Category Archives: State government

Casino vote makes strange bedfellows

Business and economics, Elections, Politics, State government

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

There’s a lot more to this debate over the proposed casino amendment than just whether or not Arkansas should have more slot machines than it already does – which is quite a lot between Oaklawn and Southland.

Issue 5 would create a constitutional amendment authorizing the building of one casino each in Washington County, Miller County and Boone County. The casinos would be required to pay the state 18% of their net and would pay 1.5% to the city where they are located and .5% to their local counties. An Arkansas Gaming Commission would regulate.

The amendment’s backers, Arkansas Wins in 2016, say Arkansas should have casinos here because they’re already just across the border elsewhere – in Mississippi, in western Oklahoma; in Caruthersville, Missouri; and in Shreveport, Louisiana. Adding three casinos in Arkansas would keep Arkansas gamblers at home and attract some out-of-staters. A lot of people think going to casinos is fun. If they’re going to gamble, eat at buffets and go to shows, they might as well do it in Arkansas, employing Arkansans, boosting tourism and paying state taxes.

Politics makes strange bedfellows, and that’s definitely true with this issue. Opposed to the effort are faith-based groups such as the Family Council along with the state’s existing gambling providers, Oaklawn and Southland, which race horses and greyhounds on a part-time basis and operate casino-like entities full-time. The Family Council doesn’t want the gambling; Oaklawn and Southland don’t want the competition.

They’ll be working in parallel but not really together. The Family Council will spread through its grassroots network of churches its message that gambling leads to social ills – addiction, divorce, etc. – without the promised economic benefits. Meanwhile, Oaklawn along with Southland’s parent corporation in August donated a total of $109,500 to the Committee to Protect Arkansas’ Values/Stop Casinos Now. In fact, they’re the only donors listed in the required campaign filing with the Arkansas Ethics Commission. That money is funding a lawsuit in the Arkansas Supreme Court to disqualify the amendment.

Four years ago, a group with a similar name and the same chairman, former Arkansas Sheriffs Association Executive Director Chuck Lange, raised more than $1 million from Southland, so that $109,500 is probably just seed money.

The Committee’s messaging so far has focused less on gambling’s ills and more on what the proposed amendment does and doesn’t do. The amendment defines gambling as whatever is legal in Arkansas’ surrounding states and in Nevada, meaning Arkansas policymakers would be handcuffed in defining terms and setting limits. It would allow sports betting and alcohol sales.

Like previous casino amendments that have either been tossed from the ballot or voted down by Arkansans, this one is backed by those who would make money off it. It would embed in the Arkansas Constitution a permanent monopoly granted to two Missouri businessmen, Bob Womack of Branson and Jim Thompson of Blue Eye, and their successors and assignees.

That means no one else could operate a casino anywhere in Arkansas except those two along with Oaklawn and Southland. Those two existing casinos are limited by law, for now, to “electronic games of skill,” such as blackjack tables with electronic “cards” rather than those dealt by humans.

So expect to hear opponents use the words “out of state” a lot, even though Arkansas’ two current gambling establishments also are owned by out-of-state entities – Oaklawn by the Cella family of St. Louis, and Southland by Buffalo-based Delaware North.

All of this very easily could become moot. The issue is now in the hands of the Arkansas Supreme Court, which is considering whether the ballot title is misleading and whether the signatures were collected improperly.

In fact, all four voter-led ballot initiatives – this, two that would legalize medical marijuana, and one that would limit judgments in medical lawsuits – are being sued for one reason or another.

Will at least one of them be disqualified? History shows that’s a pretty safe bet.

Whew, that’s a lot of debt for football seats

Education, Politics, State government

football-on-tee-150-dpiBy Steve Brawner
© 2016 by Steve Brawner Communications, Inc.

The next time you’re tempted to base your beliefs purely on political stereotypes, keep in mind that it was a former Democratic U.S. senator who stood, basically alone at first, against a huge government spending program financed by public debt.

That would be David Pryor, University of Arkansas trustee and leader of the opposition against a $120 million bond issue to help pay for adding 3,000 premium seats to Reynolds Razorback Stadium.

Pryor’s was one of two votes last Thursday – the other being Cliff Gibson’s – against the bond issue. The debt, which rises to $186 million counting interest and fees, will also pay for rounding out the stadium, adding a video board, updating the Broyles Athletic Center, and other improvements. The bond issue will be repaid over 20 years through ticket revenues and is not expected to affect students, who, unlike at the state’s other four-year universities, are not charged a fee for athletics.

