Beebe Discusses Medicaid Costs, Trade Trip and Party Control

Arkansas Gov. Mike Beebe (D) said Tuesday (May 1) that education and economic development will continue to be the focus of his administration, and he doesn’t believe Republicans will in November capture both chambers of the Arkansas Legislature.

He also elaborated on a number of issues, including the looming Medicaid crisis, federal health care reform, and his trade trip to China.

Beebe, speaking in the latest installment of “Talk Politics” with Roby Brock, said in the Ustream television interview that not having a future election will not change his governance style.

“To a large extent, my approach doesn’t change,” Beebe said. “My two priorities remain what they always were, education and economic development.”

Beebe said he wants to completely phase out the sales tax on grocery items before leaving office. He has already succeeded in reducing the grocery tax rate from a little over 6% to down around 1.5%.

Other items Beebe plans to champion will be to “get a handle on rising medical costs,” and improve graduation rates.

“Those major things are not going to change now because I don’t have an opponent,” Beebe explained.

LEGISLATIVE CONTROL
The Arkansas legislature now has the smallest margin of Democratic rule since Reconstruction. House Democrats outnumber Republicans 54-46, while the State Senate has a 20-15 Democratic advantage.

Arkansas Republicans believe they are in position to capture both houses in the 2012 election cycle. To win 5 new seats in the House and just 3 in the Senate would give Republicans control of both chambers for the first time in modern political history. And after legislative redistricting drew new district boundaries, political performance is likely to be redefined.

“Can they? Anything is possible. Do I think they will? No,” Beebe said when asked if he believed Republicans will hold both chambers after November.

Beebe also said there are some Democrats and Republicans in Arkansas behaving like “Washington politicians.” He warned that most Arkansans see through that and will punish those who play the Washington-style political games.

TRADE TRIPS
Beebe recently completed a 12-day trip to China during which he met with 11 different economic prospects in differing stages of possibly investing in Arkansas. Beebe was bullish on two later-stage prospective businesses.

During the trip, Beebe used Arkansas’ most famous exports — Wal-Mart, Tyson Foods and former President Bill Clinton — to open conversations with Chinese officials. Beebe was asked during the Tuesday interview if the Wal-Mart-Mexico bribery scandal would impair the benefit of Wal-Mart being based in Arkansas.

“I don’t think it will be a hindrance if Wal-Mart acts quickly” to fully disclose actions and to cooperate with all investigating parties, Beebe said.

The early April trade trip focused on Chinese “investments and jobs” in Arkansas rather than trade issues between China and the U.S., according to Beebe. He also said the meetings with Chinese ministers were “extraordinarily fruitful,” including a meeting with Chinese Vice Premier Li Keqiang — a position equivalent to the U.S. vice president, Beebe noted.

Tuesday morning, prior to the Talk Business interview, Beebe’s office welcomed several Asian leaders. Brock asked Beebe if he would talk about the purpose of their visit.

“No,” Beebe said with a laugh.

He did say “it is not unusual” for delegations from Asian countries to “be in my office and talk about economic development opportunities.”

Beebe also declined to elaborate on possible efforts to boost Tyson Foods poultry business with China. Although he met with Chinese officials to discuss “trade issues,” Beebe said he had not seen any results from those conversations in the two weeks since his return.

MEDICAID
Medicaid costs will be a major budget item for Arkansas in 2013 or 2014 without system reform. Beebe says the current fee-for-service model is “unsustainable,” with a deficit of more than $200 million possible by 2014.

The Arkansas Center for Health Improvement (ACHI) projects a $60 million Medicaid budget shortfall in the upcoming budget cycle.

Beebe said the numerous options proposed — cutting services, raising taxes, moving other state revenue to the program, or raising rates — do not provide for a long-term fix.

“All of that is designed to slow the growth, it’s not a panacea,” he explained, adding that raising taxes “is always an option,” but not anything he plans to propose.

Beebe also rejected using surplus revenue to ease the Medicaid budget shortfall. He said using “one-time money” is bad public policy because it does not provide for a long-term fix. He said one-time funds may be used as a stop-gap, but only when no other remedy is possible.

The Governor also re-affirmed expectations that several Medicaid reform initiatives would begin on July 1, 2012 in an effort to implement cost savings.

OTHER INTERVIEW TOPICS
• Federal health care
In response to a question about the U.S. Supreme Court’s consideration of President Obama’s federal health care law, Beebe hopes for a “definitive” decision, but is not sure if the Court “will nibble around the edges” or “definitively say it is a ‘Yes,’ or ‘No.’”

• Arkansas college graduation rates
A recent Grad Nation report shows that between 2002 and 2009 Arkansas’ college graduation rate declined 0.8%, meaning there were 303 fewer Arkansans graduating from college in 2009 compared to 2002.
www.americaspromise.org/our-work/grad-nation/building-a-grad-nation.aspx

Beebe said Arkansas is doing better with graduation rates, but not at the same rate as other states. He also said state officials are working to better prepare K-12 students to increase their chances of attending and completing college. Also, Beebe said his administration is trying to ensure people don’t run out of money before they finish college.

“It’s not an overnight panacea … it’s a process,” Beebe said.

• Incentive restructuring?
Grant Tennille, executive director of the Arkansas Economic Development Commission, said in a recent interview that Arkansas must develop a jobs incentive package that better targets knowledge-based jobs and start-ups.

“The tools that we’ve got in Arkansas, in terms of incentives, are very much designed for another era. They’re designed for big-iron manufacturers, there’s no other way to put it,” Tennille said.

Beebe agreed with Tennille’s assessment, but would not definitively say if a new incentive package would be part of his package of proposals during the 2013 General Assembly.

• Football: Arkansas State University vs. the Hogs
Beebe, an ASU graduate, believes the two football teams should play, but doesn’t think it’s the government’s job to force it, nor should it be forced through a constitutional amendment.

He said a citizen-initiated referendum could be a mechanism to force the issue.

“Ultimately it will probably happen,” Beebe said of a gridiron match between ASU and UA.

Michael Tilley with our content partner, The City Wire, is the author of this report. He can be reached by e-mail at [email protected].