The Cost of State Online Spending-Transparency Initiatives

Posted on September 19th, 2009

Legislatures around the country have begun to propose spending-transparency Web sites. The most effective argument against these efforts is the potential high cost of such Web sites. The Mercatus Center at George Mason University looked at ten recently established state spending sites and found that initial cost estimates often overestimated the final cost. The cost of the surveyed sites range from $30,000 to $300,000, and there is little correlation between the amount spent and the quality of the Web site. [Full Report]

The idea is a simple one: By placing the details of every government purchase and contract online where citizens can easily review them, the government will be much more accountable. Why? First, hundreds or thousands of citizens’ eyes will pore over the newly transparent data, discovering instances of previously unnoticed waste, fraud, and abuse. As a result, one can expect that these constituents will hold their elected representatives accountable and demand action. Second, once government officials become aware of the heightened scrutiny created by a transparency Web site, they will have an increased incentive to be more careful, frugal, and to think twice before making questionable expenditures.

One does not have to be a cynic to recognize that a proposal to throw light on how politicians spend tax dollars—and therefore make it easier for citizens to hold them accountable—might not be a very popular idea among politicians. Of course, it is virtually impossible to oppose a transparency measure on the grounds that one prefers more government secrecy and less citizen scrutiny. As a result, the most persuasive reason to oppose online transparency legislation is the potential high cost of developing a searchable Web site. This is exactly what was done in Arkansas during the last session.

The bottom line is that official cost estimates of spending transparency Web sites should be taken with a grain of salt—especially those that put a price tag in the millions. Additionally, the potential budget benefits of transparency should be taken into account. For example, according to Texas Comptroller Susan Combs, the state’s transparency initiative has saved the state over $5 million.33 This was possible because the site facilitated the discovery of wasteful duplicative contracts for express mail, printer toner, and other goods and services that were later consolidated and renegotiated.

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Conservatives: Ignore it or present solutions?

Posted on September 18th, 2009

Prison Overcrowding in Arkansas

What?

Prison overcrowding has become a serious problem in America. There is currently not enough space in prisons for all convicted criminals to fully serve their sentences. This leads to the early release of offenders who are not ready to successfully reenter the community. The emergency release of offenders out the back door, in an effort to free up space for those at the front door, threatens the public safety of communities. This is neither effective nor efficient policy.

Why?

During the late 1980s and early 1990s, state and local governments passed tough crime legislation. For example, California passed the “three strikes and you’re out” law which called for mandatory sentencing of repeat offenders, and New York adopted the “Broken Windows” strategy that called for the arrest and prosecution of all crimes large and small. Policy such as this led to reduced crime rates, but increased populations in jails and prisons.

What Next?

The precedent was set in August of 2009 when California was federally-mandated to release over 40,000 prisoners in two years. The next step is for state legislators to pre-empt such unconstitutional action by implementing effective policy that will alleviate the situation and keep local communities safe.

ARKANSAS OVERCROWDING QUICK FACTS

In comparison to other states, Arkansas ranked 15th in prison population growth and 10^th in percentage of total general fund expenditure.

Below is a summary of information including: statistics from Arkansas’ Department of Corrections, an overview of the state’s prison overcrowding dilemma, as well as helpful references for those interested in resolving the problem…

Facts and Figures 2008-2009

DOC COSTS

• Annual budget:                                                $295,349,429
• Federal grant amount received:                         $981,068
• Care and custody operating expenditures:         $272,844,471
• Average annual cost per inmate:                       $20,852

DOC STAFF and POPULATION

• Total department active personnel:                     3,766
• Total number of facilities:                                   20
• Total incarcerated under DOC jurisdiction:           14,950
• Average sentence for population:                        18 years, 4 months, 19 days
• Average sentence for admissions:                       9 years, 0 months, 25 days
• Average sentence served:                                   2 years, 9 months, 8 days

CUSTODY LEVEL

• Maximum – 13%
• Medium – 25%
• Minimum – 57%
• Unclassified – 5%

CLASSIFICATION OF INMATES

• Class IA – 4.9%
• Class IB – 7.9%
• Class I – 48.8%
• Class II – 14.1%
• Class III – 3.8%
• Class IV – 18.5%
• Class I-P – 2.0%

PAROLE

• Budget: $1,719,570
• Population: 20,080

NEWS AND MEDIA

• Panel to discuss prison overcrowding, escape – June 19, 2009 LINK.
• Out 4 Life Movement Comes To Arkansas – September 16, 2009 LINK.
• Prison officials ordered to skip privatization meeting – January 6, 2009 LINK.

HELPFUL LINKS

• Arkansas Department of Corrections Website
• Organization of state divisions, view here.
• Organization of DOC Executive Staff, view here.

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Arkansas Legislative Council – September 18, 2009

Posted on September 18th, 2009

Date & Time: Wednesday, September 18, 2009 at 9:00 AM
Location: Room 171, State Capitol
Committee Information:Members on Committee
Agenda: http://www.arkleg.state.ar.us/assembly/2009/Lists/Meetings/Attachments/11854/I7799.pdf
Attachments: http://www.arkleg.state.ar.us/assembly/2009/R/Pages/MeetingAttachments.aspx?ItemId=11854&CalType=ME&List=Meetings&btnok=nook

The Council was established by Act 264 of 1949 to collect data and information upon which legislative decisions will be made during regular session of the General Assembly. The Bureau of Legislative Research of the Legislative Council is a service agency within the legislative department of government. All members of the General Assembly have access to the Bureau of Legislative Research. The Legislative Council is the supervisory committee for the Bureau of Legislative Research, the Council coordinates the activities of the various interim committees and through the various committees provides legislative oversight of the executive branch of government. The Council consists of 36 regular members which is comprised of 20 House members and 16 Senators. In addition there are 24 ex-officio voting members and 5 ex-officio non-voting members.(A.C.A. 10-3-301)

9:05 am – Meeting called to order by the Chairman, Rep. Allen Maxwell.

