Gov. Hutchinson testifies before Senate panel, asks lawmakers to adopt transformation plan

Gov. Asa Hutchinson made a rare visit to a Senate committee on Tuesday (Feb. 19) to make a strong pitch for his efforts to streamline state government from 42 varied state agencies to 15 cabinet-level ones, telling lawmakers that if his plan was enacted it would be a “landmark” milestone in state history.

In his 20-minute testimony before the Senate Committee on State Agencies and Governmental Affairs, Hutchinson said his overarching legislation to streamline state government in Arkansas should get a “do-pass” recommendation nearly a month after senators began reviewing 16 bills that delineate how each new cabinet-level agency will operate.

“I am certainly aware of the diligence which you have been performing the review on transformation and I compliment you on your thoroughness and your dedication to this task, and I appreciate the opportunity that you have extended to me to appear before the committee today,” Hutchinson testified before the packed room at the Old Supreme Courtroom at the State Capitol.

Hutchinson continued: “I see this transformation of state government certainly as essential for what we are trying to accomplish in terms of savings, but it is also historic. And I believe (this) will be one of the landmark achievements of this General Assembly. Of course, the test will be over time as to whether we make it work and are just as committed to that.”

Hutchinson then outlined the compelling reasons why he chose to move forward with the first comprehensive transformation effort since former Gov. Dale Bumpers was in office in 1971. They include estimated savings and efficiencies of more than $15 million, improved delivery of government services, and improved managerial oversight, he said.

On the issue of savings, Hutchinson told the Senate panel that administration efforts to downsize state government since he was first elected in 2015 has led to 1,400 fewer positions during a period of robust economic growth. As an example, he noted that the transfer of the state Lottery Commission into the Arkansas Department of Finance and Administration (DFA) has led to 16 fewer jobs and $1.9 million in annual savings over the past few years.

“(That) experience, among many others, shows us that we are going to have savings whenever we do the breadth of transformation that is going to take place when you reduce 42 departments of government down to 15,” said Hutchinson, calling his staff’s $15 million savings outlook a “conservative estimate.”

Hutchinson also said better services to Arkansas citizens were the reason behind the controversial merger of Crowley’s Ridge Technical Institute of Forrest City with its next-door neighbor, East Arkansas Community College (EACC), during the 2017 session. Merging dozens of state boards and commissions with similar missions will offer similar benefits, he said.

“Whenever we made that decision that the (Crowley Ridge) merger was a good step to take place, our motivation was just not simply to save money, it was a better delivery of services for the students,” the governor said. “And so, keep that in mind as you look at the transformation efforts.”

But Hutchinson said equally as important for moving speedily ahead with the transformation plan is the lack of managerial oversight that impacts him personally. Today, the popular Republican governor said he must make executive decisions by navigating several layers of government.

“I have to manage the nuances of state government — I am the CEO,” Hutchinson told the Senate committee of his management style. “Managerial oversight will lead to both savings and improvement in delivery of services.”

In explaining his point, Hutchinson offered an example where his staff could not locate an unnamed executive director reporting to him at one of the hundreds of boards and commissions at various offices across the city and state. Upon more investigation, he said, that employee was found at his home, not working and unsupervised.

“There were problems with that particular commission,” said Hutchinson, adding “I am responsible for that but I don’t have the breadth of reporting capacity and oversight to effectively oversee 200 boards and commissions, as well as 42 different departments of government.”

He added lightheartedly: ”I’m good, but that is a challenge.”

HUGE TASK AHEAD
In closing his prepared remarks, Hutchinson said the creation of the state’s new Shared Services department and Office of Inspector General under draft legislation will not only allow the state to put his plan into action, but also make sure it is successful.

Although the Senate panel has not yet completed the task of reviewing all 16 of the draft bills to move the transformation plan out of committee, Hutchinson and his budget aide Duncan Baird did answer a volley of questions from several senators tasked with combing over the thousands of pages of enabling legislation.

Sen. Jimmy Hickey, R-Texarkana, joked although he appreciated the governor’s appearance before the panel, he wanted to make sure the “executive branch stays out of the legislative branch.” In questioning Hutchinson and Baird, a former legislator, Hickey said he was nervous that the administration was attempting such a huge task of downsizing all state agencies into 15 cabinet-level departments all at one time.

“What I do see is that whenever we do every one of these on July 1, that is a massive undertaking,” said the Southwest Arkansas lawmaker. “I do wish that somehow we would have figured out a schedule that maybe we would have done 120 days and (completed) three, four or five of them, and then the others.”

After similar questioning from other senators, Hutchinson told the panel that he recognized the massive task ahead. “There has been a long year-and-a-half ramp up for this,” Hutchinson said of the state Office of Transformation that he established in December 2016. “But we don’t take this lightly, we know it is a heavy lift, but now is the time for transformation.”

Hutchinson’s testimony before the Senate committee was his first appearance before a legislative panel in the 2019 session as he seeks to complete a grand slam on his broad legislative agenda. During the 2017 Genera Assembly, Hutchinson made a famous appearance before a House committee to endorse a bill to make Martin Luther King, Jr. Day a standalone state holiday, while also moving Robert E. Lee Day to separate memorial day in the fall.

The transformation plan is one of the four key proposals that Hutchinson pinpointed as part of his broad agenda at the beginning of the session. One of those proposals, HB 1145, was signed into law as Act 170 of 2017 on Monday. It will raise minimum teacher pay by $4,000 over the next four years in 168 of the state’s 235 school districts, beginning with the 2019-2020 school year.

Hutchinson also signed SB 211, known as the 5.9 tax cut plan, into law on Tuesday afternoon. That new act will reduce Arkansas’ top marginal tax rate from 6.9% to 5.9% in two years at a cost of $97 million. The tax cut is the third phase of the Governor’s three-part plan to provide substantive tax relief for all Arkansans and to make Arkansas’ tax code more competitive with surrounding states.

Hearings on Senate Bill 336 by Sen. Terry Rice, R-Waldron, is scheduled for the Senate Committee on Revenue and Taxation on Wednesday. That bill, unveiled by Hutchinson a week ago as the fourth plank of his legislative schedule, would provide $300 million annually to state highways by permanently extending a half-cent sales tax and enacting new gasoline and diesel taxes.

The Senate State Agencies committee also approved four of six bills on Tuesday that would revamp the states’ procurement and bidding rules.