89th General Assembly - One Regular Session in the Books

The Arkansas General Assembly convened on January 14 and wrapped up their official business on April 23.  After more than three months in session The 89th General Assembly filed nearly 2,500 bills and passed 61%, which is a pretty efficient conversion of bills to laws.  Especially when you compare the state legislature with the United States Congress, which rarely passes more than five percent of the bills introduced.  Over the past 25 years the state legislature have averaged passage of 65% of introduced bills (see below).

The Chamber began the session with a modest legislative agenda that focused on its traditional issues of economic development, higher education and transportation.  Below is a recap of how issues included on our agenda fared.

Economic Development Issues:

• Support Quick Action Closing Fund - $50 million included in final budget.  These funds are used to pay for economic development incentives and are very effective in recruiting and retaining jobs in NW Arkansas.
• Support Regional Economic Development Partnership - led an effort to broaden the reach of regional economic development partnerships, which is a state program that encourages regions to work together to proactively recruit new business and industry.
• Promote Legislation that Supports Entrepreneurs - worked with Accelerate Arkansas to advocate for funding of programs that support high-tech, knowledge based start ups.  Nearly $20 million dedicated to related programs intended to promote these "new economy" companies.
• Tax Cuts for Manufacturers - advocated for tax reductions in utilities and repair/replacement parts for manufacturers.  The General Assembly approved reduction of both taxes, which will save Arkansas manufacturers nearly $25 million per year thus making them more competitive in an increasingly global marketplace.   

Infrastructure Issues:

• Technical Corrections to Regional Mobility Authority - led effort to modify regional mobility authority legislation to clarify issues related to issuance of bonds.  
• Increase Flexibility for County/City Turnback - cities and counties receive 15% each from the recently enacted 0.5% temporary highway sales tax.  The General Assembly authorized cities and counties to bond these turnback funds if approved by voters.
• Incentives to Attract Low Cost Air Carrier to XNA - a signficiant cost for business in NW Arkansas is continued high cost of airfare.  The region sought assistance from the state to develop incentives to recruit a low-cost carrier like Frontier Airlines to XNA.  State legislators in the region designated funding to attract a low-cost carrier in an effort to reduce airfares for all NW Arkansas residents.
• FOIA Exemption for Water Systems - supported efforts by water systems to permanently exempt security-related documents from Freedom Of Information Act requirements.  Legislation passed by General Assembly.

Higher Education:

• Increased Funding for Higher Education - NWACC increased their general revenue funding by more than $500,000 and received $4.7 million in general improvement funding to pay for needed facility and program improvements.

Other Issues:

• Big River Steel - A new steel mill in Osceola will be the state's first opportunity to land a super-project.  BRS creates more than 500 jobs and brings more than $1 billion in investment to the state.  The project found support from legislators around the state for this Northeast Arkansas project.  The Chamber supported the project and the state's investment of $125 million in incentives.  The Chamber thanks all those legislators that supported the Big River Steel project.
• Private Option Healthcare - the major issue heading into the 89th General Assembly was how to deal with possible expansion of Medicaid coverage to 250,000 low-income Arkansans.  The likelihood of expanding Medicaid never found much support within the Republican majority of the House or Senate.  However, leadership in both parties negotiated an innovative compromise that uses federal Medicaid dollars to pay private insurance premiums for low-income Arkansans.  This plan is projected to save Arkansas millions in Medicaid matching funds while reducing uncompensated care losses at Arkansas hospitals and providing insurance coverage to many of the neediest Arkansans.  The Private Option plan originally conceived by Republicans John Burris, David Sanders and Jonathan Dismang truly proved to be the best solution to a difficult, complex issue.  The Chamber thanks all those legislators that supported this compromise legislation.

Referred Constitutional Amendments:

The General Assembly has the authority to refer up to three Constitutional amendments that will be placed before voters on the 2014 General Election ballot.  The year, the legislature picked these three out of a possible 38.

