Conduit’s 2019 Arkansas Legislative Scorecard

The Conduit for Commerce (CFC) Legislative Scorecard is a resource for Arkansans to learn how their legislators voted during the 2019—92nd General Assembly and compare those votes to the mission of Conduit: more economic freedom for all Arkansans. Legislation during the session is reviewed and analyzed by Conduit for Action, a sister organization to CFC. Based on those recommendations’ CFC has drafted this legislative scorecard. Bills are included into the scorecard by using the
CFC Economic Freedom Filter. The scores are based entirely on a legislator’s own voting record on bills scored.

Economic Freedom Filter
The Economic Freedom Filter is the method by which CFC determines if a
bill is good or bad for increased economic freedom for Arkansans. The
Economic Freedom Filter analyzes bills that do the following:

  1. Increase or Decrease the Size and Scope of Government
  2. Increase or Decrease Dependency on Government
  3. Does It Spend Money We Do Not Have
  4. Increase or Decreases Transparency in Government

If legislation falls into these categories, it is considered for scoring. CFC
will support bills that decrease the size and scope of government,
decrease dependency on government, saves money, or increases
transparency in government. CFC will oppose bills that increase the size
and scope of government, increase dependency on government, spends
money the state does not have, or decreases transparency in government.

Awards
Conduit for Commerce awards the top scoring legislators on the CFC scorecard for their outstanding voting records. These awards reflect the most fiscally conservative legislators based on their actual votes as they compare to the CFC Economic Freedom Filter. CFC has held a biennial Calvin Coolidge Awards Dinner honoring these top legislators since
2013. This year CFC applied the Ronald Reagan 80% rule. If a legislator got an 80% or higher on the CFC scorecard, they will receive a 2019 Calvin Coolidge Award for their outstanding voting record in the 2019
legislative 92nd General Assembly.

The 2019 Conduit Calvin Coolidge Award Winners:

Sen. Trent Garner (SD27)

Rep. Dan Sullivan (HD 53)
Rep. Austin McCollum (HD 95)
Rep. Clint Penzo (HD 88)
Rep. Grant Hodges (HD 96)
Rep. Marsh Davis (HD 61)
Rep. Robin Lundstrum (HD 87)
Rep. Josh Miller (HD 66)
Rep. Rick Beck (HD 65)
Rep. Mickey Gates (HD 22)
Rep. Justin Gonzales (HD 19)
Rep. Frances Cavenaugh (HD 60)
Rep. Mark Lowery (HD 39)
Rep. Nelda Speaks (HD 100)
Rep. John Payton (HD 64)
Rep. Richard Womack (HD 18)

Tax Reform and Relief Task Force Recommendations

Note:  This article is revised and re-posted for use by the reader for the following three purposes: 

1) Assessing the laws passed as “tax reform” by the 92nd Arkansas General Assembly of 2019;

2) Use for future tax reform which will strengthen the Arkansas state economy; and

3) Assessing the effective job of this tax task force as we consider whether a task force is useful in producing better state policy (as opposed to using the committee system already in place.) 

We are reminded here that under our Revenue and Stabilization Act, Arkansas government spends all it takes in.  Therefore, the best tax reform for Arkansas remains to be one springing from capped and reduced government spending starting with the question —“How much do Arkansans want to pay their state government for its services?”  BVT–June 12, 2019.

******

Tax Reform and Relief Task Force’ Recommendations

By Brenda Vassaur Taylor, JD, LLM (Taxation)

October 30, 2017

Disclaimer—These are the views and opinions of the author only and may not be shared by others.

It is the objective of Conduit for Action (CFA) to offer to the Tax Reform and Relief Legislative Task Force recommendations for legislative changes which, not only reduce the size of government and therefore increase economic freedom for all Arkansans, but also:

  • Modernize and simplify the Arkansas tax code;
  • Make the Arkansas tax laws competitive with other states in order to attract businesses to the State;
  • Create jobs within the State; and
  • Ensure fairness to all individuals and entities impacted by the tax laws of the State of Arkansas.[i]

(Note:  These recommendations come from experienced Arkansas tax attorneys, certified public accountants, economists, and small Arkansas manufacturers who live and work in Arkansas.)

How Can Arkansas Afford to Cut Taxes?

Before we can have tax reform in Arkansas, it is absolutely necessary that we recognize that in Arkansas, we simply budget and spend all we take in.  Therefore, in Arkansas, as a direct result of the Revenue Stabilization Act (RSA 1945), the level of government spending in Arkansas is directly determined by the tax system not the budget process

While we appreciate that the RSA requires that we balance the budget, under the current A, B, C priority budgeting system, the legislature, with help, designs an annual budget that always “cries for more money.”  Under this system, as state dollars come in, “needs” are met (priority A), next the “wants” (priority B) are funded, and in good years the “wish list” (priority C) is filled.  Surpluses are also dumped into “rainy day funds” or the now unconstitutional “general improvement fund”—guaranteeing all annual revenues are spent.

The fact that the tax system determines revenues as well as spending was illustrated in a recent answer by the Arkansas Bureau of Legislative Research in its RFP No. BLR-170002- Q1 to a prospective tax policy consulting firm with the response that the tax task force with the assistance of its chosen Consultant will determine the amount of revenue that the state needs to raise for public service.

In Arkansas, the partnership of the RSA with those seeking more government solutions means there is no “getting spending under control” in our state as echoed at the Federal level.

It is merely a question of

“how much do the people of Arkansas want to pay for government?”

The authors of a recent research paper sponsored by Mercatus Center, George Mason University expressed this fact in the following terms:

“Taxes are the “tail that wags the dog” in Arkansas budgeting.  If taxes are raised, government spending is guaranteed to go up.  If taxes are cut, spending is guaranteed to go down. The level of spending is set by the tax system itself. Understanding this fact is crucial to understanding why government spending has increased in Arkansas.  …[I]n large part, the absolute size of Arkansas’s spending is determined by the tax system”.[ii] 

Therefore, if you want spending reduced in Arkansas, if you want smaller government, you simply cut taxes!

1-What We Pay & Can Afford:  So if spending is too high, how much do we pay in taxes?

Again, citing the Mercatus report,

“Arkansas uses all the major tax instruments available to states, including income, sales, and property taxes, while some of Arkansas’s neighbors do not have certain taxes (notably, Tennessee and Texas have no personal income tax).

