Category Archives: Legislature

If it is broke, do fix it

Elections, Legislature, Politics, State government

Hand with ballot and boxBy Steve Brawner
© 2016 by Steve Brawner Communications, Inc.

Arkansans opposed to medical marijuana, casinos and/or to limiting jury verdicts in medical cases are probably pleased that the Supreme Court invalidated all three of the proposals.

Still it’s probably not a good thing that ballots are cluttered this year with four citizen-led initiatives where the votes won’t count for three of them. The only one that survived was another medical marijuana proposal.

If there’s anything in state government that’s broken, it’s the citizen-led ballot initiative process. Citizens submit a proposal, sometimes based on narrow self-interest, that gets approved by the attorney general. They raise hundreds of thousands of dollars and collect signatures that are approved by the secretary of state. The campaign begins. And then opponents sue over the same ballot titles that were approved by the attorney general and over the same signatures that were certified by a small army of secretary of state employees. By the time the Supreme Court makes its decision, it’s October and the ballots have already been printed. In the medical marijuana case, citizens had already started voting.

That initiative was invalidated because the Court said too many signatures had problems – some of them quite technical, such as listing a post office address rather than a residence. In her concurring opinion on the medical marijuana case, Justice Courtney Goodson complained that Act 1413 of 2013 left her no choice but to invalidate.

“The petition here failed to satisfy the onerous demands of the Act, even though there is no allegation that the signatures were invalid in any other way. The result is that the wishes of the citizens who signed the petition in good faith are being discarded, and the right of the people to pass judgment on the proposal in the voting booth has been lost,” she wrote.

Senate President Pro Tempore Jonathan Dismang, R-Searcy, the leader of the Senate, said Monday that he expects the Legislature to take steps to mend the process when it meets next year.

Legislators are allowed to recommend three constitutional amendments every two years, and did so this election cycle with measures that would let the governor keep his or her powers when leaving the state, extend county officials’ terms to four years, and allow the state to issue bigger bonds for major economic projects and allow cities and counties to fund Chambers of Commerce. Those are still on the ballot.

Dismang says the Legislature may self-impose a limit of two amendments, one from the House and one from the Senate, and that one of them could address the state’s broken ballot initiative process. That proposed amendment, which voters would see in the 2018 election, would reset the time frames for collecting signatures and require an earlier decision by the Supreme Court, at least before the voting begins. As part of the same effort, the Legislature will try to clean up the technicalities that led to some of this year’s problems.

Dismang doesn’t want to create an environment where there are more constitutional amendments – as opposed to initiated acts like the invalidated medical marijuana proposal. An act has only the force of law and can be changed by the Legislature. An amendment is the permanent law of the land.

In fact, he says it’s too easy to amend the Constitution now. Aside from the Legislature’s potential three amendments each two years, the citizen-led process makes it possible for well-funded individuals to institutionalize their own self-interest. The casino amendment would have granted a permanent constitutional monopoly to three casinos owned by two out-of-state individuals or their assignees, meaning it would have lasted through generations. One of those casinos would have been operated by the Cherokee Nation, which donated $6 million to the effort. It didn’t happen, but it could have, and he’d like to make it less likely.

The truth is that Arkansas’ Constitution is kind of a mess. While the U.S. Constitution is brief and broad, the state’s is sometimes painfully detailed and specific. Constitutional amendments should be timeless and should spell out the permanent duties and roles of government, like whether the governor keep his powers when out of state, and not set policy or make certain things legal or illegal, like medical marijuana. Those should be spelled out in law, which can be changed at any time to fit changing circumstances.

So whatever the fix is, let’s hope it results in fewer, better, broader amendments, and ballots where every vote counts.

Related: Where your vote really counts this year.

The ‘What the Heck’s Really Going on Book’

Legislature, Politics, State government

By Steve Brawner
© 2016 by Steve Brawner Communications, Inc.

Rep. Doug House, R-North Little Rock, metaphorically calls it the “What the Heck’s Really Going on Book,” and the thing about that book is that pages are handed out only one at a time, and not necessarily in order. A while back, another page was torn out and handed to him.

“I was ready on the Personnel Subcommittee to start cutting (state) employees,” he said. “And the staff pulled me off to the side, and they said, ‘Mr. Representative, you can do what you want to. That’s what your job is, but understand something: If you do not have more employees coming in, that’s how we fund the public employee retirement system. You stop that inflow of new employees and payments they make, you bankrupt that system.’”

So state government’s labor force won’t be cut much because current and new government employees’ retirement contributions help pay for retired government employees’ benefits. That’s what the heck’s really going on.

Here’s what else is really going on: That “balanced budget” that the state produces every year through a mechanism called the Revenue Stabilization Act – it’s not really balanced.

