Category Archives: Legislature

Extra cash for highways?

Legislature, Politics, State government

By Steve Brawner
© 2017 by Steve Brawner Communications, Inc.

Arkansas does not have Tennessee’s Great Smoky Mountains, but it does have the Ozarks and the Ouachitas. It does not have Elvis’ Graceland home, but it does have the birthplace of Johnny Cash. Unlike Tennessee, it does not have $2 billion to play with, but, like Tennessee, could it also find hundreds of millions of dollars for highways?

The question is asked after the Arkansas Highway Commission voted June 7 to pursue a ballot initiative for 2018 to raise up to $400 million a year for road construction.

That was step one of about a thousand. Forgive this run-on sentence, but the Commission and supporters such as the Arkansas Good Roads Foundation would have to decide on a specific proposal, obtain the attorney general’s approval, raise money to collect 67,887 voter signatures, raise money to defend against the inevitable last-minute legal challenge, raise money for the campaign, and then win the campaign.

The Highway Commission took this step because it’s tired of waiting on the Legislature and Gov. Asa Hutchinson, who have talked some about highways but not made them a priority. Funding for highways has been mostly flat for decades as spending for other state needs has increased significantly. Arkansas voters did approve an interstate bond issue in 2011 and passed a temporary half-cent sales tax in 2012, and last year Hutchinson cobbled together $50 million in state funds to make the state eligible for $200 million in federal ones. But the Highway Commission and the state Department of Transportation say that’s not enough.

One reason for the shortfall is the primary highway funding mechanism, the motor fuels tax, has not increased at the state level since 2001 and at the federal level since 1993. While motorists are paying the same 39.9 cents per gallon that they were in 2001, road construction costs have increased. Meanwhile, cars have become more fuel efficient, which means we’re buying fewer gallons and therefore paying less in taxes.

The easiest way to increase highway funding is to raise fuel taxes, or at least index them to inflation, but polls have shown Arkansans oppose much of an increase, and those polls are backed up by what legislators hear personally from their constituents. Aware of public opinion, legislators said no this year to a proposal that would have asked voters to approve a wholesale sales tax increase on fuel. Meanwhile, efforts in previous years to direct various auto-related revenues to highways, such as sales taxes on car purchases, failed because of opposition from other interests who depend on those revenues.

Would voters be OK with higher fuel taxes if they received a tax cut elsewhere? That’s what happened this year in Tennessee, where the Legislature and Gov. Bill Haslam raised $350 million for highways primarily through a six-cent gasoline tax increase and a 10-cent diesel tax increase. At the same time, $410 million in other taxes were cut, including that state’s food tax by 20 percent.

The combination means Tennesseans will pay less in taxes while spending more on roads. Also, Arkansans will help pay for those roads when they drive in Tennessee and stop for gas.

Could Arkansas do the same? Unfortunately, not so easily. Tennessee has nearly $2 billion in surplus funds this year, while Arkansas had to cut its budget to bring it into balance. Meanwhile, Arkansas would need much higher taxes. To raise $400 million here, fuel taxes would have to increase 28.4 cents a gallon.

So unlike Tennessee, Arkansas probably could spend significantly more on highways only through increasing total taxes or cutting spending elsewhere, or a combination thereof. That’s politically very challenging, which is why elected officials haven’t done it. A legislative task force is combing through the tax code trying to make it simpler, potentially creating room for tax cuts by ending some deductions. In the process, it might find more money for highways. But its recommendations won’t be considered by the full Legislature until 2019, and there’s no guarantee any will become law.

About half the states have increased fuel taxes in the past five years, including five this year. States know they can’t wait for money for Uncle Sam, who has his own problems. Will Arkansas join them, or find other ways to fund highways? It could happen, but it won’t be easy in a state that’s home to Johnny Cash but not much extra cash.

Lawyers vs. legislators

Business, Business and economics, Legislature, Politics, State government

By Steve Brawner
© 2017 by Steve Brawner Communications, Inc.

It could be argued that two of the three most important votes this year in Arkansas state politics occurred Feb. 16 and Feb. 27, and the third will occur this Friday.

The first two votes are when the Arkansas Senate and Arkansas House advanced a proposed constitutional amendment limiting lawsuit awards. We voters will decide its fate in the November 2018 elections.

The third will be in Hot Springs June 16, when the Arkansas Bar Association’s House of Delegates votes on whether to pursue a dueling proposal barring such lawsuit limits that also would appear on the November 2018 ballot.

The one proposed by legislators would limit punitive damages in civil lawsuits to the greater of $500,000 or three times the compensatory damages awarded in the case, except when the harm was caused intentionally. Noneconomic damages, sort of a vague term, would be limited to $500,000. The Legislature would be empowered to increase both of those amounts with a two-thirds vote. Lawyers’ contingency fees would be limited to one-third the judgment.