The overall state-and-local tax burden—10.1 percent—is the highest among the competitor states, and it is the 17th highest in the nation.  

Arkansas has the second-highest average state-and-local sales tax rate, at 9.3 percent. The top marginal state income tax rate is 6.9 percent, the second highest among our competitor states …, and two border states have no individual income tax (Texas and Tennessee).

The corporate tax rate is also the second highest among Arkansas’s competitor states, at 6.5 percent…  All these data points show that taxes are high in Arkansas compared with border and competitor states, and even compared with the nation in some cases.[iii] 

It took BLR, 192 pages to summarize all 10 categories of taxes in Arkansas for the legislature in October 2016 in its bi-annual preparation for the general session.[iv] These also include the regulator taxes and fees not mentioned by Mercatus.  It includes not so visible taxes like the 2.5 percent tax on insurance premiums which yielded over $169 million, a 43% increase in receipts from the previous year (FYE June 30, 2015.)  (It is also worth noting—insurance companies like all big corporations do not pay taxes—they simply pass on the cost of the tax to the consumer—i.e. the 19.3% increase in insurance premiums recently announced by Arkansas BCBS starting January 2018.

The Mercatus report also cites comparisons showing Arkansas spending per capita at $7,674 as the highest spending per capita among the boarder and comparable states.

“Arkansas spends almost 24 percent more per capita than the state with the next-highest spending, Mississippi. On average, Arkansas spends over 59 percent more than its competitor states, which spend an average of $4,815 per capita. Compared to its border states, Arkansas still spends 51 percent more than their average of $5,072.[v] 

Removing federal government spending,

Arkansas still has by far the highest state government spending compared with the competitor states. The amounts for other very poor states, such as Mississippi, do drop significantly …., but Arkansas remains at the top. The full group of competitor states spends on average $3,192 per capita, and Arkansas spends almost 72 percent more, at $5,481.”

Spending may be acceptable if one can afford it (and it gets you where you want to be!)  But Arkansas’s gross domestic product (GDP) per capita trails the national average of $55,295 in 2015 and ranks among the lowest compared to its peers.

“In 2015, Arkansas’s per capita GDP of $41,299 trailed the per capita GDP of Texas, Louisiana, Missouri, Tennessee, Oklahoma, and Florida, but exceeded the per capita GDP of Mississippi (Figure 1a). Each state in the region except Texas is below the national average.” [vi]

The high overall state spending in Arkansas is most notable for such a poor state!  It is time to let the people take charge of their own money to seek a better outcome.

2-Specifics Reforms:  What changes are needed?  CAVEAT:  One must clearly understand that in no way should legislators consider broadening the tax base or elimination of exemptions unless and until tax rates are significantly cut.  Waiting to cut rates while broadening the tax base and eliminating exemptions is simply a tax increase.

Corporate Tax Reform:

  • Totally Eliminate the Corporate Income Tax.
    • This income stream is the most volatile and is in fact double taxation passed on to the consumer.
    • The state already recognizes reducing taxes on companies increases economic development when it regularly choses certain companies for give tax give a-ways.
    • Pair this with a complete repeal of corporate welfare spending programs which include state and local tax incentives.
      • Corporate Welfare picks winners and losers, distorts the economy, and shifts current businesses tax dollars to competing companies. BLATENTLY UNFAIR!!
      • End the Corporate Welfare Quick Action Closing Fund Tax Incentive Program.
      • Repeal Corporate Welfare Tax Subsidies including: Create Rebate, ArkPlus, Equity Investment Tax Incentives, Research and Development Credits, and Advantage Arkansas.
      • This will also allow local taxing authorities to keep more tax dollars.
    • Eliminate the Corporate Franchise Tax.
      • Stifles growth in business creation in Arkansas
      • If necessary increase the initial filing fee when creating the entity to offset some lost revenue.
    • Eliminate Sales Tax on Inventories
      • Improves competitiveness with other state

Individual Income Tax Reform:

  • Individual Income Tax Rates Reduction and Simplify the Schedules to a single, flat rate of no greater than 9%.
    • Continue the current low-income exemptions and deductions
    • For pass-through business filers, allow complete expensing in year of purchase rather than depreciation
    • AR residents will likely lose the state and local tax deductions at the federal level which is basically a tax increase on AR residents. This should be an added deduction on the state level in order to compensate for the increase in tax at the federal level.
    • Extend the number of years for a carryforward of a Net Operating Loss (NOL)
    • Allow for a carryback for a NOL
    • Freeze spending at last year’s level, and implement automatic triggers for rate reductions to be implement for the individual income tax rate reductions over no more than a three-year period as revenue grows.

Reforms to Avoid:

  • Eliminating exemptions without first significantly reducing rates.
  • Broadening the tax base without first significantly reducing rates.
  • Reforms that do not lead to a reduced amount of money going to Government.
  • An Internet Sales Tax or Gas Tax Increase.

Offer to augment tax reform:

Government Spending Reform

  • Recommend a Proposed Constitutional Amendment for a Tax-Expenditure Limit to Contain Government Growth.
  • Tie the limit to the growth in inflation plus population growth.
  • Include a tax rebate mechanism automatically triggered at certain thresholds to return revenue collected above the spending limit.
  • A proposal like Colorado’s TABOR (Taxpayer Bill of Rights) should be considered.

Government Efficiencies Reform

  • Implement Performance Based Budgeting
  • Implement Activity Based Cost Accounting

3-Research or Recommendations Similar to one or more CFA Recommendations:  Below is a list of the most respected and conservative groups and foundations in the state and nation who spend millions developing good economic tax policies.  Guess what!  They have posted research or positions that we find supportive of one or more of our recommendations. This does not imply any of these organizations embrace our recommendations in this article but only to point that their research or recommendations have included positions similar to one or more of our recommendations. The articles on point are referenced in our footnotes.

