Gov. Beebe, legislative leaders talk details on session plans

Speaking to reporters, Gov. Mike Beebe outlined issues important to his legislative agenda, covering a wide swath of topics that included highways, taxes, prisons, Medicaid, higher education and the economy.

In a one-hour Q&A session, Beebe said his focus with the 88th General Assembly involves Medicaid and prison issues, noted this report from Talk Business.

The state’s Medicaid program is expected to have major financial problems by 2013 if lawmakers don’t alter aspects of the program. Beebe is advocating for cost reductions through efficiencies and has hinted that some benefits may be reviewed.

The Governor also expects to spend a major amount of political capital on prison reform.  Arkansas’ prison population has grown exponentially in the last decade and is projected to cost an additional $1 billion during the next 10 years.

EDUCATION
Later in the Q&A, Beebe added higher education funding as another important budget priority.  He has proposed a one percent increase to higher education budgets next year noting that there is more utilization of the state’s two-year and four-year schools – a positive trend in his eyes.

He did say that a troubling statistic to him in higher ed circles is the state’s "woefully deficient" number of bachelor degrees per capita.

"This has a relationship to economic vitality," Beebe said. "I’ll be pushing some things in that arena."

Beebe and higher education leaders are considering changes to the funding formula for colleges and universities in order to incentivize or punish programs based on course completion and graduation rates.

As for the possibility of a re-opening of the Lake View decision, the decades-long controversy surrounding K-12 public school funding, Beebe does not expect much to happen despite recent heated campaign rhetoric.

HIGHWAYS
With incoming House Speaker Robert Moore’s speculation that efforts need to be made to solve highway shortcomings, Beebe said he didn’t plan on pushing his own program. He said he was receptive to legislative ideas on the subject.

When asked if Moore was spinning his wheels with efforts on new tax revenues for highways, Beebe said, "No, I don’t think he’s wasting his time… but he’s got a pretty big hill to climb."

"If they (the legislature) passed a tax increase for highways and it was reasonable, I’d sign it," he added.

Beebe told reporters that he wished he had more discretion on spending federal stimulus funds during the past two years.

"I would have put about all I could into highways and bridges," he said.

TAXES
Tax cuts will be a front-and-center issue in the 2011 session and Beebe used today’s forum to reiterate his previous position on the topic.

His proposed balanced budget of $4.6 billion offers another half-cent reduction in the grocery tax, which has been shaved by four cents during his administration. Beebe said that he felt it was all the state could afford and he didn’t want to stop the progress of the last four years.

"We can’t stop the momentum," he said. "I think that people’s lives have been significantly improved with the cuts."

"I like tax cuts, but I like honest tax cuts," Beebe said in reference to his position that lawmakers must help find spending cuts to balance out their proposals. "If at the end of the day, revenues are up and the economy is rolling and the (budget) forecast is adjusted upward, I’d be open to more tax cuts."

He suggested that another reduction in the utility sales tax on manufacturers or the used car tax could be affordable options if state finances improve by the end of the session.

Beebe also suggested that cutting out waste, fraud and abuse in state government was a continuous crusade, but "in the big scheme of things, I’m not sure what it would affect in terms of bottom line stuff."

ECONOMY
The Governor addressed economic issues of concern, including the overall business climate and the unemployment trust fund debt.

Beebe said he hoped to see the Quick Action Closing Fund replenished. The legislature has previously earmarked roughly $50 million for the Governor to use discreetly to sweeten economic development deals.

He warned that while Arkansas was on solid financial footing, other states’ fiscal conditions "could drag Arkansas into a double-dip recession." His advice to struggling states like California and Texas, and even the federal government: "Make some tough decisions."

Beebe cautioned that the nearly $350 million in debt owed to the federal government to support the state’s unemployment trust fund for laid-off workers was complicated by the fed’s restrictions on paying back the borrowed money.

