Optimism was the theme of an American Trucking Associations’ economic report, but a broader index that measures shipments and freight expenditures delivered a sour note on future economic conditions.

The American Trucking Associations’ Truck Tonnage Index fell 2.8% in October compared to September, but was up 8% compared to October 2012. Year-to-date, the tonnage index is up 5.5% compared to the 2012 period. Also, October was the first decrease in the monthly index since July.

“From May through September, the index surged 3.5%, including only one monthly decrease over that period,” ATA Chief Economist Bob Costello said in the tonnage report. “It isn’t surprising for volumes to fall back some after such a good run.”

Costello said the “robust” year-over-year gains suggest the economy may be stronger than some believe.
 
“Specifically, the heavy freight sectors, like tank truck, have been helping tonnage this year. But in the third quarter, generic dry van truckload freight saw the best quarterly gains since 2010. I view this positively for the economy. I view it positively for trucking. Now, we have to see if it continues,” Costello said.

Trucking serves as a barometer of the U.S. economy, representing 67% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods, according to the ATA. Trucks hauled 9.2 billion tons of freight in 2011. Motor carriers collected $603.9 billion, or 80.9% of total revenue earned by all transport modes.

The Cass Freight Index reported a 2% decline in the shipment index and a 0.8% gain in the expenditure side of the index.

St. Louis-based Cass uses data from $22 billion in annual freight transactions processed by its information processing division to create the Index. The data comes from a Cass client base of 350 large shippers.

‘COOL DOWN’ SIGNS
Rosalyn Wilson, a supply chain expert and senior business analyst with Vienna, Va.-based Delcan Corp., who provides economic analysis for the Cass Freight Index, said the 16-day federal shutdown in October is partially to blame for the decline in shipments, “but prior to the shutdown the economy was already exhibiting signs of a cool down.”

“The 3.5 percent decline in freight volumes followed two months of strong growth, but is reflective of the weakening state of the overall economy. Shipment volume has already been below corresponding 2012 volumes in six months of this year, and October contributed the seventh month, coming in 2.0 percent below a year ago,” Wilson noted.

The eventual federal budget agreement only “kicked the can down the road,” Wilson said, which is not likely to help an already struggling economy.

“Rather than settling appropriations for the 2014 budget, the result was a continuing resolution that will fund the government through January 15 and suspend the debt ceiling until February 7. This resolution does little to defray the concerns of workers and consumers alike, demonstrated by the plummeting measures of consumer and business confidence in October,” she said.

The monthly Wells Fargo outlook suggests slower overall economic growth in the fourth quarter, with conditions improving in 2014.

U.S. economic activity increased at a 2.8 percent pace in the third quarter, but much of the gain was due to an outsized increase in inventories. However, real final sales, which exclude inventories, moderated to a 2.0 percent pace. The gain in inventories sets the stage for a slower pace of growth in the fourth quarter. We now expect real GDP in the fourth quarter to increase at only a 1.8 percent pace,” noted the Wells Fargo report. 

The report predicted that “economic growth in 2014 is expected to pick up from its moribund pace this year led by improving consumer spending, business fixed investment and homebuilding.”

ARKANSAS TRUCKERS
The third fiscal quarter was good for most Arkansas-based trucking and shipping companies.

P.A.M. Transportation Services Inc. reported net income of $2.39 million in the third quarter of this year. Profits surged 171% from the $880,907 pocketed a year ago. 
Revenue also rose 6.4% to $101.87 million in the quarter ending Sept. 30.

The quarterly net income for Fort Smith-based Arkansas Best Corp. more than doubled the $6.518 million reported during the third quarter of 2012, and the revenue was up almost 8% compared to the 2012 quarter. Helping fuel the improved results was a 4.3% uptick in tonnage during the quarter and a 4.5% increase in per-day shipments.

Lowell-based J.B. Hunt’s net income rose 14% to $89.47 million in the third quarter. On a per-share basis that equates to 75 cents, compared to 65 cents per share earned a year ago, falling short of the 78-cent average consensus from two dozen analysts that regularly follow the company. Total revenue rose to $1.435 billion, up 10.8% and inline with expectations for the third quarter period.