9:10 am – We have a new style of revenue report. Richard Wilson in giving a presentation of the new report and various numbers. I think I like it!

9:12 am – The sales tax collections are down for 2008-2009 by 0.44 percent. The income tax collections for the same period are down 1.7 percent.

9:14 am – We are now covering the monthly revenue report. No questions or comments. Reports were adopted.

9:16 am – The cumulative deviation from DFA net general revenues available for distribution forecast is $33.216 million under forcast.

9:19 am – We are now reviewing the report from the Executive Subcommittee. The committee heard an update concerning plans for utilizing the 5th floor of the Big MAC Building. The renovation would consiste of two committee meeting rooms: one to seat 100 legislators, with a public gallery that would seat 85; the second would seat 30 members and accommodate approximately 25 members of the public. The remaining space would be occupied by legislative staff. Representiative Maxwell made a motion to recommend the current architect plan to the Arkansas Building Authority as presented and designate office space to be occupied by legilsative staff as feasible. The motion carried without objection.

9:26 am – Rep. Dismang asked what has made it necessary to make this expansion of legislative facilities. The answer is essentially, the committee rooms are full, especially for Joint Budget meetings. There is very little room for the public in the current meetings when you get legislators, staff, and agency personnel.

9:30 am – It seems Rep. Dismang recognizes the needed for public meeting space, but he wants to know details about office spaces. This was initially presented to us as needed office spaces for Bureau of Legislative Research (BLR) staff. Now we are finding out that this is not necessarily adding additional office space, but rather it will be displacing staff into the new space to clear up office space in the basement of the Capitol for legislators.

9:34 am – House Speaker Wills explained that this would also consolidate the various Bureau of Legislative Research divisions spread out over the Capitol.

9:37 am – Rep. Dismang is asking about the reasons a tunnel between the Capitol and the new spaces. The answer was that in addition to the 10.44 tons of paper that has to be distributed from BLR staff to Legislators. Another point made was needed for security.

9:41 am – Sen. Whitaker is making the point that we don’t have more legislators, so why do we now have a lack of space? She said she believed it was because of the runaway growth of state government. The senator believed that during these poor economic times, it would be a poor choice to be making these type of expenditures at this time.

9:45 am – Sen. Lafferty and Senator Wilkins have both spoken in favor to the office spaces for House members. Senator Whitaker doesn’t seem to be opposing the offices, but rather the poor choice of timing.

9:49 am – Sen. Hendren is speaking in favor of “Robbie Wills’ Project”. Much laughter around the room. There was a move of immediate consideration of adopting the executive committee report. “Immediate consideration” passed on a voice vote. We will still need vote on adopting the report. It also passed on a voice vote.

9:56 am – The Administrative Rules and Regulations report was adopted without question or comment. See attachement F.1

9:57 am – Sen. Bobby Glover is providing a report on Charitable, Penal, & Correctional Institutions report. It was adopted without question or comment. See attachment F.2

10:00 am – Rep. Flowers provided the Claims Review report. It was adopted without question or comment. See attachment F.3

10:01 am – Rep. Roebuck provided the Higher Education report. It was adopted without question or comment. See attachment F.5

10:04 am – The PEER Committee is currently reporting. Sen. Sue Madison asked for additional information about he cost and effectiveness on the educational audits.

10:05 am – Sen. Bryles moved to suspend rules to approve a budget variance for the Lt. Governor. He is requesting an emergency of a $15,000 transfer from Operations to Extra Help in their Operations Appropriation (002/HSC5100) The purpose of this transfer is to pay for an Extra Help position to work on various projects in the Lt. Governor’s office.

10:08 am The remainder of the Reports of Standing Committees were reviewed and passed without question or comment.

10:08 am There was a report of the organizational activites of the Arkansas Legislative Task Force on Autism.

10:10 am – The Performance Audit of the Levee District Oversight, Arkansas Natural Resources Commission referred by the Legislative Joint Auditing Committee.

10:12 am – There is a communication from the Arkansas Natural Resources Commission requesting the Legislativee Council’s advice concerning the issuance of bonds in accordance with the 2010-2011 Biennium Plan of Work for the Arkansas Water, Waste Disposal and Pollution Abatement Facilities General Obligation Bond Program, submitted by the Arkansas Natural Resources Commission.

10:16 am – Sen. Lafferty asked if these bonds would be available to provide water to portions of his district. Sen. Elliott followed up by asking Randy Young if they have a process in place to locate and prioritize these items. Report reviewed.

10:22 am – Without objection, the remaining communication reports were considered reviewed. Rep. Rice asked that we go back to Item H.7 for a question. Chairman Maxwell allowed the question. Rep. Rice asked DFA director Richard Wiess how the number of vehicles held by the U of A compared with other colleges.

10:31 am – Committee approved an Interim Study Proposal 209-187 by Senator Glover, requestiong the Senate Interim Committee on Public Health, Welfare, and Labor study the prevalence of strokes and hypertension among Arkansans.

10:34 am – Meeting adjourned.