The business case for the expansion isn’t unreasonable. The University of Arkansas Athletic Department is well managed and one of a relatively small number across the country that pays for itself. Athletic Director Jeff Long said the department has already secured millions of dollars in commitments for those premium seats. To be competitive in major college football, a program must invest resources into taking care of its wealthy fans. They’re the kind who donate extra money.

Still, I’m with Pryor on this one, for three reasons.

– It’s public debt. Neither taxpayers nor students are supposedly on the hook, but if the financial arrangement isn’t working, somebody must pay that money back. While the state’s Revenue Stabilization Act supposedly forces a balanced budget each year, the truth is that the state of Arkansas has billions of dollars in debt, and the University of Arkansas is a state institution.

The other thing about debt is that it becomes your master. Future decisions will be made with this bond issue in mind. The team must keep winning to fill the stadium to pay for the bond issue, so Coach Bret Bielema had better keep engineering these late game heroics. The need to raise revenue for the bond issue will be one more reason for the Razorbacks to stop playing games in Little Rock after 2018 when the current contract ends.

– It’s regressive government financing. The bond issue is adding expensive football seats – suites, semi-private loge boxes, club seats – that are being financed by the fans who buy regular seats. Those regular seats already are priced at just about the limit for a middle class fan – for nonconference games, $35 for upper level seats and $55 for lower level ones, with conference games priced higher. Taking your family to a game already sets you back $250, and the bond issue payments will raise the cost.

– It sends the wrong message and allocates resources in the wrong direction. Pryor called this the largest financial commitment the state has ever made for higher education, and it’s for a football stadium. In January, while the Board of Trustees was advancing the stadium project, the University of Arkansas for Medical Sciences begged for $97 million to renovate its aging facilities. So far, that money has not been found. What should be the higher priority: the football stadium, or the hospital? The entity that teaches college students to be football players, or the entity that teaches medical students to be doctors?

The Razorbacks are a tie that binds, and I’m glad they beat TCU Saturday. But sometimes this state forgets that the University of Arkansas is a school, not a football team. The vote by the board of trustees is not a scandal, because the money is probably going to be there and the Athletic Department has a history of good financial stewardship. Still, $120 million – actually, $186 million? Woo, pig sooie, but whew, that’s a lot of debt for football seats.

‘Tis the season for lawsuits

Elections, Health care, Politics, State government

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

Every calendar year has four seasons, and so does every campaign year. There’s the filing season, when potential candidates decide to run; the primary season, when the parties choose their nominees; the general election season, which ends in November; and, tucked in its own little spot about now, is a fourth season: the lawsuit season.

Yes, ’tis the season when opponents of various voter-initiated acts and amendments try to remove them from the ballot, or at least keep their votes from being counted, by filing suit in the Arkansas Supreme Court.

This year, four initiatives have qualified for the ballot by gathering enough signatures from registered voters: a constitutional amendment that would legalize marijuana for medical use; an initiated act that would do the same, with some differences; an amendment that would limit attorney fees and jury awards for pain and suffering in medical lawsuits; and an amendment that would authorize casinos in Boone, Washington, and Miller Counties.

All four have drawn legal challenges. Generally speaking, the groups are making the same arguments that are always made about these issues: that the ballot titles are misleading, and that technical violations occurred in the signature collecting process.

These lawsuits are just part of accepted campaign strategy, so both sides know they have to budget for legal fees. The lawsuits almost always happen when issues are this controversial and when someone stands to lose something. For example, the Arkansas Bar Association has filed suit to stop the amendment that would limit attorney fees and jury awards – which, when higher, produce higher fees. The casino amendment faces a lawsuit from a group supported in part by Oaklawn Park and Southland Gaming and Racing, which don’t want the competition.

That last paragraph sounded cynical, didn’t it? Human beings have complicated motivations. For example, the Arkansas Bar Association’s unanimous opposition to the medical lawsuit amendment probably is due partly from a desire to protect an income stream, at least with some members. At the same time, attorneys have a unique appreciation for the importance of why big verdicts sometimes are needed. Moreover, the amendment is being pushed primarily by nursing homes who want to reduce losses from big jury verdicts, some of which might be based on emotion and good lawyering. Can’t blame them for that.

So now the questions go straight to the Arkansas Supreme Court, where the wheels of justice will turn more swiftly than is normal. We’re reaching mid-September. Election Day is Nov. 8. Absentee ballots must be mailed to voters no later than Oct. 14. Early voting begins Oct. 24. That means the Supreme Court must consider arguments and render decisions as soon as possible. Even if it moves quickly, it’s not unusual for the ballot to be littered with proposals that the court has ruled invalid.

At this point, I’m definitely against one of the proposals, leaning against two and wavering on one. Still, my preference is to vote, even if something passes I don’t like.