It is certainly hoped that the members of the tax task force (and all members of future legislative sessions) will take the time to build their own knowledge base so that they will have a bench mark to test their own consultant (and proposed bills.)  It is likely that, like most task forces, this one has a pre-determined outcome.  But it is hoped that its members will reconsider, meet the challenge and learn what is at stake. Again, the following are all directly on point with at least one or more of the issues discussed under section #2 above:

  • Trump Administration[vii]
  • Heritage Foundation[viii]
  • The Heartland Institute[ix]
  • American Legislative Exchange Council[x]
  • CATO Institute[xi]
  • American Enterprise Institute[xii]
  • Freedom Works[xiii]
  • The Club for Growth[xiv]
  • Reason Foundation[xv]
  • Recent Arkansas US Senators vote to eliminate deductions for state and local taxes[xvi]

*****

  • Tax Foundation/ Arkansas Center for Research in Economics[xvii]
  • AR Policy Foundation (Murphy Commission)[xviii]
  • Arkansas Republican Platform[xix]

Conclusion:  It is not a matter of how much we are to spend on government or whether there is a spending problem or a revenue problem.  The question is—how much do the people of Arkansas want to pay for government services?  That is all that determines what is spent in our state.  The current mood in our country has sent a clear message to DC and to Little Rock.  The people want to keep more of their freedoms and more of their own money and want government to have less.  It will be left to another day to discuss the quality of service Arkansans receive for the money now being spent.

[i] Act 78 of 2017 Tax Reform and Relief Act of 2017

[ii] http://uca.edu/acre/files/2016/06/Theres-Nothing-Natural-about-the-State-of-Government-Spending-in-Arkansas.pdf

[iii] http://uca.edu/acre/files/2016/06/Theres-Nothing-Natural-about-the-State-of-Government-Spending-in-Arkansas.pdf

[iv] http://www.arkleg.state.ar.us/bureau/fiscal/Publications/H.%20%20Tax%20Handbook/2016%20Tax%20Handbook.pdf

[v] http://uca.edu/acre/files/2016/06/Theres-Nothing-Natural-about-the-State-of-Government-Spending-in-Arkansas.pdf

[vi] https://files.taxfoundation.org/20161206233223/Arkansas-The-Road-Map-to-Tax-Reform.pdf

[vii] https://www.treasury.gov/press-center/press-releases/Documents/Tax-Framework_1pager.pdf

[viii] http://www.heritage.org/taxes/report/analysis-the-unified-framework-fixing-our-broken-tax-code

http://www.heritage.org/taxes/report/time-real-change-repeal-the-corporate-income-tax
http://www.heritage.org/node/18247/print-display
http://www.heritage.org/taxes/report/the-economic-impact-25-percent-corporate-income-tax-rate

[ix] https://www.heartland.org/publications-resources/publications/research–commentary-maryland-corporate-income-tax-reform

https://www.heartland.org/publications-resources/publications/research–commentary-illinois-corporate-income-tax-reform
https://www.heartland.org/publications-resources/publications/tip-sheet-state-income-tax-reform

[x] https://www.alec.org/model-policy/statement-alec-principles-of-taxation/

[xi] https://www.cato.org/publications/research-briefs-economic-policy/do-corporate-taxes-hinder-innovation#full

https://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2016/9/cj-v36n3-8.pdf
https://www.cato.org/publications/tax-budget-bulletin/state-corporate-income-taxes-should-be-repealed

[xii] http://www.aei.org/?s=STATE+CORPORATE+INCOME+TAX

[xiii] http://www.freedomworks.org/content/state-state-income-taxes

http://www.freedomworks.org/content/freedomworks-releases-principles-fundamental-tax-reform

[xiv] http://www.clubforgrowth.org/issues/taxes/

[xv] http://reason.org/news/show/the-facts-about-the-corporate-incom

http://reason.org/news/show/county-leaders-and-the-elusive-ques

[xvi] Cotton and Boozman voted this week in favor of eliminating the deduction for state and local taxes-ADG-Oct 20, 2017.  See the argument in favor:   http://dailysignal.com/2017/10/17/state-and-local-tax-deductions-stump-growth-says-legislators/

[xvii] https://files.taxfoundation.org/20161206233223/Arkansas-The-Road-Map-to-Tax-Reform.pdf

http://uca.edu/acre/files/2016/06/Theres-Nothing-Natural-about-the-State-of-Government-Spending-in-Arkansas.pdf; Note added 6/12/2019: since the initial publication of this article, the author was contacted by Nicole Kaeding with the Tax Foundation personally to voice her objection that the original article implied agreement by the Tax Foundation were referenced by this author.  Ms Kaeding stated that the Tax Foundation did not agree with the conclusions of the author.  I suggest that the reader personally study all reports referenced in these footnotes.

[xviii] http://www.arkansaspolicyfoundation.org/policy/murphy_summary.html (this one is a little dated but still good policy.)

[xix] http://www.arkansasgop.org/platform.html

Follow the Money Report: Selected 2018 Arkansas Republican Primaries

Have you ever wondered who controls Arkansas?

Follow the Money on 2018 Republican primaries to find out. The research team at Conduit for Commerce compiled an in-depth, comprehensive report following the money on selected 2018 Republican primaries. The takeaway is clear: establishment Republican candidates, whose votes favor bigger government, were elected with the large and unified financial support of Arkansas’ most established long-time special interest groups, which hold no party allegiance.

Conservative, limited government groups have a way to go before they see more of  their limited government candidates win election in Arkansas GOP primaries.

Conduit for Commerce collected contribution records from the Arkansas Secretary of State Financial Disclosure website, then sorted, tagged, and analyzed those against additional research of the contributing persons. This analysis allowed grouping between similar interests, entities, and persons. We could see who were the “big players” in Arkansas politics, whether contributions came inside or outside a legislative district, and allowed for a peak at the special interests behind the political contributions.

The reader is encouraged to use these findings as a blueprint for predicting future votes by these elected officials as various special interest issues come before the Legislature in January 2019.

If you want to know which way the political winds are blowing, it helps to know which way the campaign funds are flowing.

The report provides in depth analysis of fundraising for the following state legislative primaries:

Breanne Davis vs. Bob Bailey – State Senate District 16

Representative James Sturch vs. Senator Linda Collins-Smith – State Senate District 19

Cole Peck vs. Representative Dan Sullivan – House District 53

Representative Bob Ballinger vs. Senator Bryan King – Senate District 5

Representative Mat Pitsch vs. Frank Glidewell – Senate District 8

Scroll through or download the full report below. 

Download (PDF, 1.28MB)

2017 Calvin Coolidge Heroes of Freedom Award Winners

Conduit for Commerce is pleased to announce their biennial Calvin Coolidge Heroes of Freedom Award winners. These awards are presented to Arkansas legislators who fought for liberty in the recent legislative session and is based solely on their voting records. Broken campaign promises and bloviating tweets net you zero Coolidge Awards. The winners represent the cream of the crop of conservative, limited government Arkansas state legislators.