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House and Senate Interim Committees on Public Health, Welfare and Labor – September 17, 2009

Posted on September 17th, 2009

Date & Time: Wednesday, September 17, 2009 at 10:00 AM
Location: Room 151, State Capitol
Committee Information:Members on Committee
Agenda: http://www.arkleg.state.ar.us/assembly/2009/Lists/Meetings/Attachments/11892/I7761.pdf
Attachments: http://www.arkleg.state.ar.us/assembly/2009/R/Pages/MeetingAttachments.aspx?ItemId=11892&CalType=ME&List=Meetings&btnok=nook

This committee reviews matters pertaining to public health, mental health, mental retardation, public welfare, human relations and resources, the aged and problems of the aging, environmental affairs, water and air pollution, labor and labor relations, and similar legislation.

10:05 am – Committee called to order by Rep. Gregg Reep. Minutes reviewed and approved. Rep. Reep made open comments.

10:10 am – Rep. Curren Everett is asking for adoption of Interim Study Proposal ISP 2009-004 – “An Act to Create a Community-Based Providers Task Force for Community-Based and Juvenile Services and Treatment; and For Other Purposes.” See Exhibit C at the attachments link above.

10:13 am – Rep. Tracy Pennartz is asking about the ISP and seems concerned about the inclusiveness of the groups involved. She is getting insurances that the groups she is concerned about will be included in the proposal.

10:17 am – Jay Bradford, Insurance Commissioner, is making a presentation on Grants Recieved for the Centers for Medicare and Medicaid Services (CMS). Jay Bradford is a former long time legislator who served in both the House and the Senate for about 30 years. He was serving the House when I served my first term. Perhaps the biggest shock in his political career was when Jay Dickey beat him for Congress.

10:20 am – Melissa Simpson, Senior Insurance Information Program (SHIP) Manager is talking about funding for a new program that seeks to gain coordination and cooperation with other organizations to get information out about benefits to those they do not know about them. One item is a Medicaid savings program. She is asking that information be giving to churches and non-profits in communities. They will be paying the organization $25 per application for the programs. The organization will be trained to provide assistance in completing the paperwork. Ms. Simpson says that this is all federal money and there is no reason why we shouldn’t be spending all these funds. Mr. Bradford says he wants to get all of this money out and doesn’t want to leave any of it on the table. [Take not of this folks, our government now pays people to find people to give money to. And we wonder why we are in such sad financial shape.]

10:28 am – Rep. Stewart is asking if they would travel to other parts of the state to provide training. Ms. Simpson responded that they will.

10:31 am – Sen. Bledsoe is asking if those that need the program can fill out applications right now. They can.

10:32 am – Rep. Linda Tyler is campaigning for U.S. Senator Blanche Lincoln informing the committee about some bill the Senator is co-sponsoring to do with kidney transplants. [The bill actually sounds fine, but it very much sounded more like a campaign commercial.]

10:34 am – Dr. James Phillips, Branch Chief at the Infectious Diseases Division of the Arkansas Department of Health is providing and update on preparations for H1N1 (Swine) Flu Outbreak.

10:36 am – Dr. Halverson thinks that it probably should not be called “Swine Flu” but rather H1N1 because it is a novel form of H1N1.

10:37 am – He says that although the severity of H1N1 will probably not be as bad as was first thought, they fear the prevalence will be. This is because most people have not had exposure before and therefore do not have the adaptive immunity.

10:39 am – The projections is 90,000 deaths from H1N1 in the U.S., extrapolating to Arkansas, that would be approximately 900 for the State of Arkansas.

10:40 am – He is emphasizing the fact that you cannot get the flu from the flu vaccine.

10:41 am – He said that the Arkansas Children’s Hospital is already overrun with children with flu-like symptoms. And he mentioned that H1N1 prevailed through the summer which is uncommon.

10:43 am – They were already planning to give seasonal vaccines to school children, but it looks like they will now also have the H1N1 vaccine available in time to offer it as well. They will also be having mass flu clinics, also called drive-thru vaccine clinics, around the state.

10:46 am – The vaccine is coming to the state and distributed to doctors free of charge. There is expected to more than enough for everyone. The public cannot be charged for the vaccine but a limited adminstrative charge may be charged.

10:47 am – He said they are willing to work with churches provided they abide by the agreement.

10:50 am – He is discussing anti-virals. A vaccine is not an anti-viral. He is said they are discouraging the use of anti-virals as a preventative treatment because to do so increases the likelihood that resistance will occur. Anti-virals should only be used in severe cases and for those with weakened immune systems.

10:53 am – He is encouraging people to wash their hands, cover coughs, and stay home if they are sick. He is even jokingly discouraging handshakes to politicians. Seriously though, he did recommend that we keep hand sanitizer availiable and use it often.

10:54 am – Dr. Halverson is talking about the importance of those with symptoms to stay home, not to go to work sick. He is encouraging businesses to make exceptions to sick leave policies. He is especially emphasizing that they don’t want people to go to the doctor just to get a doctors note.

10:57 am – He is encouraging those with chronic illnesses to make arrangements with their doctor to be able to get needed anti-virals and other prescriptions telephonically.

10:59 am – I have mistakenly been referring to Dr. Halverson above as Dr. Phillips. My apologies. Dr. Phillips has not made any of the comments above.

11:03 am – Dr. Halverson is said that they had initially thought that school closures may be a method they would use to reduce vectoring, but after researching and understanding the severity of H1N1 they will not likely be doing that.

11:05 am – Dr. Phillips said they have as a goal to immunize all school children who are not allergic to eggs. He hopes that a good “herd immunity” will be developed.

11:07 am – Rep. Clark Hall is asking if there is an ideal time to get the shot. Dr. Phillips said that immunity begins about 10 days after vaccine and the peak performance is about 6 weeks after, but that a stabile good performance is maintained throughout the season.

11:10 am – Dr. Phillips said that if you have had H1N1, then you have a resistance, but they are saying that unless you have had confirmatory tests to insure that you have had H1N1, then you should get the vaccine because it will do no harm.