Labor and business leaders are attempting to hammer out a solution on the subject, but remain far apart. Beebe said that one solution being discussed involves raising payroll taxes on businesses temporarily until the debt is paid down. Then, the temporary tax would sunset.

Another idea being floated would be to earmark General Improvement Fund (GIF) money, which comes from carryover funds and interest earnings, to pay down the debt.  Beebe said he wasn’t opposed to that idea, but was expecting GIF money to be less than in previous years. That option would also take money away from the Quick Action Closing Fund, which the Governor argued has been used effectively to create jobs.

Beebe also said he was "not supportive" of a pre-filed bill by Sen. Denny Altes, R-Fort Smith, that would earmark a half-percent of wages from employees to pay down the unemployment trust fund debt.

Wednesday’s (Jan. 5) forum was sponsored by the Associated Press and Society of Professional Journalists and was held at the Arkansas Press Association’s offices in Little Rock.

LEGISLATIVE LEADERS
The forum included incoming Senate President Paul Bookout and House Speaker Robert Moore who fielded questions from a panel of journalists in Little Rock in advance of next week’s annual legislative session.

Moore, a Democrat from Arkansas City, said he’s confident that the bipartisan work of the General Assembly will continue next session. He said, "Nothing changed from my standpoint except there are a few more people from the other side of the aisle."

Next week, 46 new members of the House will be sworn into office. Democrats will hold a slim advantage of less than 10 seats in the 100-member House chamber.

Bookout, the Jonesboro Democrat who will lead the Senate, agreed with Moore that bipartisanship will steer the legislative debate in 2011. He said he had met with all of the 13 new members in the 35-member Senate chamber and felt "very confident about their abilities" for a productive session.

TAX CUTS
One of the biggest items on this year’s agenda, according to the two primary legislative figureheads, involves tax cuts. A number of legislators, predominantly Republicans, have filed and discussed filing tax cut proposals ranging from corporate and personal taxes to used car tax changes to the capital gains tax.

Both leaders said that all tax cut proposals would be studied and debated. Moore stressed that he hoped tax cuts and incentives would be geared towards economic development aimed at job growth. He also suggested that any tax cuts that might help the lower end of the economic spectrum would garner his attention.

Bookout said a reduction in the used car tax was a measure he was most interested in after the additional half-cent grocery tax cut proposed by Gov. Beebe. Both Bookout and Moore warned that tax cuts and budget cuts would have to be applied equally.

Saying there is "no magic hidey-hole" to find state savings, both chamber leaders agreed that they’d be asking members to bring spending cut suggestions in tandem with tax cut proposals.

HIGHWAYS
Turning to highway needs, Moore said he sees hope for putting forth a road proposal — possibly for voter approval — this session. Claiming he didn’t have details, the Speaker-elect said that the $19 billion in road needs would only get more expensive in the future and that improved roads were crucial for economic development and tourism.

“The further we delay the repairs we’re not doing now, and its pretty commonsense, it’s going to cost more" he said, while noting that a potential tax increase would be necessary for future highway funding. Moore said the challenge of a highway program in a tough economy and anti-tax climate could be left to another session, but "that’s not what I’m up here to do."

Bookout admitted that a "band-aid approach" was not going to address the "crisis situation" with the state’s highways. He charged that the Governor would have to be a leader on the issue to help fully explain circumstances to the public, but he expressed doubt that voters were in the mood for a highway-related tax increase.

HEALTH CARE
The health care reform debate, which dominated last year’s politics, is likely to become an issue in the session. Many newly elected state legislators used campaigned against the federal health care reform measure, vowing to do all they could to curtail its implementation.

Moore and Bookout acknowledged that uncertainty in Congress and the federal courts may complicate state efforts to address the issue. Freshman Rep. David Meeks, R-Conway, has pre-filed a bill to repeal the requirement mandating individuals to purchase health care insurance.

Bookout, who was non-committal on the bill, said he wondered if the bill would have any effect. Moore said he didn’t see a great deal of support for it.