Gov. Hutchinson says time to pass budget, end 2019 session by early April

In a lights-out speech before the Little Rock Political Animals Club, Gov. Asa Hutchinson said on Wednesday (March 13) that he will ask lawmakers to soon take up the budget-balancing Revenue Stabilization Act in hopes of ending the 2019 session by early April.

Speaking at the Next Level Events meeting room at the downtown Union Station where the lights and sound system suffered an outage, Hutchinson told the roomful of more than 100 people that he will ask House Speaker Matthew Shepherd, R-El Dorado, and Senate President Jim Hendren, R-Sulphur Springs, and other legislative leaders to take up the RSA as quickly as possible.

Under the state’s RSA law, the 92nd General Assembly itemizes and prioritizes spending for the operation of state government. The act establishes a formula to perform an orderly monthly distribution of revenues. Each legislative session, the law allows the legislation to adjust financial projections within the state’s balanced budget to adapt to economic cycles, revenue forecasts, and program priorities.

Before the session, Hutchinson outlined his $5.75 billion budget for the 92nd General Assembly for the upcoming fiscal year 2020 that begins on July 1, 2019. That balanced budget request, which must be approved by the legislature, is 2.3%, or $125 million, above the fiscal 2019 budget of $5.6 billion, which ends June 30, 2019.

“There are a number of stages that we have to tie-up and line-out so as we hear from everybody …, but we will be starting (the RSA process) at the beginning of next week,” said Hutchinson.

Still, the governor said he would like the legislature to begin looking toward a conclusion to the 2019 session, which will enter its 10th week on Monday when the General Assembly recesses for spring break. “We are in good shape, but my message to the General Assembly is stop spending. Let’s control that …,” he said.

Earlier in his speech, Hutchinson touted the fact that most of his aggressive legislative agenda has been strongly supported by large majorities of the 35 senators and 100 state representatives after he started his second term as governor in January.

FOUR T’S ON TARGET, TRANSFORMATION LEFT
Hutchinson has nearly accomplished his goal of enacting into law his four Ts — teachers, taxes, transportation and transformation. The first proposal, HB 1145, was signed into law as Act 170 of 2017 on Feb. 18. 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.

A day later, Hutchinson signed SB 211, known as the 5.9 tax cut plan, into law. 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 part of the Governor’s three-part plan since taking office in 2015 to provide substantive tax relief for all Arkansans and to make Arkansas’ tax code more competitive with surrounding states.

On Tuesday, Hutchinson signed what he called “the largest highway plan in the state’s history.” The first part of the legislative package includes Act 416 by Sen. Terry Rice, R-Waldron, which will raise $95 million annually for the state’s highway system. Voters will also be asked to permanently extend a half-cent sales tax that expires in 2023. That tax, which was first approved in 2012, is expected to raise another $205 million.

The final step of Hutchinson’s 2019 legislative agenda is his omnibus legislation to streamline state government from 42 varied state agencies to 15 cabinet-level ones. The popular Republican governor said he hopes to move swiftly in the days ahead to approve a gaggle of 16 bills that detail every aspect of the administration’s huge task to downsize all state agencies into those cabinet-level departments all at one time.

“Even though we have done a lot, there are still some heavy items that we have to address for the rest of the session,” he said. “It’s a big lift, it’s a big challenge and it’s a 2,000-page bill that we need to get passed.”

On Wednesday afternoon, the transformation bill, HB 1763, cleared the House State Agencies committee.

During his wide-ranging speech, Hutchinson also offered some insight on a secondary raft of bills that the legislature has already approved or pending legislation now before members. Those priorities include juvenile justice reform, school safety regulations, internet sales tax legislation, 911 system upgrades and funding for the University of Arkansas Medical Sciences’ National Cancer Institute.

Toward the end of his speech, Hutchinson gave a historical perspective on the history of the Arkansas flag. He used that vignette to segue into a brief explanation on why he supports House Bill 1736 by Rep. Charles Blake, D-Little Rock, which would re-designate stars on the state flag to remove any links to Arkansas’ Confederate past.