11:15 am – Dr. Halverson said that businesses and public facilities need to invest in infrastructure to provide hand sanitizer and “no-touch” restroom facilities.

11:16 am – Rep. Stewart asked about the vaccination program being compulsatory. We were assured that the vaccines are all voluntary.

11:18 am – Rep. Flowers is asking about side-effects. Dr. Phillips said the side effects are minor similar to the current seasonal flu virus. Dr. Halverson said that police and fire are no longer in the highest risk priority groups as they had been when the H1N1 was first being evaluated.

11:24 am – Rep. Flowers is asking about the charges. As Dr. Halverson stated earlier, they vaccine is free, but the adminstration fees may be charged up to the regional medicare rate, which is usually about $20.

11:27 am – Only one shot will be required for those 9 and older. But for children under 9 will require two shots.

11:29 am – We have now moved on to the the review of the State Board of Nursing Regulation Chapter One (General Provisions) by Ms. Faith Fields, Executive Director of Arkansas State Board of Nursing.

11:30 am – Rep. Stewart asked if any of the loans are eligible for loan forgiveness programs. Ms. Fields said they are. She recommend that those seeking loan forgivenss need to contact their financial aid office at the school they attended.

11:35 am – After a few informational questions, we moved to the review of the Workers’ Compensation Commission Quarterly Reports for April – June 2009 presented by Alan McClain. See Exhibit G in the attachments link above. Reviewed without question or comment.

11:39 am – Bill Paschall, Public Relations for Paschall & Associates is presenting a report of substance addition in Arkansas. The Open Society Institute provided a grant to study this, specifically the “treatment gap.” Ernie Oakleaf with Opinion Research Associates is presenting the poll.

11:42 am – Findings: 92% of Arkansans believe that drug addiction is a problem, 70% of Arkansans believe that it is a serious problem.

11:44 am – 57% of Arkansans believe too little is being spent on treatment; only 7% believe too much is being spent. 61% of Arkansans believe less money should be spent on warehouseing prisoner and more should be spent on treatment and prevention. 69% of Arkansans favor increasing the tax on beer, wine, and liquor to fund addiction treatment.

11:48 am – Senator Pritchard is making the point that he appreciated that the polling included information where the money would come from and who and how it would be paid to fund additional treatment options. [I personally feel that the way the questions somewhat create a false dilemma.]

11:50 am – Hahahahaha! Rep. Pennartz is making the exact point that he question creates a false dilemma. She make the point that if fails to capture the cause and effect.

11:55 am – A member from the audience requested to make comments. He is involved in substance abuse and transitional assistance group.

11:56 am – Meeting adjourned.

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Blue Ribbon Committee on Highway Finance – September 16, 2009

Posted on September 16th, 2009

Date & Time: Wednesday, September 16, 2009 at 1:30 PAM
Location: Room 151, State Capitol
Committee Information:Members on Committee
Agenda: http://www.arkleg.state.ar.us/assembly/2009/Lists/Meetings/Attachments/12147/I7794.pdf
Attachments: none

1:41 pm – Meeting called to order by the chairman, Senator John Paul Capps, who also presented opening comments.

1:43 pm – Minutes from the August 19th meeting approved. I wish I could provide you with a link to Exhibit C which is the official minutes, but because they are not posted on the web, the link above to my live blog will have to suffice.

1:44 pm – Mr. Sean Slone, Transportation Policy Analyst at the Council of State Governments (CSG) is presenting a discussion on transportation and infrastructure finance. The content of his presentation can mostly be viewed here: Transportation and Infrastructure Finance: A CSG National Report

1:49 pm – The funding for the CSG comes from state appropriations (43%), the remainder from grants (28%) and entreprenuerial efforts (29%).

1:51 pm – He says that there is needed 5-year investment of $2.2 trillion because “America’s infrastructure is crumbling.” [Note the crisis creation.] Current spending for highway capital improvements: $70.3 billion. ARRA (Stimulus Package) funding for transportation infrastructure projects: $48.1 billion. [Apparently the Obama administration does not believe that there is a crisis in America's infrastructure since such a paltry amount of the almost a $1 TRILLION dollar expenditure was allocated to the need.]

1:57 pm – 82% of federal transportation funding comes from federal fuel taxes. 24% of state revenues for highways come from state fuel taxes. The point is being made that because cars are more fuel efficient the fuel tax revenues continue to decline. Purchasing power has declined and the amounts are no longer sufficient to finance “large and growing” infrastructure needs.

1:59 pm – He says some methods of financing is to convert from Cents Per Gallon Excise Taxes to an ad valorem tax (Sales Tax). He also suggests indexing the fuel tax to some appropriate indicator such as the Consumer Price Index or the Construction Cost Index. It is additionally suggested that indexing only a portion of the motor fuel tax, coupling indexing with a “cap” on annual changes in the upward or downward direction in order to avoid wild fluctuations in tax revenue and in prices faced by customers.

2:03 pm – Vehicle fees are also suggested because they are relatively inexpensive to administer in relation to potential yield, can be varied by vehicle size, can be set in rough relation to highway cost responsiblity, are categorized as “very promising” as both a short and long term funding option. The types of these “fees” [read "taxes"] are heavy truck fees, excise taxes on vehicle sales, and personal property taxes.

2:06 pm – Mr. Sloan has covered other tax and fee mechanisms, bonding issues and ways for more public debt to be carried, and alternate transportation funding mechanism. A promising method might be Public-Private Partnerships (P3).

2:08 pm – A P3 is defined as collaborations between governments and private companies that aim to improve public services and infrastructure by capturing efficiencies associated with private sector involvement while maintaining the public accountability of government involvement. I will try to post more on this later.