The amendment is supported by powerful groups, including the Arkansas State Chamber of Commerce and those representing health care providers. They want to reduce the risk of jackpot jury verdicts that produce a climate of uncertainty, raise insurance rates, and require costly cover-your-rear actions ultimately paid by consumers and resulting in lost jobs. If your local hospital no longer delivers babies, it’s because the insurance is too high and the fear of a lawsuit is too great.

Opponents, including the Arkansas Bar Association, which represents attorneys, of course don’t see it that way. They say juries should be trusted, not limited, and that the awards prescribed by the amendment are so low that big, bad actors won’t be deterred from harmful activities. They say the upfront costs of lawsuits can be daunting with no guarantee of a payout, so capping attorneys’ fees will make it harder for Arkansans to find a lawyer willing to represent their case.

This already was going to be a heavyweight brawl between two groups with access to money and reasons to spend it. Aside from the legitimate philosophical differences, we’re talking about rich people’s livelihoods – those of business executives and medical providers who say enough is enough, and those of attorneys whose bottom lines would be significantly shortened. So Arkansas voters next year presumably will see plenty of 30-second ads defining the bad guys (evil corporations or unscrupulous lawyers, depending on who is funding the spot) and the heroes/victims (average Arkansans, either way).

But then the Arkansas Bar Association came up with another idea – pass its own, equally far-reaching amendment. It would do away with all the caps included in the Legislature’s measure while also taking more than a few shots at the legislators themselves – increasing transparency for campaign contributions, prohibiting legislators from directing how state funds are spent locally, reducing their authority over state agency decisions, and increasing the number of votes needed to override a governor’s veto from the current simple majority to two-thirds.

An added twist occurred last week, when the State Chamber’s President and CEO, Randy Zook, sent a letter to its members asking them to encourage their hired law firms to vote against the measure.

On Friday, the ABA’s House of Delegates will vote on whether to pursue the amendment, which its Legislation Committee unanimously endorsed.

The pluses? As a political strategy, the amendment would enable the ABA to play offense rather than just defense. Also, instead of the campaign being mostly lawyers vs. business owners and doctors, it also would be a more winnable lawyers vs. legislators.

But unlike the Legislature’s amendment, getting the proposal on the ballot would require supporters to collect 84,859 signatures, which would cost millions of dollars and inevitably lead to a lawsuit by opponents hoping to block the measure.

Things will get really interesting if they’re both on the ballot. One limits jury awards. The other says jury awards can’t be limited. One or the other could pass. If they both pass, the one with the most votes wins. If neither passes, things stay the same – meaning no lawsuit limits.

That means the Bar Association would have more paths to victory than the Chamber-supported amendment. Not necessarily better, but more.

Math beats myth, this time

Debt and deficits, Legislature, Politics, State government, U.S. Congress

By Steve Brawner
© 2017 by Steve Brawner Communications, Inc.

Wednesday saw the triumph of math over myth, in one state.

That would be Kansas, where the Legislature overrode Gov. Sam Brownback’s veto of tax increases made necessary by his previous tax cuts. We’ll see how this applies to Arkansas later in the column.

What happened in Kansas was in 2012, Brownback pushed through the Legislature huge tax cuts that weren’t accompanied by sufficient spending decreases. He said the tax cuts would spur big economic growth. They didn’t.

The state ever since has been a fiscal mess, and a cautionary tale for other governors. This year it faced a $900 million budget deficit along with an order by its state Supreme Court to increase funding for public schools.

Kansas’ previous policies were based on a commonly believed myth – that if you cut taxes, the economy will grow and the tax cuts will pay for themselves. Thus, you don’t really have to cut spending.

The math is quite different, as proven time and again. Tax cuts can spur economic growth, but not enough to make up for the lost revenue. A minus sign doesn’t become a plus sign just because a politician says it’s so. To make the equation work, it’s very simple – just cut spending too. If you don’t have the courage to do that, don’t cut taxes.

The easy decision is to cut taxes without cutting spending. That makes everyone happy until the bills come due, which can take a while. The easy decisions of the Kansas Legislature of 2012 left the Kansas Legislature of 2017 with hard choices – more taxes, less spending, more debt, and/or violating a court order. So after the 2012 Legislature played Santa Claus, today’s legislators had to be Scrooge.

The result was the Legislature passed a $1.2 billion tax increase that Brownback, still determined to be Santa Claus, vetoed. On Wednesday, legislators overrode that veto knowing they’ll have to tell their primary voters that they voted for a tax increase.

It’s ironic this all happened in Kansas, the state that produced President Eisenhower, under whose administration the federal budget was balanced three times in eight years and almost balanced every other year.

If you’re wondering why this is relevant to Arkansas, it’s because your elected officials at the state and national levels will be spending a lot of time talking about taxes and tax cuts.