• Issue 1 - Seeks voter approval to authorize the General Assembly to oversee state agency rulemaking.  This empowers the legislature at the expense of the executive branch.

• Issue 2 - Seeks voter approval of an ethics, term limit, legislative pay and campaign finance laws.  This bill contains a little bit of everything.  It would allow state legislators to serve for up to sixteen years in any combination of terms in the House and Senate; eliminates most gifts and free meals for state legislators with a few exceptions; establishes an independent commission to set salaries for elected state officials and legislators; and eliminates corporate contributions to elected officials. 

• Issue 3 - Requires citizen petition drives seeking to place questions on statewide ballots have at least 75% valid signatures when they are submitted for the first time.  In 2012, many proposed citizen initiatives had 60% or more of their signatures thrown out because they were not from registered voters or in at least one instance were fraudulent.  Despite this, these petition efforts still received 30 additional days to collect signatures simply because they turned in petitions.  If the proposed amendment is approved by voters any rejection of more than 25% of signatures would immediately eliminate the ballot question from consideration.  This would make it more difficult for citizen petition drives to receive enough signatures to be placed on the ballot.  A lawsuit has been filed to stop consideration of this issue.

Other Issues Approved by General Assembly:

• Tax Cuts - in addition to the two manufacturing tax cuts, the legislature approved 1) a reduction in the capital gains tax on Arkansas investments and property, 2) a sales tax reduction on utilities for grain dryers and poultry houses, 3) a 0.1% income tax reduction, 4) future reduction in the sales tax on groceries, 5) income tax exemption for active duty military personnel and 6) sales tax reduction on sale of dental appliances and timber harvesting equipment.
• Lottery Scholarships - early in the session, the General Assembly modified the state's lottery scholarship awards so that no matter the institution, qualifying students will receive $2,000 for their freshman year, $3,000 for their sophomore year, $4,000 for their junior year and $5,000 for their senior year.  This change places two-year and four-year institutions on the same level and rewards students who complete their degree.

 While these are just a handful of the 1,500 bills approved by the General Assembly, they are the ones that the Chamber focused on during the session. Thank you for subscribing to this email.  Your engagement in the political process is very important factor in ensuring the business community has a voice in determining bills approved by the General Assembly.

Please continue to check-in with our Chamber's advocacy website:  www.rogerslowellvotes.com  to stay up to date on federal issues and join with other Chamber members to participate in important advocacy efforts.

Arkansas General Assembly - Winding Down?

The legislative session is rapidly winding down. Maybe quicker than anyone imagined. More than a few people suggested that the General Assembly would adjourn on April 5, which leaves just two weeks to either consider the nearly 2,000 bills that remain on the table or disappoint a lot of legislators who didn't have a chance to have their bill heard. Of course the General Assembly won't consider them all, but they do typically pass around fifty or sixty percent of introduced bills so that would mean they would need to consider and approve more than 900 bills before adjourning. No way that happens by April 5.

One of the big stories for the past week was HB1418, which would have phased-in a transfer of sales taxes from vehicle-related sources (batteries, tires, car sales) from the state's general revenue to the Highway Department. As originally conceived the bill would have phased-in a gradual transfer of this revenue so that in ten years the Highway Department would have had nearly $400 million per year in additional funding to pay for maintenance and construction. The Highway Department's main funding source - the federal trust fund and state gas taxes - have been flat while the cost of maintaining and building new highways has skyrocketed. This disparity prompted the proposal to shift sales taxes to the Highway Department

Governor Mike Beebe and the state's institutions of higher education led a very spirited opposition to HB1418 because of their fears that any transfer of general revenue to the highway department would result in cuts to universities and community colleges. A number of other advocacy groups joined in the opposition and were able to strip away co-sponsors from the bill. The bill's sponsor amended the legislation a number of times to reduce the potential impact to higher education, but an acceptable compromise could not be reached. The Transportation Committee heard the legislation on Thursday and the normally quiet committee was transformed into standing room only as supporters and opponents took over an hour to argue the merits and drawbacks of the bill.