2:10 pm – Mr. Sloan is talking about congestion pricing. This is a mechanism that seeks to assess vehicles for the costs they impose on society, which may include time costs, external congestion costs and other variable costs, such as environmental and governmental. These types include, tolling the entire roadway, tolling existing lanes, tolling new capacity, imposing a “cordon fee” on any vehicle that enters a designated area.

2:12 pm – VMT charges are being discussed. This is a fee based on miles driven in the state, collected at gas stations. This would mean you would have a GPS-based receiver tracking the amount of miles you drive. It seems that these guys believe this is the way of the future that we will be going. The point was being made Europe does it, like that somehow means we should.

2:15 pm – Mr. Sloan provides a list of factors for evaluating revenue mechanisms. The are revenue potential, sustainablity, political viability, ease/cost of implementation, ease of compliance, ease/cost of administration, level of government, promotes efficient use, promotes efficient investment, promotes safe and effective system operations/management, address externalities, minimize distortions, promotes spatial equity, promotes social equity, and promotes generational equity.

2:21 pm – We are currently reviewing the New Revenue Subcommittee Report. This is the report from the committee that I blogged this morning. Please see that here.

2:24 pm – Rep. Lowery is presenting the Revenue Transfer Subcommittee Report. He said that they started by evaluating a mid-range of amount of dollars needed. He said the transfer of existing revenues discussion centered on using existing revenues coming from auto sales taxes and other transportation related taxes to the highway department. Rep. Lowery suggests that this expenditure is an “economic stimulus.” He makes the point that there may not be a net revenue loss to other programs from which the revenue is transferred due to increased economic activity.

2:34 pm – Other business concerning meeting times and places are currently being discussed.

2:35 pm – Here are links to the reports that we were provided during this meeting:

• Performance Driven: New Vision for U.S. Transportation Policy (NOT part of the U.S. Department of Transportation.
  
• Paying Our Way: A New Framework for Transportation Finance by the National Surface Transportation Infrastructure Financing Commission (NOT part of the U.S. Department of Transportation)
  
• Final Report of the National Surface Transporation Policy and Revenue Study Commission: Transporation for Tomorrow (NOT part of the U.S. Department of Transportation)

2:40 pm – Meeting adjourned.

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Arkansas Fuel Taxes Highest of Any Surrounding State

Posted on September 16th, 2009

During the New Revenue Subcommittee of the Blue Ribbon Committee on Highway Finance meeting this morning we were distributed a table of State Motor-Fuel Tax Rates. The source of the data on the chart is the U.S. Department of Transportation, Highway Statistics 2006, Washington DC 2008, Table MF-121T. There was a note that mentions that the rates for New York, Florida, West Virginia, Nebraska, and Massachusetts had changed, but I have not included them on this chart showing surrounding states.

Arkansas economic development depends upon having a competitive tax structure. We have some hard choices to make and need to get our priorities in order. To simply say, “The government needs more money,” is not an option. We very well may need to fund infrastructure, but to do so without seriously looking at cutting other expenditures is irresponsible. Arkansas is already paying the price for irresponsible tax policy as it relates to economic development. Bribing select large companies doesn’t work, but lowering the tax burden on ALL of the small businesses and entrepreneurs does work. Interestingly enough, when responsible tax policy produces economic growth in small businesses, then revenues for critical infrastructure increases also. It is time for the tail (state government) to stop wagging the dog (small businesses).

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New Revenue Subcommittee of the Arkansas Blue Ribbon Committee on Highway Finance – September 16, 2009

Posted on September 16th, 2009

Date & Time: Wednesday, September 16, 2009 at 10:00 AM
Location: Room 272, State Capitol
Committee Information:Members on Committee
Agenda: http://www.arkleg.state.ar.us/assembly/2009/Lists/Meetings/Attachments/12149/I7791.pdf
Attachments: none

The Arkansas Legislative website and network is down, so I am not live blogging this meeting. I kept a running log during the committee and this was posted after I was able to get back to an internet connection.

10:05 am – The meeting was called to order by Jim Mckenzie, the subcommittee chairman

10:07 am – Mr. Bill Lynch said that we need to look at all options but that we should take a closer look at some of the public private funding methods than have we had in the past.

10:10 am – Rep. Bill Sample. – Agreed but thinks that we need to be aware that we need a serious funding source and seems to believe that we are going to need a serious tax that matches the “need” and that a public-private option will not get us there.

10:12 am – Mr. Williams F. “Bill” Fletcher suggested focusing on smaller sections where bottlenecks are occurring.

10:14 am – Mr. Mark Lamberth suggested a phase-in of a sales tax on fuel, tires, and batteries. He believe that the people are ready for this problem needs to be solved. He says that there are a lot of thinks in the “Discussion Paper” that can work, but none of them will work by themselves.

10:18 am – Mr Mark McBryde says we can’t do this in one fell swoop because the public would not stand for it. [In other words, the heat needs to be turned up slowly on the frog you are cooking so he won't jump out.]

10:19 am – Rep. Sample expressed concerns about working toward a tax when he is running for office.

10:20 am – Mike Wilson said that nobody ever got beat voting for taxes for highways or education.

10:22 am – Chairman stated that the need is $200 million on the low end; $14 billion on the high end.

10:24 am – Mr. David Malone says that we are kidding ourselves if we think that $200 million will solve the problems. He said this will require a combination of funding sources. He seriously doubts that the legislature is going to go for the high end funding. He suggest that funding be broken down in a way to say this amount of funding is necessary for maintenance, this amount for solving congestion problems, and this amount is the amount needed for economic development. [The problem is that the money will not actually be distributed according to those priorities by the Highway Commission and the legislature has no way to approve funding according to the priorities as described by Mr. Malone.]