House has spent the past year-and-a-half researching what the state really owes. It hasn’t been easy to find out – not because things are purposely hidden, but because the debts are strewn out in different places. It’s like my desk: You can find things, but you have to look. Those debts include $1.7 billion in bonds for things like highways and the Big River Steel project, $2 billion in higher education revenue bonds, capital leases and notes payable, and $2.2 billion for “other employee benefits” – mostly liability for health insurance and also for post-employee benefits, such as unused vacation time.

Public schools owed $4.1 billion as of June 30, 2015. As with colleges and universities, the debts are technically the responsibility of the entities, not the state. But if they can’t pay, the state’s taxpayers surely would be expected to pick up the tab, House said.

Meanwhile, the state’s six retirement systems – public employees, teachers, state highway employees, etc. – had $5.95 billion more in liabilities than assets as of June 30, 2015. That would be a problem in itself, but House said the systems assume 8 percent annual growth in their assets. Maybe that’s doable in good times, but it’s now been seven years since the Great Recession ended, and eventually another will come around.

Add it all together, and the state appears to have about $16.75 billion in debts and liabilities (my math, not his). That’s $5,600 for every Arkansan – hardly the $61,000 that is every American’s share of the $19.8 trillion national debt, but it’s money owed nonetheless. While each Legislature goes through the exercise of ensuring a balanced budget under the Revenue Stabilization Act, these other instruments – bonds, pension plans, etc. – are a huge loophole.

“Congress has a balanced budget,” he said. “They spend whatever they want to, and then they go borrow the money to cover their checks … and we’re doing essentially the same thing.”

The news is not all bad. House said interest rates are low, the state’s bankers have treated it fairly, and pension plan managers are very good at what they do. Moreover, much of the state’s debt has produced valuable assets – schools, roads, educated students.

What now? House wants the state to pay off all its bonded debt within 10 years. Also, he would replace lifetime defined benefits with defined contribution pension plans where the state contributes to beneficiaries’ accounts while they’re working. Most private companies and the federal government have already made this switch.

House would like to see the state go from being a debtor to a creditor. Instead of borrowing money that it then loans to a local utility to build a wastewater plant, for example, it could lend the money and keep the interest for the general fund.

So according to the “What the Heck’s Really Going on Book,” the state is in debt, though not nearly as deeply as the federal government is. The good news is that when those pages are torn out, they can be rewritten and replaced.

The challenge is that the Legislature contains 135 authors, and state government has a lot of editors.

Private option water torture

Health care, Legislature, Politics, State government

By Steve Brawner
© 2016 by Steve Brawner Communications, Inc.

Voting for the private option was hard for many Arkansas Republican legislators, and every month – every dang month – it becomes harder to keep supporting it.

That’s because every month the number of Arkansans being served by the program continues to rise – past the 250,000 that was originally forecast, and now, as of the end of September, past 324,000 who are either enrolled or have been deemed eligible, or have been placed in traditional Medicaid because they were considered “medically frail.”

The private option is the health care program created by the Legislature in 2013 after the U.S. Supreme Court ruled the Affordable Care Act – that’s Obamacare – was constitutional but that states were not required to expand government-run Medicaid to serve individuals with incomes up to 138 percent of the poverty level. Given the choice, most Republican-leaning states said no to a lot of federal dollars, but Arkansas said yes, with a twist: Instead of simply expanding Medicaid, it bought those folks private insurance.

By many measures, the private option has been a success. Arkansas is a national leader in reducing its uninsured population. Without it, most beneficiaries would not have health insurance, but some still would have health problems, which they would wait to address until they were very sick by showing up at emergency rooms and being treated for free. Meanwhile, the huge pool of private option customers has kept insurers in the state and competing against each other, holding down rates for other individual buyers.

But all that government-paid health care isn’t free. The federal government is sending the state $1.6 billion in taxpayer dollars this year and paying 100 percent of the cost. Starting next year, the state chips in 5 percent, a number that rises to 10 percent by 2020.

For Republicans who have supported the program, it’s been a conundrum. Most if not all would say government benefit programs invariably create ever increasing numbers of beneficiaries – which is exactly what has happened. They went against their own instincts to vote yes because Arkansas is a poor state that needed the money, and local hospitals can’t keep providing all this free emergency room care. Also, frankly, there aren’t a lot of better ideas out there. Health care is hard.

Each legislative session has hinged on whether enough legislators could be found to overcome the objections of diehard opponents. The program barely passed in 2013 and barely passed again in 2014. It survived 2015 because Gov. Asa Hutchinson promised changes in the form of Arkansas Works, his renamed version that requires higher-income recipients to contribute $13 to their monthly premiums and makes other minor changes. Hutchinson wanted more, including a work requirement, but the Obama administration didn’t agree. So he took what he could get hoping the next administration will be more flexible.