The awards reflect legislators who voted to:

(1) Decrease the size of government;

(2) Decrease Dependency on Government; and

(3) Not spend money we do not have.

The complete list of Calvin Coolidge Award Winners: Calvin Coolidge Award Winners

 

The Calvin Coolidge Heroes of Freedom Awards were given to the top scorers on the Conduit for Commerce Scorecard rankings. The Freedom Bill awards were given to legislators who sponsored the best bills of the session.

The best bills of the session included:

  1. SB175 – Medicaid Disclosure by Senator Bryan King
  2. SB726 – Ethics Reform prohibiting legislators who are attorneys/consultants from running bills for clients – by Senator Linda Collins-Smith
  3. SJR10 – Fair Ballot Titles Reform – by Senator Linda Collins-Smith
  4. SB727 – Civil Asset Forfeiture Reform – by Senator Linda Collins-Smith
  5. SB723 – Special Elections Reform – by Representative Justin Gonzalez
  6. HB1465 – Obamacare Medicaid Expansion Freeze – by Representative Josh Miller
  7. HB1222 – School Choice and Education Savings Accounts – by Representative Jim Dotson
  8. HB1405 – Unemployment Insurance Tax Cut – by Representative Robin Lundstrum
  9. HJR1016 – Voter I.D. Proposed Constitutional Amendment – by Representative Robin Lundstrum

 

2017 Legislative Scorecard: Ranking of the 91st General Assembly

2017 Ranking of the 91st General Assembly

Regular and Special Sessions– January-May 2017

By  Conduit for Commerce

June 13, 2017

 

Much like any specific vote, scoring of votes by Conduit for Commerce (CFC) is not an exact science as some bills have a greater impact on Arkansas if passed.  However, the weekly pre-vote publications (score cards) released during the Regular Session by Conduit for Action (CFA) referencing specific bills is reflective of the measure used in CFC’s final vote tallies.

Likewise, only bills which reflect the focus and mission of CFC are taken into account when deriving these rankings.  Therefore, our scoring is weighted for principles based upon the following preferred outcomes:

  • Reduces the size of government,
  • Reduces dependency on government, and/or
  • Reduces spending by government.

Votes cast by legislators on bills on the floor and during committees (when known) are all considered.  In total 30 Senate floor votes, along with three supportive committee votes, were scored.  For the members of the House of Representatives, 35 floor votes and 13 committee votes were included in the scoring.

It is believed that the methods used by CFC will ultimately yield a better assessment of the pattern of voting by a specific senator or house member.  It is our goal to assist voters as they measure differences in their expectations and results.  Ultimately our intent is that the voting pattern of these elected officials, as they relate to the above principles, is made clear.

Likewise, as the methods and results of the CFC rankings are compared to other groups, differences may be noted.  These differences should be filtered with the understanding that CFC is an Arkansas founded and small business focused organization, which not only understands the fiscal impact of these bills, but is able to use knowledge and background regarding directly related issues which may not be apparent to national groups.

(Note: Floor votes on bills reflected at the following government site: http://www.arkleg.state.ar.us/SearchCenter/Pages/historicalbil.aspx  This is the third Regular Session Report Card, starting in 2013, published by Conduit for Commerce.  For more information contact brenda@conduitforcommerce.org)

 

 

 

 

 

 

 

[table id=4 /]

[table id=3 /]

 

Any typographical errors will be promptly corrected.

 

 

What is Traded Sector & Its Importance

 

The Fall & Rise of Legislative Pork in Arkansas

Reprinted from Conduit for Action; By: David Ferguson

This is the second in a series of articles on General Improvement Funds

GIF PigThe General Improvement Fund (GIF) used to be used for improvements to state facilities, state parks and other state projects.  As an example of the type of state projects that were included, here is a link to Act 1030 of 1987, which distributed GIF. As you can see as far afield as the legislation went was to provide money to the Livestock and Poultry Commission for District Livestock Shows, but there is extensive legislation concerning state promotion of livestock through the shows.

The types of projects included in GIF became broader over the years.  The types of projects allowed exploded during the years Republican Mike Huckabee was governor, but it was not Huckabee’s doing. Much of the expansion came about because the overwhelmingly Democratic controlled legislature flexed its muscles in defiance to a Republican governor.  Adding more kinds of GIF projects was just one byproduct of the struggle to determine whether the Republican governor or the Democratic legislature would be king of the hill.

By 2005, the raid on state funds for GIF pork had gone crazy! The GIF distribution bill grew to 113 pages! Page after page made awards to not just state facilities and parks, but also to cities, counties, fire departments, and lots of private entities.  There were parks, museums, sports complexes, senior citizens centers, scholarships and out right support of private entities. Much of the money given to private and nonprofit organizations could be used however the entity saw fit. Some organizations got more than one GIF award because the awards came from different legislators who filed separate legislation.

I spent hours reading through the list of entities were authorized to receive money under the 2005 law and found no good way to summarize the projects.  A summary of the projects would have been much too long for this article.  I decided to list just a few random examples of awards of non-governmental awards, other than senior citizens centers and the many subscription fire departments.

Below is an example of twenty five projects listed in Act 2315 of 2005.  This is not a top 25 list.  I just picked 25 and quit reading the 113 page act.