10:34 am – There was a back and forth discussion about the inequity of distribution of discretionary funds on the willingness of legislators and the public to fund the needs. Mr. Mark Lamberth and I participating in said discussion. I pointed out that something that resolves the problem of the scope of the committee conflicting with the need to find a fair and sufficient funding source would be to rely upon the regional mobility authorities.

10:37 am – Mr. Mark McBride suggested the creation of a funding model for objectively determining priorities.

10:41 am – Mr. Sean Slone, Transportation Policy Analyst for the Council of State Governments (a rather liberal group in spite of claims of non-partisanship) is discussing the elasticity of highway revenue.

10:43 am – He discusses moving from an excise tax to an ad valorem. Another method is indexing the tax to a particular indicator. He suggested the CCI (which is the Construction Cost Index)

10:45 am – He is discussing the public support for these issues and claims that the desire is that the voters not get hit all at one or all in one particular place. Mr. Sloan will be presenting a more complete report at the committee this afternoon.

10:47 am – Mr. Mike Wilson asked if any state had implemented an indexed ad valorem with bracketed high and low value limits.

10:49 am – Mr. Bill Fletcher is asking about the CCI and the potential for this to artificially be driven high to maximize revenue, thereby creating criticism for the proposal.

10:51 am – Chairman Jim McKenzie is discussing index programs in other states, he mentions that there may be problems with that which was tried in Michigan.

10:53 am – Mr Lynch is asking if anyone has moved completely from an excise (absolute tax per gallon) to an ad valorem. (percentage of tax per dollar).

10:54 am – Mr. Mike Wilson is asking for a graph that shows a comparison of excise versus ad valorem.

10:55 am – Mr. Mark Lamberth is asking Mr. Sloan why the Michigan system did not work. Mr. Fletcher mentions that we should imagine what would have happened if the tax had been tagged when gas was $4/gal like we had a year ago. Mr. Lamberth says that he thinks a combination of the excise and ad valorem taxes are the way to go.

10:58 am – [I am wondering why there are never any opposing viewpoints placed on these type of committees. The discussion is all one sided and short sighted without any critical reasoning taking place. It seems to be the same kind of decision made in an echo chamber that caused the Fayetteville School Funding Millage increase to go down in brutal defeat.]

11:00 am – The state motor fuel tax rates for surrounding states indicates that Arkansas has the highest rates of any of the surrounding states. Arkansas is the highest in Gasoline, Diesel, and Gasahol. More information later.

11:03 am – The chairman is suggesting a “Carbon Tax” may be the way to go and he believes that it will not be necessary obtain the 75% super majority required to raise that tax.

11:05 am – He also suggested fees, but Mr. Wilson said that they are probably more a nuisance than a revenue source. Also suggested is a miles-traveled tax. Mr. Lynch thinks that is the most intriguing. Most seem to think that is something for the future. [You have to be kidding me, these guys are debating taxes for the future before they have even decide on this one.]

11:08 am – Mr. Malone suggested a 1% sales tax increase on everything.

11:09 am – Mr. Charles Dains suggests a new sales tax on top of the regular sales tax.

11:11 am – The chairman suggested on a general income tax hike. Bill Sample pushed back and said he was not comfortable even discussing taxes that are not paid based upon use.

11:12 am – Mr. Bill Fletcher said that he believes all of the current sales taxes on automobiles should be redirected to highways. He is suggesting that they should suggest a combination of the mentioned taxes. [Frankly, I sure hope these guys make the suggestions that it sounds like they will. The voters will kill this whole deal dead, then perhaps this discussion can be held again with some critical voices who are concerned about protecting the taxpayers rather than scalping them for as much as they think they can dupe them into.]

11:16 am – Mr. Malone is again suggesting that they need to present funding sources that have not been considered before because of a super-majority vote requirement. He again mentions an income tax increase.

11:21 am – Much discussion around the table about what are the limits of their charge. It seems they have actually made no progress on actually determining a source of new revenue, they have pretty much declared by a motion determining the future activities of the committee to create a plan to raise ALL of the previously discussed taxes in a slow and distributed enough fashion so as to not anger a majority of the voters all at once. Mr. Lynch has suggested that the subcommittee break into subcommittees to each discuss a couple of tax proposals each. [I kid you not.]

11:28 am – Mr. Mark Lamberth believes that some of the Blue Ribbon Commission meetings should be held around the state to help generate interest.

11:29 am – Mr. Williams believes that we need to start running television commercials to “define” the problem even though we do not yet have the answer.

11:33 am – Committee Adjourned.

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Arkansas Legislative Council: Administrative Rules and Regulations – September 15, 2009

Posted on September 15th, 2009

Date & Time: Friday, September 15, 2009 at 9:00 AM
Location: Room 151, State Capitol
Agenda: http://www.arkleg.state.ar.us/assembly/2009/Lists/Meetings/Attachments/12107/I7762.pdf
Attachments: none

This committee reviews matters regarding administrative rules and regulations by state agencies, boards, and commissions for Legislative Council review, as required by A.C.A. 10-3-309; and such other matters pertaining to administrative organization, rules, regulations, and procedures as may be assigned to the committee by the Legislative Council.

9:02 am – The rules filed for the Arkansas Alternate Dispute Resolution on continuing mediation education requirements for Certified Mediators and also for the requirements for the Certification of Mediator for Arkansasas Circuit Courts were reviewed.

9:06 am – We skipped ahead on the agenda to accomodate Mr. George Hopkins to attend other state meetings. Item 15 – Reviewed rule changes for the Arkansas Teacher Retirement System.

