Senate panel takes up governor’s transformation plan, asks for financial impact analysis

A Senate panel began the long process Tuesday (Jan. 22) of reviewing Gov. Asa Hutchinson’s omnibus transformation plan by asking the bill sponsors to provide a financial impact analysis on all 15 cabinet-level departments that will be created if the legislation is enacted.

In the first of what is expected to be a weeks-long debate, the Senate Agencies and Governmental Affairs Committee took up the shell bill that sponsors Rep. Andy Davis, R-Little Rock, and Sen. Bart Hester, R-Cave Springs, said will be part of a “massive package” of overarching legislation that will change how state government in Arkansas works and looks.

“This bill clarifies how the process is going to be, and I think we will spend the next several weeks if not months talking about each one of those [15] departments,” Hester said of House Bill (HB) 1070, the enabling legislation for the first of Hutchinson’s broad agenda that also includes tax cuts, teacher raises and a solution to pay for state highway construction.

After Davis and Hester laid out the bill’s key provisions, the two lawmakers and state Chief Transformation Officer Amy Fecher provided the Senate panel an overview of how the newly-formed state government would be restructured.

In response to a volley of questions from Sen. Trent Garner, R-El Dorado, concerning the chain of command and authority of cabinet secretaries and how the cabinet-level departments would be set up, Davis attempted several times to describe the difficult and daunting task.

“To be honest, one of the reasons why it is going to be so massive is that we are still trying to get everything on a consistent name and language, so terms are going to be important for this bill,” Davis explained. “We call them cabinets because it kind of mirrors ‘federal speak,’ but in the bill it is departments.”

Sens. Jimmy Hickey, R-Texarkana, and Will Bond, D-Little Rock, peppered Fecher and the HB 1070 sponsors for more than 30 minutes with a long list of queries that ranged from technical language in the bill to questions on how the administration planned to handle duplicated jobs, inter-agency accounts and funds, and real estate ownership at each of the 15 new departments.

Hickey later told Davis, Hester and Fecher after a long line of questioning that despite some speculation at the State Capitol that he is against the governor’s transformation plan, his goal was to make sure it was done right.

“I just want to make we aren’t creating a monster with [this],” the Texarkana senator said of the state’s first major effort to trim state government in 50 years.

Picking up where Hickey left off, Bond’s inquiries mostly focused on the potential efficiencies and savings from the transformation, asking Fecher several times for a tally on how state revenues would be impacted. The Democratic senator also noted Hutchinson has touted initial savings of $15 million a year on several occasions, but he wondered aloud if that amount was accurate.

“I don’t want to press too early because I know that this is going to be a long process for us to go through the bill, but how did we arrive at that $15 million [total]?” Bond asked Fecher after she stated that the state Department of Finance and Administration (DFA) had done a precursory financial impact study on the governor’s plan. “If they’ve done that work and come up with that number, I’d like to see [it]. I think everybody in here is all for saving money as best we can, but I think I would like to see we accounted for that. I just would like to see the math.”

After additional questions from Bond and other senators concerning “hiring and firing authority” of division heads and cabinet secretaries, Fecher agreed to work with DFA staff and the Bureau of Legislative Audit to get financial analysis and revenue impact statements for all 15 departments that would be created under HB 1070.

When Gov. Hutchinson first announced his transformation plan in March 2018, he touted the fact that the last government reorganization occurred under Gov. Dale Bumpers in 1971, when the Democratic governor reduced the number of agencies reporting to him from 60 to 13 cabinet-level agencies.

Since the Bumpers’ administration, state government has expanded to 42 state agencies reporting to the governor’s office, and more than 200 boards and commissions for which he is responsible. By comparison, the federal government has 15 cabinet-level officials, state officials offered.

Gov. Mike Huckabee also attempted a merger of the state Departments of Health & Human Services, a move that was subsequently reversed by his predecessor, Gov. Mike Beebe. Once Gov. Hutchinson came into office in 2015, he soon created a transformation office headed by Fecher to formulate a statewide strategic plan to focus on centralizing state services and studying ways to streamline state government.

Many of the recommendations found in HB1070 first became fodder for possible legislation following a 2015 study by the Arkansas Policy Foundation that suggested a smaller and more efficient state government would save millions of dollars.

After the Senate panel’s first meeting on Tuesday, Davis said there will be a total of 16 bills introduced during the session on how each cabinet-level department would be set up under the enabling legislation. Besides HB 1070, four other bills have been filed as part of the comprehensive transformation package.

HB 1071 filed in late December outlines the specific duties for the newly created Secretary of Veteran Affairs. HB 1072 outlines the responsibilities of the Secretary of Health under the reorganized plan. After Tuesday’s meeting, Rep. Davis had already filed HB 1215 and HB 1216, which would establish the cabinet-level departments of Public Safety and Energy and Environment, respectively. The new law reorganizing state government, if approved, would go into effect on July 1, 2019.

Still, Davis groused about Bond’s request to get a fiscal impact analysis for each of the 15 departments that will be created under HB1070. When asked if he believes DFA or Bureau of Legislative Audit staff could complete the request in a reasonable time, he replied: “It’s going to take a long time. I don’t know if they can do it.”

The Senate panel, headed by Sen. Ronald Caldwell, R-Wynne, will take up HB 1071 and HB 1072 on Thursday. Caldwell said he hopes his Senate committee can take up at least two of the transformation bills at each meeting over the next several weeks.