  1. Arkansas American Red Cross $90,701
  2. Arkansas Baptist College $70,000
  3. Ballman Parent Teacher Association $2,500
  4. Boys and Girls Club of Pine Bluff Inc. $100,000
  5. Butterfly Community Ministries for North Little Rock Our Club $60,000
  6. Elmwood Cemetery Association, Inc. $25,000
  7. England Acres Neighborhood Association $100,000
  8. First Tee Golf Program for scholarships $50,000
  9. Free Will Baptist Family Ministries $25,000
  10. Habitat for Humanity of Jefferson County $5,000
  11. Hot Springs Village Property Owners Association $80,000
  12. Human-Elevation-Love Project $3,000
  13. Inner City Futurenet Incorporated $30,000
  14. Legion Hut in Lepanto $10,000
  15. North Little Rock Heflin YMCA $35,000
  16. Ozark Guidance for a Psychiatric Care Unit in Washington County $454,000
  17. Philander Smith College $30,000
  18. Runyan Acres Property Owners Association $20,000
  19. Sherwood Rotary Club (Veteran’s Memorial) $20,000
  20. Small Business Association $10,000
  21. Sylvan Hills Optimist Club $5,000
  22. United Family Services, Inc. $50,701
  23. Veterans of Foreign Wars (VFW) in Jefferson County $10,000
  24. Westside Business Men and Women’s Association $5,000
  25. White County United Way $40,000

There was much more legislation involved other than just the 113 page GIF distribution bill. There was also a separate appropriation bill for most of the projects in the list.  Separate bills were filed because Article 5, Section 30 of the Arkansas Constitution requires appropriation bills to be limited to a single subject.  Because some legislator would fail to get legislation filed in time, there was also a bill that would list multiple projects. Among legislators it was known as the “Christmas Tree Bill.”

Wilson v Weiss DFA

There was so much pork being spread around by 2005 that attorney and former state Representative Mike Wilson of Jacksonville had enough. Wilson filed a lawsuit challenging the constitutionality of a number of acts awarding General Improvement Funds. He challenged several claiming the acts violated:

  1. Amendment 14 of the Arkansas Constitution, which prohibits “local or special legislation”; and
  2. Article 5, Section 29, of the Arkansas Constitution, which requires appropriation bills to state a “distinct purpose”. Many of the appropriation acts merely stated that the funds were being appropriated “for state assistance to” the entity.

In Wilson v. Weiss DFA the Arkansas Supreme Court struck down several GIF awards as unconstitutional. Some observers thought the court decision meant the end of legislative pork. But the legislature was not inclined to give up.  As soon as the Supreme Court rendered its decision, legislators went to work devising a plan to get around the decision.

Scheme to continue GIF funding to local projects and groups

There was much discussion among legislators about the possibility of setting up a commission to make the same awards as grants, and the commission would be controlled by legislative appointments. This idea was eventually dropped, in part because it would focus too much attention on the legislature.

Eventually, they arrived at a plan that would keep the pork but make it harder for the public to track it. The GIF would be funneled through state agencies and GIF grants would then be awarded. The legislators would keep control of the grants by using informal communications with agencies. An unofficial behind the scenes list was kept on each project a legislator wanted to fund out of “his or her” share of GIF. The amount that would be appropriated to an agency was based on the unofficial list. Using this scheme, the appropriation bills avoided naming the particular recipients, which was thought to help avoid a constitutional challenge.

Under this scheme the GIF distribution bill no longer had to be 113 pages, but it is still lengthy because grants to colleges and state facilities are still listed separately. The latest distribution act is Act 1147of 2015.

A few bumps in the road

The scheme to keep funding local projects had an Achilles’ heel. The scheme depended on good backchannel communication between the legislature and state agencies.  There were glitches in communication at first.

Where is my publicity? The first complaint that arose among legislators was that some agencies didn’t give the legislator credit for the grant.  At least one agency sent out grant checks by the mail, which denied legislators the opportunity to make a big show of the award.  Agencies quickly found out that a good awards presentation with the legislator present for a photo opportunity was what was usually expected when it came to local grants.

Grants to colleges were not so much of a publicity problem because the legislator could still have his or her name on the act making the grant to the college.

But it is my money! In 2007, Senator Gene Jeffress send $100,000 to the state Athletic Commission for grants to Boys and Girls Clubs.  Not having any direction on how to divide the money, the commission announced that the fair thing to do was to give each Boys and Girls Club a GIF grant.  The commission’s decision revealed the lack of communication to the public and exposed the new system for what it was. Senator Gene Jeffress went to the next meeting and objected saying it was his money and that he intended for the entire $100,000 to be divided between just two clubs in his district.

“I did not seek $3,000 for each one,” he said. “I sought $75,000 and $25,000.” Do you think I would have sent $100,000 this way if I didn’t expect to get it back?” he asked. “I’m sorry, but I don’t represent Corning or West Helena. I got the money for the districts I represent.[i]

After the meeting, Jeffress said the Supreme Court decision was the reason the legislation didn’t mention specific clubs. “It was just the way it had to be written,” he said.[ii].

His public statement was an embarrassment to many legislators because they were trying to keep the funding local projects under the radar.  It was also too late.  The Athletic Commission was in a bind.  It could make the Senator mad or make the public and other clubs mad by reversing course and doing what the senator asked. With the public scrutiny the commission chose to keep its promise to divide the money among all clubs.

Local criticism of grants. After the 2008 article on the Boys and Girls club grants, GIF got little negative press because the big media normally didn’t notice the small grants being done though agencies.  A couple of exceptions began as local criticism of a GIF project and became statewide news. Two example are:

  1. A grant for a fireworks show that was criticized by a county judge who needed money for other projects; [iii] and
  2. A grant for a fully handicapped accessible playground which quorum court members criticized because they did not have money to maintain a park and didn’t even have a parks department. .[iv]

Letter of legislator support needed.

Many local GIF grants are funneled through the Department of Finance and Administration and then to one of the eight Planning and Development Districts covering the state.  The Planning and Development Districts then award grants to local projects.  How much money goes to a Planning and Development District is determined by how much each of a legislator’s “share” of GIF the legislator wants to funnel through the district.

The board of a Planning and Development District is made up of mayors and county judges. Although Arkansas Code 14-166-205 says the decision on allocating the funds “shall be solely within the discretion and control” of the board, the system doesn’t work that way. In 2013 the Arkansas Democrat Gazette exposed the fact that:

For five of the eight planning districts, a letter of support from a legislator is either required or strongly recommended and is considered in the grant evaluation process.[v]

Does that mean that the other three Planning and Development Districts make grants the way they wish instead of the way the legislator wants it to be spent? Do you think a legislator who knows how he wants the money to be spent would keep sending his “share” to a board that won’t listen?  It is more likely that the lack of a requirement for a letter of recommendation merely means there is no need for a paper trail in that district.