In a state whose motto is, “The people rule,” it’s probably best if the measures stay on the ballot, if they can. All four were approved – actually, partly rewritten – by the attorney general’s office to comply with state law. All four’s signatures were validated by a small army of full-time and temporary workers with the secretary of state’s office. Should four Supreme Court justices override those efforts?

Also, all four represent the kind of issue for which voters are well-suited to express their will. These aren’t questions of bureaucratic minutiae. They’re big-picture questions about values and about what this state ought to look like. Whether there should be casinos in Arkansas when surrounding states already have them has been debated around many a kitchen table. So has whether marijuana’s clear harm to many means it shouldn’t be available to those it clearly helps. Would limiting a type of jury award help doctors and nursing homes lower costs for all of us, or would they become more negligent? The voters can decide.

If the legal minds on the Supreme Court believe that real problems exist with a ballot title or signature gathering process, then yes, disqualify a proposal. It’s their job to look at the details.

But if it’s in the gray area, let’s hope the Court errs on the side of not disqualifying. In a state whose motto is “The people rule,” the presumption should be to let the people rule.

Insurance hikes coming, fixes not

Health care, Politics, State government

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

It’s hard to feel sympathy for a giant health insurance company, but Blue Cross and others will try next year to generate at least some understanding from state legislators, and they’ll probably succeed.

They’ll be doing this after the Arkansas Insurance Department last month required them to lower the rate increases they had requested. Those rates are for private individuals who buy their own insurance or have it bought for them through the state’s private option.

Arkansas Blue Cross Blue Shield asked for a 14.7 percent increase for its 213,955 individual consumers. The state told it to drop the request to 9.7 percent, which it did under protest. In a letter to Insurance Commissioner Allen Kerr, Blue Cross Senior Vice President Lee Douglass noted that the Insurance Department’s own private consulting firm had said the company’s request “appears actuarially reasonable” based on the increasing costs of health care. The company’s reserves have been decreasing for the past three years to $1,265 per insured member by the end of 2015 – not enough to pay for a day of inpatient hospital care.

Douglass added this: “We also believe it is important to increase our efforts and resources so all members of the General Assembly are informed of the costs and issues associated with our state’s health care needs as well as any deficiencies in the filing process.”

Which means Blue Cross will be actively working the halls of the State Capitol looking for allies. It no doubt will be joined by the state’s other health insurers, who also were told to lower their rate requests. Qualchoice had asked for increases of about 24 percent and was told to lop off 10 points. Ambetter asked for 8.1 percent and was approved for 4 percent.

This is the part where you’re going to want me to blame someone, and this being Arkansas, that someone probably is President Obama. The reality is more complicated than that.

Without a doubt, the Affordable Care Act, otherwise known as Obamacare, is part of the reason for the increasing rates. The law required insurance companies to stop turning away sick people, and that’s who in large part is signing up for insurance. Sick people cost a lot to insure, especially when their ailments have been building up for a while, and many of the young, healthy people needed to offset that cost have opted to pay the fine rather than pay more for health insurance.

Furthermore, the Affordable Care Act does not allow for the creation of bare bones health insurance plans that cover only the major illnesses, and it doesn’t give states enough flexibility to experiment with ideas that could lower costs.

On the other hand, other factors are at play – particularly the rising prices of specialty drugs that are wonderful and life-saving and very, very expensive. Long-term trends such as the nation’s aging, overweight population are major contributors to rising costs as well.

The truth is that America’s health care system was unsustainable before Obamacare, and it’s unsustainable now. Obamacare made some things better and some things worse, but it did not create the cost problem, nor solve it. The law’s opponents never solved that problem when they were in power, either.

We can’t just “repeal Obamacare” because it’s now the health care system we live under, and just getting rid of it would be too disruptive for everyone. Besides, who would want to go back to the days when insurance companies turned away patients because of pre-existing conditions or dropped coverage when their illnesses became too expensive?

What should happen now is that policymakers should try to fix the system, calling it whatever they must. They should do next year what they should have done in 2009 – engage in a multi-year, bipartisan process that addresses access and cost. A solution should be created that includes ideas and buy-in from Democrats, Republicans, the medical community, insurers like Blue Cross, and average Americans. And then we should try to make it work rather than half of us trying to make it fail.

Unfortunately, America’s political system is too unhealthy to engage in that kind of productive advancement. So next year, at the state level, the insurance companies will ask for higher rates that probably are justified, and they probably will succeed because that’s the kind of “fix” the political system can handle.

And bigger, bipartisan solutions? Those will probably have to wait until the system is healthier – someday.