9:08 am – Mr. Bob Leslie is presenting rule changes for the Assessmanet Coordination Department. These changes concerned the changes in market value between reappraisals.

9:09 am – Mr. Jim Martin with the Arkansas Appraiser Licensing and Certification Board presented rule changes related to the registration of Appraisal Management Companies.

9:10 am – Ms. Lane Anderson, Arkansas Development Finance Authority, is presenting the 2009 Guidance to Implement the Tax Credit Assistance (TCAP) and the Section 1602 Exchange Program. These were federal programs which are tax credits to raise equity for multifamily housing, but are now direct subsidies. Information about the 2009 Neighborhood Stabilization Program (NSP) Policies and Procedures Manual was presented. Senator Malone is asking why we are getting these rules approved AFTER the deadline for application. He makes the point that the government takes a year to put the rules in place, but the public and those affected by the rules only have 15 days. The agencies are notorious for doing this sort of thing. Senator Malone is dead on correct that these agencies need to stop pushing this for our (the state legislator) review to the last minute and rushing it in such a way that the States have no way to make corrections or represent our interests.

9:24 am – Ms. Susie Stormes of the State Board of Election Commissioners is reviewing a raft of rule changes. See item 5 of the agenda. These included a) reimbursement of expenses for state funded elections, b) election officials (poll workers) training, c) county election commissioners training, d) voter intent, e) provisional voting, f) nonpartisan judicial office filing fees, and g) citizen complaints of non-HAVA violations of election and voter regislation laws.

9:28 am – Many of the rule changes we review are going into place without any public comment whatsoever. Businesses and those impacted by these rules should be more diligent to place comments in the record. This is very important because legislators are not always as informed on these topics as someone professional working in a particular area may be. We key on the public comments to know if we should investigate the impact of a rule change later. Very often if there is no public comment, we assume that the rule change is not problematic.

9:36 am – Senator Kim Hendren is asking if rule changes were made to address problems with the voting and elections during the last cycle. Apparently that was fixed by laws during the last session.

9:37 am – [The legislature should consider changing the law to require agencies to formally schedule the legislative review of rule changes in the process calender just as they do a public comment section. These rule changes need to be submitted to the legislature in sufficient time to reviewed by the committee, changes made, and then approved during the next regularly scheduled meetings. It seems like every committee during the interim which provides government accountabilty and review is faced with agencies waiting until it is too late for the legislature to act in the best interests of their consituents.]

9:44 am – Sen. Faris is asking about improvements in compensating and rewarded for their time. Ms. Stormes said that is why they removed the rule that prevents people employed by the government or on a board/commission from being a poll worker. [I don't think that is such a good idea] This could present some serious conflicts of interest.

9:47 am – Racchael McGrew, State Board of Embalmers and Funeral Directors, is presenting rule changes. They have reduced the requirements for CE from 8 to 6 hours and there are no requirements of “live” CE. Other professional boards should take note. Haha, Sen. Malone said the same thing!

9:51 am – The Department of Finance and Administration, Office of Adminstative Services presented rule changes concerning the State Administration of Justice Fund.

9:52 am – Tara Smith, Dept. of Higher Education Program is presenting rule changes related to a) Arkansas Health Education Grant Program, b) Higher Education Opportunies Grant Program, c) Law Enforcement Officers’ Dependents Scholarship Program, d) Military Dependents Scholarship Program, and the e) Arkansas Governors Scholars Program.

9:54 am – Sen. Bledsoe is asking if any of these programs are having a large amount of defaults. Apparently the professional degree programs have a very good track record with very few defaults.

9:55 am – Sen. Malone is asking how strong the requirements are for requiring grant recipients are indeed an Arkansas resident. The requirements are pretty strict, but they are currently drafting rules to formalize.

9:58 am – Sen Malone is making the point that each and every agency or program has a different definition of “Arkansas Resident.”

10:00 am – Former Rep. Jeff Wood, Department of Human Services, Children and Family Services, is presenting revisions to rules to comply with 2009 Legislative Enactments. He is presenting a 17 page “summary” of changes. I wonder if I can get a summary of the summary.

10:09 am – Cathy Rowe of the Department of Human Services, County Operations is presenting rule changes to the Low-Income Home Energy Assistance Program Block Grant for FFY 2010 and the State Plan for Fiscal Years 2010-2011 Community Services Block Grant Program. The funding payment for crisis intervention is increasing from $500 to $700.

10:12 am – Sen. Madision is asking about the reason why the state cannot provide weatherization assistance for HUD programs with more than four units. No response because that is a different agency, but Ms. Rowe agreed to find the answer from Senator Madison.

10:15 am – There is a request to move item 13 to the next meeting.

10:17 am – Fmr. Rep. Jeff Wood, Dept of Human Services is back presenting changes to rules for the Medical Services Division of the Dept. of Human Services. We covered item “g” first concerning reimbursement for a new type of ventilator to replace an obsoleting one. Other rule changes effect a) rehabilitative services for persons with mental illnesses (RSPMI), b) under 16 bed ICF/MR facilities rate adjustment, c) ICF/MR provider fee per diem adjustment, and d) ICF/MR provider fee administrative procedures.

10:34 am – Mr. Fred Knight, State Board of Nursing, is presenting rule changes to the Nursing Student Loan Program. This should speed up process to make more nurses availiable. Sen. Hendren asks if there needs to be some different priorities in how we are spending in this critical area.

10:38 am – Dr. Joe Alford, Arkansas Psychology Board is presenting rule changes for Annual Continuing Education Reporting, requiring them to report annually and change the time to match the fiscal year as is done for the licenses.