Good press at home

While the legislature tries to fly under the radar of statewide media, local press is still sought and is a big deal. Local newspapers are happy to provide their legislator publicity for bringing home the bacon to help the community. Many legislators are quick to let the public know that the grant was a result of the legislator’s willingness to share “his” GIF money (See examples in the CFA article: General Improvement Fund – A Reelection Tool )

The future of legislative GIF for local projects

Will the legislature act?  Not likely! Not every legislator likes the way the legislature uses GIF to fund a buffet of local projects across the state. But, don’t expect them to be brave enough to stand in opposition to the scheme. First, most of their colleagues love GIF as a way to help get reelected, and a legislator is not likely to alienate colleagues over GIF.  Second, if a legislator took the bold stand of saying I will not accept local GIF moneys, local groups would see funds going into other districts and rise up in opposition to the legislator’s reelection. Third, some entities have received GIF money for so long that they see it as their money and right.

If no one in the legislature has the guts to stop the raid on taxpayers’ dollars, how can it be stopped?  It may take another embarrassing lawsuit.

Mike Wilson speaks out on the new scheme.  Mike Wilson who filed the lawsuit over 2005 projects, has not been happy or impressed with the legislature’s scheme and has called it an attempt to bypass the court decision.

Concerning funding of a park in Saline County, he is quoted as saying:

“A single member of the Legislature does not have the privilege of directing where public money goes,” Wilson said by phone. “That’s a perfect demonstration of what the writers of the constitution said was unlawful. It’s an attempt to get around the constitutional provision of local or special acts. And it’s clear that’s what that is.[vi]

Concerning a grant of $5,000 for a fireworks show in Benton:

“I don’t believe that there is a state fireworks program that I haven’t heard of,” Wilson said. “Why is it that other firework-needy places don’t have access?”[vii]

Wilson has also called the scheme:

a corrosive example of pigging out at the public trough”.[viii]

Another lawsuit?  Sadly it may take another lawsuit to curb the legislative GIF practice.  With the legislative scheme being so obvious it may be time to put the scheme under review again to determine once again whether the local pork system violates:

  • Amendment 14, which prohibits “local or special legislation” or
  • Article 5, Section 29 which requires appropriation law to state a “distinct purpose.”

In addition, I think it would be worthwhile to also consider challenges based on:

  • Article 4, Section 2, which requires a separation of powers. This provision should be examined because the scheme allows individual legislators to act as the de facto authority over the distribution of GIF grants in their districts. Although this is being done indirectly, it should be remembered that the court has stopped intrusion on the executive base based upon a pattern of results.  (See Chaffin v Game and Fish)
  • Article 5, Section 30, which requires appropriation bills to be limited to a single subject. With the operation of the scheme being obvious, would the court decide that awarding grants is the single subject, or would the court look at the operation of the scheme as a “legislative Christmas tree” of unrelated projects.

Bottom line

When a legislator talks about being fiscally conservative and maintaining a balanced budget – remember the legislative GIF feed trough is still open and being filled each session (with your money!)

 

[i] Funds secured for his district, senator asserts, Arkansas Democrat Gazette, Jan 30, 2008

[ii] Ibid.

[iii] Display funding called to question, Arkansas Democrat Gazette, July 4,2014

[iv] Legislator’s letter eased funds for wife’s park project, Arkansas Democrat Gazette, Sept 3, 2013

[v] State tap still open on local projects, Arkansas Democrat Gazette, October 13, 2013

[vi] Legislator’s letter eased funds for wife’s park project, Arkansas Democrat Gazette, September 20, 2013

[vii] Display funding called to question, Arkansas Democrat Gazette, July 4,2014

[viii] State tap still open on local projects, Arkansas Democrat Gazette, October 13, 2013

– See more at: http://www.conduitforaction.org/the-fall-rise-of-legislative-pork-in-arkansas/#sthash.jzYyOAFw.dpuf

Arkansas DHS Director Misled Lawmakers On Obamacare Waiver

CFC Claims no Credit. This article is shared from forbes.com and all credit is given to the authors, forbes.com, and the Foundation for Government Accountability.

Original Link

By Jonathan IngramNic Horton and Josh Archambault

Arkansas bureaucrats are wasting millions of dollars providing Medicaid benefits to people no longer eligible for the state’s expansion of the program under Obamacare. But is that just the tip of the iceberg?

Last month, internal e-mails from the Arkansas Department of Human Services surfaced, revealing that the state had never bothered to verify that individuals enrolled in Obamacare’s Medicaid expansion were still eligible for benefits. According to data provided by state officials, this is costing taxpayers up to $20 million each and every month.

We previously questioned why the state hadn’t started the redetermination process yet – which should have begun months ago. After all, federal law requires states to verify Medicaid enrollees’ eligibility at least once per year.

As we reported at the time, state officials contended that they had received a temporary waiver from the Obama administration, allowing them extra time to perform the eligibility checks. But it turns out that no formal waiver ever existed. Worse yet, a recent follow-up letter from the Obama administration may generate more questions than answers.

No Waiver Existed

After news broke that the state wasn’t performing the required eligibility checks, a number of reporters and lawmakers reached out for a copy of that waiver. Such a waiver would be pretty important – without it, Arkansas would be violating federal law.

Obama’s Letter Provides More Questions Than Answers

Unfortunately, this letter provides more questions than answers. First, it says that the Obama administration is now providing Arkansas the authority to delay its eligibility redeterminations. Does that mean that Arkansas was operating without that authority prior to April 27th? It certainly seems that way.

The Department of Human Services also contends that this letter allows them to delay all redeterminations until September 2015. But that is not, in fact, what the letter says. The letter allows them to delay redeterminations due in 2014 “for 9 months.” While a redetermination due on December 31, 2014 would not be due until September 2015 under this letter, one originally due on January 1, 2014 was actually due back in October 2014. This means that all redeterminations originally scheduled between January and August of last year should already have been conducted.

But even more worrisome is that the letter limits the delay exclusively to “eligibility renewals scheduled for January 1, 2014 through December 31, 2014.” It provides zero authority to delay redeterminations that should have been scheduled in 2015. So why hasn’t the state conducted the mandatory redeterminations that were due in January, February, March and April?

The Redetermination Process Should Have Begun Months Ago

Regardless of whether or not Arkansas’ actions are approved by Obama, they should be worrisome to taxpayers everywhere. The state has yet to redetermine eligibility for a single Medicaid expansion enrollee. By now, the state should have re-checked eligibility for more than 170,000 enrollees. Another 70,000 should be due for verification later this year or early next year.