The bill required 11 votes to pass out of committee and on to full consideration by the House. After a roll call, the bill garnered ten yes votes - one short and HB1418 failed to advance.

Also this week, the legislature received a consultant's report on the viability of the proposed Big River Steel project. The House and Senate Agri/Economic Development committees meet on Monday to discuss the report and make recommendations on incentives. The state is being asked to issue $125 million in bonds to fund a $50 million loan to Big River Steel and use the remaining $75 million for site preparation and issuance costs. The state is also offering various sales tax exemptions and income tax credits estimated at more than $200 million.

In return, Big River Steel will build a $1.1 billion steel facility in Osceola that will employ 525 people at an average wage of $75,000. The success of the facility depends in large part upon the global demand for steel. The report projects steel demand will increase by 8.7 million short tons a year and the new plant has a capacity for more than 3 million short tons or approximately 1/3 of projected increase in demand.

So how does the state benefit from this investment? The state will collect additional income taxes from the 525 jobs created, collect sales tax from purchases made by the plant both during construction and operation and corporate income taxes from the company itself. The report projects that by investing $125 million in bonds the state will likely recover their investment plus earn a return of more than $50 million in sales, corporate and income taxes.

If this "modest level of economic benefits," as the report describes it, is enough to prompt the state to issue the bonds we shall likely see next week.

This week could also see an announced agreement on tax cuts. Media reports say that legislative leadership and the Governor's office are hinting that an agreement is close on up to $100 million in total tax cuts. With so many tax cut proposals introduced (in the billions if all were approved) there appear to be a few that have the most support. The leaders seem to be cuts to grocery, income and manufacturing-related taxes.

There is so much to be decided between now and the end of the session. They have to make a decision on Medicaid/insurance expansion for Arkansans earning 138% or less of federal poverty limits, cobble together a budget and consider up to three potential constitutional amendments. I can't imagine a more frenzied finish to a legislative session than what the 89th is going to experience.

If you want to see a list of committees, their members and pending legislation you can find that information HERE.

89th General Assembly - 4th Week

We are essentially a month into the legislative session and much of the major business-related issues remains sidelined. The Revenue and Tax committees in the House and Senate are not even holding meetings because they don't have anything to consider despite the fact that they are four weeks into the session. That is a telling sign that the 89th General Assembly is taking things very methodically.

My assumption is that leadership in the House and Senate have agreed to focus on social issues in the first month before turning their attention to taxes, Medicaid and other business-related legislation. The past two weeks have seen a lot of committee time spent debating abortion and guns. Next week should see the final resolution to many of these issues.

On Tuesday (February 12), the House Education committee will consider Representative Charlie Collins' (R, Washington County) bill to authorize college staff and faculty to carry concealed weapons on campus. Many universities oppose this measure and the Education committee will no doubt hear from them that allowing concealed weapons on their campuses will not make them safer and will result in higher liability insurance for academic institutions.

There are also two abortion bills that are moving through the House and Senate and their final form should be decided in the next week as well. Once those are done it seems more likely that the General Assembly's energy will focus on taxes, Medicaid, funding the Big River Steel plant and a host of other issues.

Leadership has hinted that all tax cut related legislation will be considered at the same time and after spending levels are more certain. So, instead of passing individual tax cuts they will weigh the merits of each and then decide which they can afford. In 2011, the House passed four tax cuts fairly early in the session that then got held up in the Senate and used as a negotiating piece for other legislation. One might guess that House members may want to hang on to some leverage by working jointly with the Senate to ensure their main priorities are enacted. If so, it will be March before Revenue and Tax has anything to vote on.

