Beebe talks taxes, lottery and the Legislature

Gov. Mike Beebe navigated an hour of Q&A with moderator Steve Barnes and questions from citizens on AETN in the Tuesday night (Nov. 23) airing of “Arkansans Ask.”

Beebe discussed a variety of positions and potential initiatives on taxes, highways, education, ethics, budget issues, and the lottery, according to this report from Talk Business.

Beebe doesn’t expect the next session to be highly partisan despite Republican gains in November’s election.

"For the most part, members of the General Assembly don’t suffer from what Washington does," he said.

He expects GOP and Democratic legislators to challenge him and views that as a healthy process.

"I think they [legislators] do propose alternatives and I don’t think it’s limited to the GOP.  Democrats propose alternatives to what the administration proposes. We did it when I was in the Senate to every Governor," Beebe said. "All I ask is that they do it with civility."

On tax changes and the state budget, Beebe said he worries about two primary areas: prisons and Medicaid growth. Calling Medicaid growth "unsustainable" and warning that in two to three years the program could be at a financial crisis, he said that "systemic changes" were necessary.

Non-violent offenders in the prison system would have to be given alternative sentences and the state will have to look at system restructuring to allow less-threatening criminals the chance to participate in community service, for example.

Beebe said that as tax cutting alternatives are floated and debated in the session, a balanced budget that provides essential state services would remain his focus.

"You’re free to propose what you want," he said. "The real problem comes if you pass it. You can’t take a $100 million out of every biennium, or $80 million, in terms of revenue without either cutting something that it would have paid for or creating other tax revenue by a tax increase somewhere else."

Beebe said there was no appetite for raising taxes and he wouldn’t be proposing any.

"I think right now with the bad economy, I don’t really see a mood for tax increases and I don’t see any general support for it, and I’m not pushing any tax increases. There’s not one that’s been mentioned yet that I could find support for," Beebe said.

That prospect will likely shut the door on the Governor’s endorsement for raising the severance tax or a blue ribbon panel’s tax recommendations to meet burgeoning highway needs.

Businessman and former natural gas company executive Sheffield Nelson has suggested raising the state’s severance tax on natural gas again. While Beebe lamented that the severance tax hike from three years ago has failed to meet projections due to market conditions, he only sees a public initiative as a path for changing the current tax structure.

Beebe also said tax increases for roads would require immense education of the public to find support. He also opposed some of the tax shifting policies the commission has recommended, such as using general funds tied to auto-related tax sources for highway needs.

"Not on my watch, not if I can help it," Beebe said in reference to tapping general revenue funds for highways. "We can’t afford to take general revenue and redirect it to highway construction without impacting education or prisons or human services."

Beebe had harsh words for the Arkansas Scholarship Lottery’s management. Citing recent negative headlines from an unfavorable audit report and controversy surrounding overtime pay for top-level officials, Beebe suggested that he and the public are losing confidence in the lottery despite its good deeds.

"All in all, I’ve been pretty unhappy with events," said Beebe.

When asked if the lottery’s director Ernie Passailaigue should be dismissed, Beebe said, "I think it’s getting close to that point. I think it’s very, very close."

When asked if he would call for management changes at the independent lottery commission, Beebe said if matters deteriorate, he wouldn’t rule it out.

"Would I hesitate to do so if I thought that time [had come]? No, I wouldn’t hesitate to do that."

On a final note, Beebe waded into a debate over ethics reform for legislators. He said that he would be supportive of a two-year waiting period for former lawmakers to be lobbyists, which is one of several proposals being considered in advance of the 2011 session.