To make matters worse, the Department of Human Services expects that up to 40,000 enrollees are still receiving benefits even though they’re no longer eligible. If those estimates are correct, taxpayers could be on the hook for up to $20 million per month to provide Medicaid expansion benefits to people no longer eligible.

Worst of all, state officials have facilitated this fraud by asking for waivers and continuing to kick the can further down the road. Meanwhile, nearly 3,000 children and adults with developmental disabilities are sitting on Medicaid waiting lists. Some of them have been waiting eight years or more for their needed home- and community-based services. They continue to wait, while Arkansas bureaucrats provide Obamacare welfare to 40,000 able-bodied adults who aren’t even eligible.

Welcome to Obamacare.

General Improvement Fund – A Reelection Tool

Reprinted from Conduit for Action; By: David Ferguson

GIF-The members of Arkansas General Assembly are given discretion over millions of dollars in General Improvement Funds (GIF). For the 2015-2016 fiscal year $20 million has been set aside for the whims of legislators.  Each legislator determines how “their share” is spent. Some designate their share to go to a college others have the funds sent to the Department of Finance and Administration to then be sent to one of the eight planning and development districts and then awarded as grants.

The public is not privy to exactly how the money is divided among legislators, but if the House and Senate each received $10 million, and then with each Senator getting an equal share and each Representative getting an equal share, then each Senator would have discretion over $285,714.28 and each Representative would have discretion over $100,000.

Why are state funds distributed upon the discretion of an individual legislator instead of through a formula or perhaps retained for other needs? $20 million helps incumbent legislators gain favor in their districts.

2014 Election

Republican Doug Driesel, who ran against incumbent Democrat Representative Scott Baltz in District 61, stopped by a rural fire department to campaign.  According to Driesel, several firefighters told him they liked what he stood for, but that they couldn’t vote for him because Baltz had gotten General Improvement Funds for their fire department.

Blaine Davis ran as the Republican candidate in the adjoining District 60, against incumbent Representative James Ratliff. Recently, I asked Davis if he had a similar experience with fire fighters in his race. Davis responded:

 “Absolutely.  Several that I’d known for literally forever told me they would have to support him or just groaned when I told them who I was running against.  He’s given thousands to every one of them [fire departments].  Heck, at the Strawberry Fire Department fundraiser all he [Ratliff] did was stand up and talk about how much he gave them.”

A GIF grant is not likely to be forgotten by the members of an organization receiving the grant. In addition, local governments and volunteer organizations are also likely to be a good source of campaign workers because these are people who are already active in their community.

Could GIF make the difference in a legislative race?  You bet! Consider how close Blaine Davis’ came to winning.  Davis only lost to the incumbent by 50 votes. There are a lot of fire firefighters in House District 60. If just 26 firefighters voted for the incumbent because of GIF funds, then GIF funds made the difference in the outcome in that race.

Gaining publicity and building voter gratitude.

Legislators doling out GIF grants is a big deal in many areas of the state. Local newspapers, especially in rural areas, love to report that their Representative or Senator got GIF for local communities and organizations.  Legislators are quick to get in the photograph when as poster size check is handed out.  Click on name for an examples of the publicity legislators get from “their GIF:

 Rep. Scott Baltz                      Rep James Ratliff           Sen. Stephanie Flowers

Rep. Sheilla Lampkin            Rep Jeff Wardlaw          Rep Douglas House

 

Some legislators send all or a portion of “their” GIF to colleges. It is good publicity too.  For example, the University of Arkansas made sure its supporters and alumni knew that thirteen legislators deserve recognition for sending GIF to the university for three projects in the combined amount of $3 million. See article: University receives increase in state funding monies from General Improvement Fund

Many people see these articles and think “Our legislator is working hard and knows how to bring home the bacon.”  No effort was actually needed. Legislative GIF is just a slush fund created to give every legislator a share, whether the legislator uses it for a good purpose or not.

If the local newspaper fails to report the story or an organization’s newsletter fails to publicize it, what does a legislator do?  The answer is easy – toot your own horn on social media.  That is what Rep. Ratliff did when he did not get the publicity he hoped for.  Here are a couple of examples from James Ratliff’s Facebook account:

June 4, 2014: “Had a busy day. Started by going to the women’s battered shelter in Highland this morning awarding them a grant of $1000 for fixing their plumbing.”

April 12, 2015: “The fire chief Stan Mayland thanked myself (Rep James Ratliff) for the grants that bought all new turnouts and equipment for all the firemen in Strawberry.”

It seem a bit odd for a Representative to need to put his own name in parentheses on his own Facebook account.

 

Are there reasons for giving legislators discretionary funds (other than election purposes)? Are there legitimate reasons to give legislators discretionary funds?  No, there is not. Excuses cited in the past include:

1. Legislative discretion over the money is needed in order to get money for projects in rural areas. Wrong. Sorry but if getting funds to rural areas is the goal there would be a lot easier and cheaper ways of doing it. First, it is not just rural legislators who have say over GIF funds. Second, no legislator is required to use the funds for a rural project or even within his or her own district.

2. Legislative discretion is needed because a legislator knows better than anyone which local project should get a GIF. Wrong again. Legislators sometime do not know the greatest needs in their district and even if they do they have no obligation to use GIF for the most needed projects. In exercising discretion over the money, the legislator’s goals sometimes conflict with the priorities and needs of municipal and county officials.In 2013, Senator Jeremy Hutchinson directed GIF money to a firework show.  I happen to like firework shows, but local governments didn’t fund the firework show because of a lack of funds for more important projects.“Saline County Judge Lanny Fite said he has a list of projects that need funding like repaving parking lots or buying new lighting. ”“I did not like the way it was being used, plain and simple,” Fite said. “Money is very tight; we don’t have a sales tax. This money is always good to help us do projects that the county cannot afford.” [i]Also in 2013, then Representative Andy Mayberry and some legislative friends sent $120,000 in GIF to fund a playground that is fully accessible to disabled children.  That is certainly a worthy cause! But it also seems to be an instance in which a state Representative single handily pushed a project onto the county despite the quorum court not having money to maintain a park or replace equipment in the future.  It was noted by a quorum court member that the county didn’t even have a parks department. Julie Mayberry, Rep. Andy Mayberry’s wife and now a state Representative, responded to criticism by the quorum court in 2013 by suggesting that the quorum court create a parks department.[ii]Could we handle needs without giving legislators an expensive reelection tool?