10:39 am – Adjourned

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Remember…

Posted on September 11th, 2009

Real time streaming video of Fox News broadcast from THAT day. http://ow.ly/oYWY

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Legislative Joint Auditing – September 11, 2009

Posted on September 11th, 2009

Date & Time: Friday, September 11, 2009 at 9:00 AM
Location: Room 171, State Capitol
Agenda: http://www.arkleg.state.ar.us/assembly/2009/Lists/Meetings/Attachments/12074/I7776.pdf
Attachments: none

The duties of the Legislative Joint Auditing Committee shall be to provide for the auditing of each department, institution, board, commission, office, and agency of the state government for the purpose of furnishing the General Assembly with information vital to the discharge of its constitutional duties. (A.C.A. 10-3-407)

9:02 am – Meeting called to order, previous meetings minutes adopted.

9:03 am – Rep. Patterson is presenting the Executive Committee report. Report adopted without questions or comments.

9:05 am – Rep. Thompson is presenting the report from the Committee on Counties and Municipalities. Report adopted. Sen. Smith asked questions concerning audits that had been delayed.

9:11 am – Rep Cheatham is presenting the the report of the Committee on State Agencies.

9:12 am – Rep. House is presenting the report for the Committee on State Agencies. The report adopted without questions or comments.

9:14 am – The committee just observed a moment of silence in memory of the 911 tragedy.

9:17 am – Mr. Norman is currently discussing the impact of the American Recovery and Reinvestment Act (ARRA) on the state auditors. Apparently alot of their time will be spent being Federal Auditors instead of State Auditors.

9:20 am – The State of Arkansas now spends more in Federal Funds than the entire country did in 1960!

9:21 am – Since 1960 there has been an extremely steep rise in Federal Grants, which has created a large amount of work for the state auditors, especially since the U.S. Congress passed the Single Audit Act in 1984.

9:24 am – The “Single Audit” requires a Schedule of Expenditures of Federal Awards (SEFA) fairly presented, internal control over federal program compliance requirements, and complied with laws, regulations, contracts and grant agreements.

9:26 am – The Arkansas Department of Legislative Audit also conducts the our own single audit and 200+ single audits of the Arkansas School Districts.

9:29 am – The compliance requirements for the single audits include a) activities allowed and unallowed, b) allowable costs/cost principles, c) cash management, d) Davis-Bacon Act, e) eligibility, f) equipment and real property manangement, g) matching. level of effort, earmarking, h) period of availiablity of federal funds, i) procurement and suspension and debarment, j) program income, k) real property acquistion and relocation assistance, l) reporting, m) subrecipient monitoring, n) special tests and provisions.

9:32 am – Apparently the rules and regulations to perform the audit for the ARRA and the volume of work created by it are expected to double the number of auditor hours invested.

9:35 am – Sen. Glover mentioned that to sustain the programs created by the ARRA will require a massive tax increase after ARRA funds are terminated. The projected timing of the ARRA shows approximately $45 to $50 billion in 2009, $109 billion in 2010, $60 billion in 2011, $20 billion in 2012, $15 billion in 2013, then tapering until it terminates in 2016.

9:40 am – I have mentioned this before, but Arkansas is going to recieve approximately $2.9 billion in new and pre-existing federal programs.

9:42 am – Rep. Abernathy is expressing concern that the State of Arkansas is going to make unrefunded expenditures for auditors to maintain the required level of audit services.

9:44 am – Sen. Glover and Sen. Smith have expressed concern about how difficult it has been historically to discontinue funding to agencies and organizations once they have been started. They seem to be very concerned that the situation could force a massive future tax increase.

9:47 am – Beverly Thwing is currently presenting the Special Report: Prosecuting Attorneys – Disposition of Matters Referred by Legislative Joint Auditing Committee – January 1, 2008 through December 31, 2008. Rep. Abernathy asked an information question, no content questions or comments. Report Adopted.

9:49 am – Tim Thompson is presenting the Special Report: Athletic Expenditures – Update Reviews of Selected Arkansas Public School Districts, For the Year Ended June 30, 2008. Of the 50 schools visited 32 were out of compliance by variances of more than 5%. 19 had variances of more than 10%. DLA revisited those 19 schools and 17 had shown improvement, but even then 11 still had variances more than 5% as required by law. The primary cause of the 2008 adjustments exceeding 10% was because the district did not properly calculate athletic salaries. This audit was only conducted in the central Arkansas region, but is coming to a school near you. School boards need to be prepared and get things in order.

9:58 am – Tim Thompson is currently presenting the report Performance Audit: Health and Benefit Plans – Employee Benefits Division, Arkansas Department of Finance and Administration.

10:01 am – Off current topic but presented earlier during ARRA Audit discussion: The ARRA distribution of funds in Arkansas are as follows: $34 million to Safety and Community, $50 million to Water and Environment, $88 million for Energy and Weatherization, $379 million for Transportation, $443 million for Fiscal Stablization (what I call the “Governor Bailout Funds”), $454 million for Housing and Labor, $476 million for Education and Higher Ed., and $954 million for Medicaid and Human Services.

10:07 am – Committee adjourned.

10:08 am – More info from ARRA Audit discussion: Federal Expenditures in Arkansas from 2002 to 2008 have risen from approximately $3.75 billion to approximately $6.25 billion.

10:10 am – More info from ARRA Audit discussion: The growth in Medicaid in Arkansas from 1996 to 2010 (Projected) has gone from $1,284,000,000 to $4,462,000,000 !

10:11 am – Okay folks, that is all for today. I’m off to see the wizard, or look for a way to slip back through the looking glass.

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