If the General Assembly is focused on social issues, it raises the question what types of bills are being filed and is there a backlog waiting to be heard. While clearly not a scientific analysis, keyword searches of filed legislation produces the following insight:

219 bills are related to revenue (out of approximately 580 total bills filed)

72 bills are related to tax
24 bills are related to Medicaid
20 bills are related to economic development
8 bills are related to concealed weapons
6 bills are related to abortion

So the issues with the fewest number of bills are generating the most debate!

89th General Assembly - Week 3

This is the first full week of the legislative session even though it was the third overall and it turned out to be quite busy in the Capitol as Governor Beebe announced the largest economic development project in the state's history - a proposed $1.1 billion steel plant in Northeast Arkansas.

The proposed plant is projected to create 2,000 construction jobs for 20-months and 525 permanent, high-wage jobs at the plant, which will be located in Osceola. Recruiting these types of major projects requires a substantial commitment from the state and local entities through incentives. The state will be considering whether to offer $125 million in Amendment 82 bonds to support the project. Amendment 82 refers to the voter-approved addition in 2004 to the state's Constitution that authorizes the state to sell bonds in an amount up to 5% of general revenues to attract a designated "super-project."

The $125 million bond issue will be used to provide a low-interest $50 million loan to the steel plant and pay for $75 million in site preparation and issuance costs. Over the next three weeks, the General Assembly will be reviewing the proposal and will have to determine if the commitment of general revenue to repay the bonds is a good investment of scarce state resources. In approximate terms, if the state issues a 20-year bond issue at current tax exempt rates of 3.5% this equates to a payment of $9 million per year. The private developer will be repaying $50 million so that would like reduce the commitment of general revenues to around $5.2 million per year. This is compared to almost $40 million in annual payroll produced by the plant.

It seems likely that the General Assembly will agree to the bond issue as a means of bringing high-wage jobs to a part of the state that has been struggling with double-digit unemployment over the past few years.

With three weeks in the books, the General Assembly has slowly been filing bills. A typical session sees around 2,500 bills filed with a little more than half actually enacted into law.

Sometimes you can see what is important in a legislative session by comparing how many bills are filed with each committee. The way the state legislature works is that non-budget bills are routed through one of about ten A or B committees. The committees review the bills and recommend passage or issue a do not pass recommendation. Often, making it of committee with a "do pass" recommendation is enough to ensure its passage on the floor.

So what are the committees with the most bills after three weeks?

Public Health - 34 bills

State Agencies - 31 bills
Judiciary - 21 bills
Education - 17 bills
Insurance & Commerce - 7 bills
Transportation - 5 bills
City, County, Local - 5 bills
Agri & Econ Development - 4 bills
Revenue & Tax - 4 bills
Aging, Children & Youth - 3 bills

Public Health is an obvious choice with healthcare representing such an important if not THE important issue of the 89th General Assembly. The committee also reviews topics as diverse as abortion, unemployment insurance and wage law.

State Agencies has a number of bills pending that will change how a state agency like Natural Resources or Alcohol Beverage Control might operate as well as a few voting laws. It is also the committee that can refer up to three constitutional amendments for inclusion on the 2014 general election ballot.

Judiciary often focuses on crime and punishment in the state. There are a number of proposed laws pending that deal with criminal penalties and capital punishment.

Education deals with public and higher education issues and currently has a number of school choice and charter school related bills pending. The choice bills would address the ability of public school students to transfer to a school outside of their home district while the charter school legislation most often seeks methods to increase the number and viability of charter schools as an alternative to traditional public schools.

89th General Assembly Recap - Week 1

The first week of the General Assembly is in the books and while little actual legislation was discussed a number of interesting bills were filed that could likely figure in debate later in the session. Those bills are listed below and include a number of potential state constitutional amendments, possible spending caps and a bill that would prohibit single-use plastic bags.

The first week saw Governor Beebe offer his final State of the State address to a regular session of the General Assembly. After nearly three decades as either a state legislator, attorney general or governor, Mike Beebe will end his time in state government next year.