At the state level, taxes were cut in 2015 and 2017, and now Gov. Asa Hutchinson and other elected officials want to further reduce rates and simplify the tax code to make the state more competitive with its neighbors. A task force is meeting to craft legislation for 2019. For the math to work, the state must eliminate deductions, but each one will have its own constituency that will fight to protect it. On Wednesday, the task force hired a consultant to determine exactly what deductions are littered throughout the code.

Arkansas has a history of being fiscally responsible and has mechanisms in place through the Revenue Stabilization Act to produce a balanced budget. But mechanisms can be overridden or worked around. The Legislature is going to cut taxes. Hopefully, it will offset all of them by closing deductions and with spending cuts, lest Arkansas look like Kansas without the “Ar.”

More concerning is what’s happening at the federal level, where President Trump wants spending increases for the military and the border wall and has proposed spending cuts that largely won’t happen. He wants to leave untouched the government’s biggest programs, Social Security and Medicare.

Meanwhile, he and other Republican leaders have been promising tax cuts that they really, really want. Speaker of the House Paul Ryan was Brownback’s legislative director in the 1990s when Brownback was in Congress.

For a long time, Washington has behaved like Kansas, with much more disastrous results. Taxes have been cut under the theory that they would pay for themselves, spending has been increased, and the national debt has reached $20 trillion, or $62,000 for every American.

Arkansas’ six members of Congress could, as has happened so often, act like the 2012 Kansas Legislature and play Santa Claus, letting a future Congress somewhere down the line be Scrooge.

Let’s hope they instead base their decisions on math, not a myth. Santa Claus isn’t real, but the bills that come due after Christmas are.

Related: $23.33 less debt

The return of recess?

Education, Legislature, State government

By Steve Brawner
© 2017 by Steve Brawner Communications, Inc.

Can more time in recess and less time in class help students learn better? That’s a question some schools in Arkansas will try to help answer.

Under state law, elementary students must have 40 minutes of physical education each week and 90 minutes of additional physical activity, such as recess. That’s 18 minutes per day.

Act 1062 sets up a pilot program for the 2018-19 school year that basically triples that amount in some schools. In addition to physical education, students in grades K-4 will get 60 minutes of “unstructured and undirected play” each day, while students in grades five and six will have 45 minutes. Two schools in each of the state’s 15 education service cooperatives – groups of school districts that share resources – will participate, along with two more schools not involved in cooperatives. The Arkansas Department of Education will write the rules. The results will be studied and used to enact future policy.

The law was sponsored by two legislators on opposite sides of the political spectrum – Sen. Gary Stubblefield, R-Branch, a conservative farmer, and Sen. Joyce Elliott, D-Little Rock, a former teacher and one of the Senate’s most liberal members.

The background for this is when the federal No Child Left Behind law was passed in 2001, schools were held more accountable for their students’ test scores, and as a result, they began to focus more on core academic subjects. With the stakes raised higher, recess was considered an expendable part of the day and reduced.

In recent years, many have questioned the wisdom of that philosophy, for several reasons, the obvious one being health. One in five school-aged children is now obese – triple the percentage of the 1970s, according to the federal Centers for Disease Control and Prevention. Spending more time sitting and less time playing certainly doesn’t help.

But there are also potential academic and social benefits to recess, which may help explain why students who get more breaks elsewhere, like Finland, outperform American students. According to a 2013 paper by the American Academy of Pediatrics, children benefit when concentrated learning is followed by unstructured play. Research by Anthony Pellegrini and Catherine Bohn found that recess made students more attentive and productive in class whether they were outdoors or indoors. Moreover, students learn important social skills when engaged in unsupervised play away from adults.

It’s unclear how many schools will volunteer to participate. Sixty minutes a day is a lot of time to take kids away from the classroom. Not only will it require a major reconfiguration of the school day – for a one-year program – but it also will require schools to take the risk that the reduced instruction time won’t hurt test scores.

Moreover, much has changed in the past couple of decades. Americans don’t do “unstructured and undirected” very well anymore when it comes to children. We’ve become a more risk-averse, less playful society, so what’s the response if more recess means more kids get injured or bullied or suffer some other bad outcome? What happens if we give the kids time to play and develop their social skills, and all they do is stare at their phones?

The way these things work is that the Legislature passes a law with broad goals, the agency sets the specific rules, and school districts implement them based on their local situations.

So here’s a couple of suggestions. First, the research shows that kids need a lot of short breaks to recharge their minds, not hours sitting in class and then an hour on the playground. In Finland, it’s 45 minutes of learning followed by 15 minutes off. Let’s do something like that. Second, the Department of Education should interpret “unstructured and undirected play” loosely so that teachers still can offer helpful guidance when appropriate – maybe show the kids how to play kickball, and then get out of the way.

The question isn’t going to be whether recess is beneficial for students. That one’s already been answered. The real questions are, how much recess is best, and how best can it be implemented?

Can those questions be answered with a one-year pilot program? Don’t ask me. I’ve been working on this column for hours, and I need a break. Kickball, anyone?