The campaign that wasn’t

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

This year’s U.S. Senate campaign would seem to fit neatly into a junior high textbook description of how the country’s two-plus party system operates. The incumbent, Sen. John Boozman, is a well-liked, mild-mannered Republican. He’s older and wiser and not one to rock the boat, which is a good or bad thing, depending on a voter’s perspective. He’s being challenged by a young, energetic Democrat, Conner Eldridge, who hasn’t previously run for elective office and has things he wants to do. Adding to the interest is the Libertarian candidate, Frank Gilbert, who makes an eloquent case for views not held by the majority of voters.

It’s not hard to imagine how that junior high textbook would describe such a campaign: as a contest of ideas where the candidates discuss the issues and the voters choose the best one.

Instead, it’s been the campaign that wasn’t. Most people’s attention, including mine, has been riveted on The Hillary and Donald Show at the top of the ticket. There have been times when I couldn’t take my eyes off that circus even when I wanted to.

Meanwhile, Arkansas is now such a red state that Boozman has been able to rely on his party label and the advantages of incumbency. Plus, maybe voters just think he has done a good enough job. You may not agree with him, but you can’t help but like him. So it’s no surprise that, in a recent Talk Business & Politics/Hendrix College poll, Boozman was leading his two opponents, 52-34-4.

With so much in his favor, Boozman adopted a simple strategy: Ignore Eldridge. Eldridge challenged him to a series of debates, but Boozman refused to take the bait, and, besides, it wouldn’t have made much of a difference. They debated once on AETN, and it didn’t fundamentally alter the race. Trying to break through, or at least get under Boozman’s skin, Eldridge drove a truck through the state with two lecterns to illustrate his charge that Boozman was avoiding him and debated Gilbert several times with an extra lectern supposedly meant for Boozman.

In other words, Boozman has behaved as anyone would behave with a big lead: by playing it safe and running out the clock. Eldridge has done what he could to change the game’s direction, but he never could raise the money to mount a challenge or gain momentum or just get some attention. Gilbert has shared his views with whoever would listen.

The campaign never could be about the issues, so then it became about non-issues. Eldridge has tried to make something of Boozman’s international travels, which would seem to be part of the job of being a senator, and has said Boozman hasn’t spent enough time in the district. He criticized Boozman for refusing to disavow Donald Trump, which wasn’t destined to have much success in a state where more Arkansans say they are voting for Trump than for Boozman. Boozman’s campaign, when it hasn’t pretended Eldridge doesn’t exist, ripped page one out of the GOP playbook and tied Eldridge to President Obama, who appointed Eldridge as a U.S. attorney. The issue has not been whether Eldridge had served well but that he had served, period.

Boozman is going to win. Regardless, a U.S. Senate campaign, especially one with three textbook candidates, ought to be a bigger deal to all of us than this, even when The Hillary and Donald Show is on.

A senator is an important official. There are only 100 of them, each state gets only two, they serve six years, and they aren’t term-limited. Sen. Dale Bumpers was in office 24 years – three times longer than any president except President Franklin Delano Roosevelt. And senators make important decisions, including ratifying treaties and confirming Supreme Court justices, according to the textbooks. A single senator taking advantage of the rules can just about grind Congress to a halt. But for all the reasons listed above, this year’s race just hasn’t reflected that importance.

The next Senate campaign in Arkansas is scheduled for 2020 – another presidential election year. It’s hard to imagine that one being as crazy as this one, but then, it was hard to imagine this one. Maybe that Senate race will get more attention. Sen. Tom Cotton, who arouses passion on both sides, will be on the ballot then – at least as a Senate candidate, and maybe more.

Related: How Conner Eldridge thinks he can win.
A husband first, and then a candidate.

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

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

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?

Where your vote really counts this year

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

This year’s big races in Arkansas were decided long ago, when incumbents decided to run for re-election and when candidates decided which letter – “R,” “D” or something else – would be beside their name. Statewide, the “Rs” have it.

So even though you’re probably focusing most of your attention on the presidential race, your votes will count the most in local races and in the four ballot initiatives remaining on the ballot.

Those initiatives are where America stops being a republic governed by elected leaders and instead becomes a direct democracy – where you, Mr. and Mrs. Responsible Citizen, decide the law of the land.

Issue 1 is a constitutional amendment extending the terms of nine county officials – county judge, sheriff, etc., but not justice of the peace – from two years to four years. Secondarily, it would prevent county officers from being appointed or elected to another civil or elected office (school board, for example) while serving their terms; take their names off the ballot if they don’t have an opponent; and define the previously undefined “infamous crime” that warrants their removal from office.

Passage of the amendment would give elected officials more time to settle into their offices and govern instead of having to return to the campaign trail so soon after being elected. If you think that’s a good thing, vote yes. If not, vote no.

Issue 2 would allow the governor to maintain his or her powers when leaving the state. Under the Constitution, if Gov. Asa Hutchinson drives into Memphis or crosses the border separating Texarkana, Ark., and Texarkana, Tex., Lt. Gov. Tim Griffin becomes not just the acting governor but the actual governor. If Griffin is also out of state, then the Senate president pro tempore, Sen. Jonathan Dismang, R-Searcy, becomes the actual governor. Issue 2 would end that practice.

The pros? Governors travel a lot for legitimate reasons. Hutchinson, in fact, is in China this week meeting with business leaders he hopes will invest in Arkansas, and with government officials to promote Arkansas agriculture exports. In the past, replacement governors have taken advantage of their moment in the sun to sign a bill the governor didn’t like, or let people out of jail, or temporarily fire the governor’s chief of staff. On the con side, if the governor is out of state during an emergency – as occurred on Sept. 11, 2001 – current law ensures Arkansas still has a governor at home.

Issue 3 would allow the state to issue bonds for economic development projects in unlimited amounts. Currently, those bonds must equal no more than 5 percent of state general revenues. That provision would let the state go into more debt in order to attract a really big employer, such as an auto plant. The amendment also would allow cities and counties to provide economic development money to private entities, such as the local Chamber of Commerce. It also would let cities and counties sell bonds to private individuals rather than through a public sale.

Why vote yes? Because Arkansas is still a poor state, and it competes with other states that also use taxpayer funds to attract employers and spur economic development. Vote no if you’re concerned about how those funds are used, who benefits, and how much debt the state would incur.

The other initiative has attracted the most attention. Issue 6 is the Arkansas Medical Marijuana Amendment, which would legalize medical marijuana through a constitutional amendment. It would allow marijuana to be distributed through for-profit dispensaries and lists medical conditions that would qualify.

If you want more information, the Cooperative Extension Service has an excellent, unbiased voter guide at its website, www.uaex.edu. I used it for this column.

Tax cuts: some legislators cautious, others enthusiastic

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.