Hutchinson said a fourth star to commemorate the Confederacy was only added to the Arkansas flag in 1924, only five years after the infamous Elaine massacre where an estimated 100 to 237 blacks were killed in one of the bloodiest racial conflicts in the nation’s history.

“So you can understand the question and why it was put there, and why it is a challenge for a certain part of our minority population,” Hutchinson told the silent crowd. “I hope we will get there, whether it is in this session or another one. I hope that we can come together and do things that remove offense and help us go together as a state into the future.”

Earlier before Hutchinson’s speech, a House committee declined to table Blake’s HB 1736 on the subject in a voice vote of 4-4, and four representatives not participating. The controversial legislation remains before the House Committee on State Agencies and Governmental Affairs.

SUMMER TRADE MISSION TO EUROPE
After the noon luncheon, the state’s globe-trotting chief executive also told reporters that he and Arkansas Economic Development Commission (AEDC) officials plan to depart on another overseas trade mission later this summer. He made those remarks after saying he would not support legislation to provide exemptions for the state’s new minimum wage act approved by voters in November.

The summer trade mission will include stops at the Farnborough International Airshow in England for a major trade exhibition for the aerospace and defense industries. Hutchinson, along with AEDC Director Mike Preston, will also makes stops in Germany and other parts of Europe.

“I will be going on one or two trips this year, we are still developing the itinerary so it is probably going to be in the June timeframe,” said Hutchinson.

When asked about several Arkansas trade deals with China in the pipeline, Hutchinson specifically mentioned that AEDC officials are still engaged with Shandong Sun Paper on plans to build a $1.3 billion paper mill in Arkadelphia that was first announced in April 2016. He said Sun Paper officials have completed nearly all of their environmental permitting requirements with the Arkansas Department of Environmental Quality.

“That’s a work in progress. We are pleased that it’s still on track,” he said, offering no date on when construction on the project will begin.

Changing tunes, Hutchinson boasted that Chinese manufacturers Suzhou Tianyuan in Little Rock and Hefei Risever Machinery (Risever) in Jonesboro have already jumpstarted operations after the governor and AEDC officials made earlier trade missions to the Far East in 2017.

Risever, a Chinese-based heavy equipment parts manufacturer, broke ground on a $20 million facility in Jonesboro in June 2018, he said. At its peak the Northeast Arkansas factory plans to employ up to 130 workers.

Suzhou Tianyuan, which first announced plans to invest more than $20 million and bring 400 jobs paying $14 an hour, also began hiring last summer at a large factory located in the capital city’s industrial port on the Arkansas River. The company now has 100 workers that manufacture sportswear for Adidas, Reebok and Armani, the governor said.

In 2017, AEDC also penned deals with China’s Pet Won, which said it would invest $5 million to locate a new pet-treat facility in Danville that would create 70 new jobs at a former 28,887-square-foot facility formerly owned by Petit Jean Poultry.

In South Arkansas, Shandong Ruyi announced it would locate its first manufacturing operation in North America in Forrest City, creating up to 800 jobs that will pay more than $15 an hour when operational. The company, which is China’s largest cotton textile manufacturer, said it would spend $410 million to retrofit a 1.4 million square foot cotton-spinning, garment factory in the Delta town.

“The vast majority of those (projects) are right on target, (but) we are worried a little bit about the delays of Ruyi in Forrest City. That is one of the consequences of being derailed by the tariff discussions. So hopefully that will get back on track soon,” he said in reference to the Trump administration’s trade war with China.

The U.S. and China have been locked in a trade war since President Donald Trump first announced billions in tariffs against China last summer. Earlier this week, U.S. trade officials said long negotiations between the two countries should be winding down with a possible agreement by the end of the month.

Hutchinson said he is confident that President Trump and Chinese President Xi Jinping will reach a formal agreement at a possible meeting in Miami on March 27. “I don’t know if it will happen at this next meeting or not, but I am confident it will happen,” he said.