Arkansas Chamber advises ‘No bonds’ on unemployment debt

Editor’s note: Roby Brock, with our content partner Talk Business, wrote this report. He can be reached at [email protected]

After 4 regional meetings to visit with its membership, the Arkansas State Chamber of Commerce has recommended to Gov. Mike Beebe that the state not pursue a bond issue to resolve nearly $360 million in debt owed to the federal government.

“There was overwhelming opposition to a bond issue," State Chamber President Randy Zook tells Talk Business. "Our executive committee recommended not bonding as an option."

In the recently completed legislative session, lawmakers passed Act 1125, which allows the Governor to call an election to float bonds to pay back the unemployment trust fund debt. An additional assessment on workers paid by employers would underwrite the bond debt.

However, a recent analysis from the Arkansas Department of Workforce Services showed that a bond issue would not save the state or employers enough money to pursue the option.

The new calculations suggested that under reforms made in the last two legislative sessions combined with improving economic conditions, Arkansas could be debt-free by 2015. Lawmakers raised the payroll contribution threshold in the 2009 legislative session and they curtailed benefits and changed eligibility requirements in the 2011 session.

Zook said about 95% of his organization’s membership — which includes most of the largest employers in Arkansas — were in opposition to a bond issue to address the debt.

Beebe spokesman Matt DeCample said unless there is a sudden spike in unemployment, it’s doubtful Beebe would use the bond mechanism.

“Right now, there is no immediate plan to set a bond election," DeCample said. “Between the actions of the last two legislative sessions, it appears that we have a path back to getting that fund where it needs to be as long as the recovery continues as it’s going."