On the other hand, maybe we would miss those newspaper photos of legislators handing out poster sized checks and their Facebook self promotions. The state also has turn back formulas for sending state support to municipalities and counties.

Also consider that a significant portion of legislative GIF goes to fire departments.  Again, there is a funding formula for support of fire departments.  In addition, a fire department with a significant need could be overlooked merely because it is in a legislative district where the legislator prefers to give his GIF allotment to a college or perhaps want to use it for a fireworks show.

Consider that a significant portion of legislative GIF goes to colleges. We already have a funding formula for the colleges. The Department of Higher Education should have a good understanding of needs of Arkansas colleges.  And, under the current system there is no guarantee that the most important need will be addressed because a legislator with a college in his or her district could choose to spend his or her share on other types of projects.

Do we really have to give a legislator a “please-reelect me fund” in order to fund worthy projects.

 

[i] Display funding called to question, Arkansas Democrat Gazette, July 4,2014

[ii] Legislator’s letter eased funds for wife’s park project, Arkansas Democrat Gazette, Sept 3, 2013

 

Why Are So Many Employers Unable to Fill Jobs?

This article is from Stephen Moore of The Heritage Foundation. CFC takes no credit or authorship of the article. It can be found here.

 

The great conundrum of the U.S. economy today is that we have record numbers of working age people out of the labor force at the same time we have businesses desperately trying to find workers.

As an example, the American Transportation Research Institute estimates there are 30,000-35,000 trucker jobs that could be filled tomorrow if workers would take these jobs- a shortage that could rise to 240,000 by 2022.

While the jobs market overall remains weak, demand is high in certain sectors.

For skilled and reliable mechanics, welders, engineers, electricians, plumbers, computer technicians, and nurses, jobs are plentiful; one can often find a job in 48 hours.

As Bob Funk, the president of Express Services, which matches almost half a million temporary workers with employers each year, said, “If you have a useful skill, we can find you a job. But too many are graduating from high school and college without any skills at all.”

The lesson, to play off of the famous Waylon Jennings song: Momma don’t let your babies grow up to be philosophy majors.

Three years ago the chronic disease of the economy was a shortage of jobs. This shortage persists in many sectors. But two other shortages are now being felt—the shortage of trained employees and of low-skilled employees willing to work.

Patrick Doyle, the president of Domino’s Pizza, says that the franchises around the country are having a hard time filling delivery and clerical positions. “It’s a very tight labor market out there now.”

This shortage has an upside for workers because it allows them to bid up wages. When Wal-Mart announced last month that wages for many starter workers would rise to $9 an hour, well above the federal legal minimum, they weren’t being humanitarians. They were responding to a tightening labor market.

The idea that blue-collar jobs aren’t a pathway to the middle class and higher is antiquated and wrong. Factory work today is often highly sophisticated and knowledge-based with workers using intricate scientific equipment.

After several years honing their skills, welders, mechanics, carpenters, and technicians can, earn upwards of $50,000 a year—which in most years still places a household with two such income earners in the top 25 percent for income. It’s true these aren’t glitzy or cushy jobs, but they do pay a good salary.

So why aren’t workers filling these available jobs—or getting the skills necessary to fill them. I would posit these impediments to putting more Americans back to work:

1) Government discourages work.

Welfare consists of dozens of different and overlapping federal and state income support programs. A recent Census Bureau study found more than 100 million Americans collecting a government check or benefit each month.

The spike in families on food stamps, SSI, disability, public housing, and early Social Security remains very high even five years into this recovery. This should come as no surprise given the vast majority of the federal government’s roughly 80 means-tested welfare programs don’t include any type of work requirement.

Economist Peter Ferrara argues in his new book, “Power to the People,” that if “we simply required work for all able-bodied welfare recipients, the number on public assistance would fall dramatically. This is what happened after the work for welfare requirements in 1996.”

2) Our public school systems often fail to teach kids basic skills.

Whatever happened to shop classes? We have schools that now concentrate more on ethnic studies and tolerance training than teaching kids how to use a lathe or a graphic design tool.

Charter schools can help remedy this. Universities are even more negligent. Kids graduate from four-year colleges with little vocation training and with debt averaging more than $25,000—although this number now commonly exceeds $100,000 at some universities.

A liberal arts education is valuable, but it should come paired with some practical skills.

3) Negative attitudes toward blue-collar work.

I’ve talked to parents who say they are disappointed if their kids want to become a craftsman—instead of going to college. This attitude discourages kids from learning how to make things, which contributes to sector-specific worker shortages. Meanwhile, too many people who want to go into the talking professions: lawyers, media, clergy, professors, and so on.

4) A cultural bias against young adults working.

The labor force participation rate is falling fastest among workers under 30.

Any time a state tries to change laws to make it easier for teenagers to earn money, the left throws a tantrum about repealing child labor laws. The move to raise minimum wages in states and at the federal level could hardly be more destructive to young people.

My own research finds that the higher the minimum wage in a state, the lower the labor force participation rate among teenagers.

Anecdotally, I’ve always been struck by how many successful people I have met who grew up on farms and started working—milking cows, building fences, cleaning out the barn—at the age of 10 or 11. They learn a work ethic at a young age and this pays big dividends in the future. Many studies document this to be true.

5) Higher education has become an excuse to delay entry into the workforce.

I always cringe when I talk to 22-year-olds who will graduate from college and who tell me their next step is to go to graduate school. Maybe by the time they are 26 or 27 they will start working. Here’s an idea: colleges could encourage kids to have one or two years of work experience before they enroll.

Here’s an even better idea: abolish federal student loans and replace the free government dollars with privately sponsored college work programs.

For instance, schools like College of the Ozarks require kids to work 15 hours a week to pay their tuition. It’s hardly a violation of human rights if a 21-year-old works to fund for their own education—and they will probably get more out of their classes if they do work.

Anything easily attained is lightly valued. This would drive down tuition costs too, because students would start demanding more financial accountability and less waste. After all, federal subsidies have increased college costs.

These may seem like old-fashioned and even outmoded ideas. But the decline in work among the young bodes ill for the future. Many European nations have removed the young from the workforce and the repercussion appears to be lower lifetime earnings.

A renewed focus on working would also help erode the entitlement mentality ingrained in so many millennials. Instead of more benefits and handouts, this generation needs to get a job.

A version of this was originally published in Forbes.