Don’t be like Kansas and Oklahoma

Arkansas Legislature, Arkansas Works, Jeremy Hutchinson, Mickey Gates, Jim HendrenBy Steve Brawner, © 2018 by Steve Brawner Communications, Inc.

By the time this upcoming legislative session is over, taxes in Arkansas undoubtedly will have been cut. The question is, how much will lawmakers learn from Oklahoma’s and Kansas’ mistakes?

Kansas made big tax cuts without corresponding spending cuts thanks to Gov. Sam Brownback’s allegiance to the theory that cutting taxes would stimulate the economy and generate more revenues. Oklahoma cut taxes while relying on oil and gas revenues that fell as those markets tanked.

The result is that Kansas’ budget has been a disaster for years. In fact, it’s Exhibit A when policymakers talk about how not to cut taxes. Finally, in 2017 the Legislature passed more than $1.2 billion in tax increases and then overrode a veto by Brownback, who was determined to keep digging a hole. In November, the longtime Republican state elected a Democrat, Laura Kelly, as governor.

A little closer to home, Oklahoma cut taxes and then dealt with budget issues so severe that almost one in five schools were holding classes four days a week. This year, the governor and Legislature passed a $430 million tax increase to fund education just before teachers staged a nine-day walkout.

One lesson learned is, if you vote for a tax cut today but don’t cut spending enough, then you might really be  voting for a tax increase down the road – or at least, forcing someone else to vote for one.  Continue reading →

About that record low unemployment rate

Dr. Michael Pakko

Dr. Michael Pakko speaks to engineers Nov. 7 about the state’s economy.

By Steve Brawner, © 2018 by Steve Brawner Communications, Inc.

Economics has been called the “dismal science,” so leave it to an economist to offer a dose of reality regarding Arkansas’ “record low unemployment rate.”

That rate is 3.5 percent, the lowest ever measured and one that is slightly lower than the national 3.7 percent rate.

Elected officials understandably brag about those numbers because they are much better than in the recent past – particularly October 2009, when 10 percent of Americans were unemployed. The Great Recession supposedly had ended in June that year, but nobody knew it – certainly not those 10 percent.

Dr. Michael Pakko, chief economist and state economic forecaster at the University of Arkansas at Little Rock’s Institute for Economic Advancement, offered a different take during his annual economic forecast Nov. 9. I heard him speak a couple of days earlier to an engineering association.

Pakko, whose overall forecast was positive, particularly regarding the next two years, is looking at another number – the labor force participation rate.

It tells us more. The unemployment rate measures only workers with a job or looking for one. The labor force participation rate includes people who aren’t trying to find one. Continue reading →

This could make the legislative session even crazier

By Steve Brawner, © 2018 by Steve Brawner Communications, Inc.

Things get crazy when 135 legislators gather at the Capitol to consider thousands of bills in three months’ time. Sometimes something happens that makes things crazier.

This upcoming legislative session, it could be the same issue that’s caused much of the craziness the past almost six years: Arkansas Works. This time, there’s a special reason why.  Continue reading →

Arkansas GOP still doesn’t hold majority of offices – yet

By Steve Brawner, © 2018 by Steve Brawner Communications, Inc.

Arkansas is now thoroughly Republican at the state and national levels, as evidenced by the party controlling all six congressional offices, all seven statewide offices and three-fourths of the Legislature, as well as winning the presidential election here every year since 1996.

At the county level? Not yet.

According to data crunched by the Republican Party of Arkansas, Democrats still control 839 the state’s 1,524 partisan offices at all levels, not including constables. That’s about 55 percent. Republicans control 663, or 43.5 percent. The other 22 offices are held by officials who are neither Republican nor Democrat. Continue reading →

Higher taxes for highways?

Good Roads Foundation

Gov. Asa Hutchinson discusses his plans for highways before the Good Roads Foundation Nov. 13.

By Steve Brawner, © 2018 by Steve Brawner Communications, Inc.

In two years, you’ll probably be asked to vote for higher taxes for Arkansas’ highways, for three reasons.

One reason is that highways are clearly underfunded. The Arkansas Department of Transportation has identified $9.3 billion in needs but only $4.5 billion in expected revenues over the next 10 years – numbers confirmed by a legislative audit. That extra $4.8 billion would maintain and improve the nation’s 12th largest highway system, but it would not fund the long-desired I-49 in western Arkansas and I-69 in south Arkansas.

Why the big shortfall? Highways are funded primarily through fuel taxes, which haven’t changed at the federal level since 1993 and in Arkansas since 1999. Neither were indexed to inflation, so as construction costs have risen, revenues have not. Meanwhile, vehicles have become more fuel efficient. Some – maybe someday many – don’t use fuel at all.

This has been the reality for a long time. Scott Bennett, ARDOT’s director, told me he’s made basically the same speech for 15 years.

What’s changed are the second and third reasons you’ll be asked to vote for higher taxes for highways. Continue reading →