Now here we are at 324,000 counting those deemed eligible but not yet enrolled, which is 7,000 more than last month and 16,000 more than the month before that. Department of Human Services Director Cindy Gillespie says there’s still a backlog of applications. Each month, the diehard opponents get a fresh chance to say “I told you so” (without offering much of an alternative), and each month the state draws nearer to when it must pay part of the cost. For Republican supporters, it’s like Chinese water torture: drip, drip, drip.

When the Legislature meets in 2017, those Republican lawmakers will face the same difficult choice they’ve faced every year since 2013: Keep a program that’s growing unsustainably, or … what?

Eventually, those supporters will become opponents unless the next administration gives states more flexibility. For them to keep voting yes, recipients must have more skin in the game. The rules will have to push recipients into jobs, and then into better paying jobs, and eventually out of the program entirely. And if able-bodied recipients don’t move along that path, then they’ll have to lose their benefits.

Of course, doing that – or getting rid of the private option entirely – would put us right back where we were before it existed: sick, uninsured people showing up at the local hospital seeking care, and then what should be done? Treat them for free and then shuffle the costs around, or turn them away because they don’t have insurance?

Did I mention health care is hard?

Tax cuts: some legislators cautious, others enthusiastic

Legislature, State government

By Steve Brawner
© 2016 by Steve Brawner Communications, Inc.

The easiest things for lawmakers to do politically are to cut taxes and increase spending, but there comes a point where the math stops working (except in Washington, D.C, where they can just pretend). Some state legislators are wondering if we’re reaching that point.

The reason they are wondering is because state revenues have not met the Department of Finance and Administration’s forecast each of the past three months. In fact, they’re $36.1 million less than expected and about the same as the state collected this time last year.

Meanwhile, the state is facing increasing costs that are hard to contain. Spending on K-12 public schools must increase every year or the state probably will be sued. Meanwhile, health care costs are rising – in particular, the so-called private option, where the state uses federal Medicaid dollars to purchase health insurance for lower-income Arkansans. When the program was created, it was expected to cover 250,000 individuals, but the numbers have zoomed past that, and next year the state begins paying 5 percent of the cost.

The situation wasn’t vastly different – at least the same trends existed or were predictable – in 2015, when Gov. Asa Hutchinson first came to office after having campaigned on a promise of cutting taxes. Hutchinson made a $100 million income tax cut his first priority, and legislators passed it right out of the gate early that year and then made spending decisions based off that.

It worked just fine. In fact, the state had a $177 million surplus in fiscal year 2016. But that surplus would not have happened were it not for two factors.

First, the economy is strong. The state’s unemployment rate is 3.9 percent, the lowest in recorded history, though part of the reason is because many individuals have dropped out of the workforce and aren’t counted in the rate.

The second reason for the surplus is that the state is taking a lot of money from Uncle Sam. The private option will rake in $1.6 billion in fiscal year 2017. Many Republican states said no to that money. Then earlier this year, Hutchinson and legislators found about $50 million in state funds so Arkansas would be eligible for $200 million in federal highway funds.

So balancing the budget actually has been pretty easy lately. The problem is that the factors that make it easy are temporary, but the factors that make it harder are permanent. The Great Recession supposedly ended in June 2009, which is news to a lot of people still struggling to make ends meet, but that’s the official date. That was seven years ago, and unless the laws of economics have been rescinded, another recession eventually will come around the corner. At that point, the state will have a lot of obligations that it might not be able to meet, especially as those education and health care costs continue rising. Meanwhile, at some point, the cash-strapped federal government will stop handing out money to the states like candy. Surely.

Hutchinson is determined to cut taxes. The governor’s duties include being the state’s chief marketing officer and deal-maker. He’s told by out-of-state corporate leaders that Arkansas’ high income taxes are a negative. But even he is scaling down expectations. He’s now talking about $50 million, which is not much.

Other legislators are even more cautious. Sen. Jake Files, R-Fort Smith, chairman of the Senate Revenue and Tax Committee, said any tax cut this year will occur after “more fact-finding and evidence-based methodology” than in 2015. He suggested a triggered tax cut that would occur only if revenues meet a certain mark. He’d also like to see the tax cuts targeted to lower income Arkansans, who were left out of the 2015 cut.

Other legislators, however, including Sen. Bart Hester, R-Cave Springs, are full steam ahead. He says the state has a surplus and that if the money stays in Little Rock, legislators will just spend it, and not efficiently. He’s pretty certain legislators will become more enthusiastic about a tax cut when they have the chance to pass one.

What would be the safe bet? There will be a tax cut – a small one, passed with cautious enthusiasm.