The Governor's address outlined his priorities for the 89th General Assembly, which included acceptance of federal funding to expand Medicaid coverage to around 250,000 Arkansans, minimizing cuts to the current Medicaid system by dedicating surplus funds, reducing the sales tax on groceries and funding education programs.

Governor Beebe also hinted at the possibility the state could land a billion dollar superproject in 2013. If it occurs, it would be the largest economic development project, by far, in the state's history. Undoubtedly, to seal the deal for such a major project it would require incentives that will necessitate approval by the legislature. The session could last into early April and the bill filing deadline is early March so surely the project would be announced by then in order for a bill to be filed and considered by the General Assembly.

Also in big news this week, Speaker of the House Davy Carter (R, Cabot) announced committee leadership positions. Two major leadership positions went to Northwest Arkansas Republicans. Speaker Carter appointed Duncan Baird (R, Lowell) to chair the powerful Joint Budget Committee. Representative Baird is a third termer with a background in accounting and banking. The Chamber ran a profile of Representative Baird in 2011, which you can view HERE.

The second key appointment was Fayetteville/Washington County Representative Charlie Collins who will lead the House Revenue and Tax Committee. Representative Collins' campaign focused on tax policy so this appointment fits well with his interests and background. Collins is in his second term and when he is not working as a state legislator he is partners in an executive search firm.

Other Northwest Arkansans appointed to committee leadership positions are Jonathan Barnett (R, Siloam Springs) who will chair Public Transportation again in the 89th General Assembly and Mary Lou Slinkard (R, Gravette) who will chair House Technology.

Overall, Speaker Carter took a bipartisan approach and choose 7 Republicans and 4 Democrats as committee chairs. Eight Democrats were appointed as vice chair along with three Republicans.

termers.

Like every legislative session, it is going to be an interesting one so please visit www.rogerslowellvotes.com to find information on important issues and stay informed in 2013!

89th General Assembly & New Advocacy Website

The Arkansas General Assembly convenes for their regular session for the 89th time on Monday, January 14.

With Republicans in the majority in the state House and Senate for the first time since the 1870s it has generated lots of speculation on what changes or types of legislation the new majority will implement now that they have control. With 51 seats in the House (out of 100) and 21 seats in the Senate (out of 35), Republicans will be able to pass all but budget bills without getting any support from Democrats. Budget bills require 3/4th approval so whatever budget is finally approved will be bipartisan.

The General Assembly utilizes a committee structure to review and approve bills for votes on the floor of the House and Senate. So to become law a bill must be approved by a committee first before it can be voted on by the entire House or Senate (with, I think, one rarely used procedural exception). Therefore if Democrats oppose a non-budget related bill they will either need Republican support or they will need to stop it at the committee level.

In the 2011 legislative session the Republicans appeared to be a very organized and mostly unified group on legislative issues. So normally I would find it unlikely that many Republicans would cross over to support Democrats in opposition to their party on major issues. However, the recent race for Speaker of the House highlighted that the Republicans aren't necessarily unified on big issues. The Speaker's race saw a coalition of very conservative Republicans and presumably all the Democrats in the House to elect Davy Carter (R, Cabot) over the presumptive Republican candidate, Terry Rice (R, Waldron). If a coalition that diverse can come together on an issue as important as the election of the Speaker of the House, anything is possible.

The second option for Democrats is to stop bills at the committee level. Republicans control all of the key committees in the Senate. They also control Revenue and Tax, Education and State Agencies in the House. So if it is related to schools, tax cuts, elections or constitutional amendments Republican have a clear path to enact their agenda if they are unified.

Democrats share control of Insurance and Commerce and Public Health committees, which are the two most likely to deal hot button issues like insurance exchanges and healthcare. So any legislation related to these issues will require bipartisan support for it to become law.

You can view a list of House Committee assignments HERE. You can view a list of Senate Committee Assignments HERE.

Like every legislative session, it is going to be an interesting one so please visit www.rogerslowellvotes.com to find information on important issues and stay informed in 2013!