber's Government Affairs website.

In addition to the A and B Committees, House and Senate members serve on Joint Committees. Representative Uvalde Lindsey (D, Fayetteville) will serve as House Vice Chair of the powerful Joint Budget Committee and Chairman of the Personnel Subcommittee.

Representative Tim Summers (R, Bentonville) hosted a lunch reception after the swearing-in ceremony where I ran into Arkansas State Police Majors Les Braunns and JR Hankins. Northwest Arkansans might remember Major Braunns who commanded Troop L in Springdale for a number of years before being promoted to Highway Patrol commander of the western half of the state a few years ago. Major J.R. Hankins commanded the Clarksville Troop before being promoted last year where he currently oversees the eastern half of the state's highway patrol Troops. Major Braunns still lives in Springdale and stays at the State Police barracks during the week.

An interesting side note was the presence of Rodney Slater on the House floor today. Mr. Slater is an Arkansas native and served as U.S. Transportation Secretary under President Bill Clinton and currently works in Washington D.C. as a partner with Patton Boggs and James Lee Witt & Associates. One wonders if there is some future Arkansas political race that Secretary Slater has his eye on.

My Experience in Little Rock - Take #1
I also want to include a bit of the personal side about what life is like in Little Rock during the session. I arrived on Sunday and almost beat the snow, but I had to channel my inner NASCAR driver the last fifteen miles as snow and ice covered the roads. Thank goodness my car has all-wheel drive or I would be writing this from a ditch in North Little Rock.

The weather has put a crimp in the inaugural festivities as most of the receptions and events scheduled for tonight have been cancelled. Governor Mike Beebe's BeebeeQue is still on at Cajuns featuring BBQ and Catfish and a Johnny Cash tribute band. I hope they have the National Championship Game on so I can see Auburn and all of their Arkansas connections keep the BCS trophy in the SEC for another year. One thing is certain, Auburn is getting a great return on their $180,000 investment. The prayers from Old Man Newton's Florida church must carry a lot of weight...

I am staying at the Legacy Hotel, which is close to the Capitol and I learned that it was built in just 18 working days in 1913. Knowing this makes me nervous...

Finally, most legislative sessions run 90 days. That means a lot of my meals for the next three months will be take out and banquet food. I would wager very little will be healthy. I weighed 170 this morning in the Legacy's fitness room. If I can keep my weight under 187 I am going to declare victory. You have heard of the "Freshman 15" this is going to be the "Session 17." We won't even consider cholesterol levels that would just be cruel.