However, Van Buren-based USA Truck again posted a quarterly loss, but the loss was lower than expected. Cash flow improved and revenue was up almost 14% – overall a much-needed improvement for a company facing a hostile takeover and five consecutive years of losses. Also, The 6 cent per share loss was better than the consensus estimate of 10 cents per share.

Thirty-seven teams of high school business students made their pitches Nov. 21 to “loan committees” at the University of Arkansas at Fort Smith to seek funding for the businesses they want to start and operate until spring.
 
Dave Robertson, director of the Family Enterprise Center at UAFS, said Craig Pair, local entrepreneur and business owner, was the catalyst of the program when it began in 2007. Robertson has been the on-campus facilitator for the annual event since 2010.

The participating students come from business development classes at Northside and Southside high schools. Their presentations at UAFS were business plans developed this fall.

“Each team was allowed to request up to $500 in seed money to use to actually start and run their small business,” said Robertson. “Most asked for $100 to $200, and some didn’t need any cash up front.”

Robertson said local business people were on the panels that decided loan amounts for the students, with approximately $3,000 loaned to the students this year by UAFS. The high school instructors work with the students to open bank accounts and purchase supplies or inventories for their businesses.

“The neat thing about this is that for some of these students, this may be the first time that they have had to make a formal presentation to a group of adults,” said Robertson.

The plans covered a range of business entrepreneurial endeavors -- customized cell phone cases, car detailing, Web creating and hosting, algebra and geometry tutoring, monogrammed sports bras, handmade bass lures, seasonal gift bags, Mexican candy sales, specialty headbands and more.
 
The high school faculty involved with the project believe in the importance of the endeavors as well. Instructors include Judy Vosburg from Southside and Melinda Briscoe from Northside. Briscoe said her students are learning about the quality of work that is expected outside the classroom.
 
“They get to practice talking to adults in a business and social situation that some never get the opportunity to do,” she said. “This is a first ‘networking’ opportunity for many of my students. We practice shaking hands and making eye contact. What we might consider common knowledge, they need to practice.”
 
Briscoe asked her students what they gained from this experience, and the answers – which “just filled the air” – were varied.
 
“I heard how stressful it is to run a business, how important the details are and how it would feel to be the business owner,” she said, adding that others believe they have learned time management.
 
Vosburg believes the entrepreneurship activity at UAFS is important for her students, too.
 
“The students gain valuable experience and confidence when they present themselves and their business ideas to business owners and bankers,” said Vosburg. “They realize that it takes a lot of planning and detail work to get their businesses started, and through this process, some learn that entrepreneurship is not for them and some realize it is and they want to do this.”
 
The student teams return to the UAFS campus next spring, with another group of panels judging their efforts and awarding first-, second- and third-place winners with UAFS scholarships.

The Crawford County Quorum Court's budget committee began meeting with department heads on Thursday (Nov. 21) to address a $150,112.76 budget deficit.

According to Justice of the Peace Mary Jan Blount, chair of the budget committee, the group is meeting with department heads to see where cuts can be made so the county can have a balanced budget by its Dec. 16 regular meeting.

"We're just going to each department head - for instance the county clerk is on the agenda for tonight – we're going to be asking why they're asking for money. We're going to give them the opportunity to make their own cuts first," she said. "If that does not happen, then we'll make the cuts we deem necessary."

For now, Blount does not know where those cuts may come from, though everything is on the table at this point, including limiting how many vehicles can be replaced in anyone department's fleet.

"That is probably one area we will look at, but I'm not sure about that."

County Judge John Hall said the county is also trying to encourage employees who meet the eligibility requirements for Medicare to enroll in the program in order for the county to save money. There are 10 county employees over the age of 65 and therefore eligible.

Should those employees forgo county-provided health benefits, they could be given a $200 per month supplement which would still be a cheaper cost for the county rather than the $590 per month the county spends on each employee for health coverage. Once the payments are factored in, the county could expect to save $46,800 next year in up front costs.

Hall said having older employees off the county's insurance plan, which is provided by United Heath Care through a contract with Brown-Hiller-Clark & Associates, would also save the county money in the long run.

"What it is is a risk factor," Hall said. "The over 65-year-old is a higher risk when they figure our rates. So it would help us if they would go ahead and get on (Medicare)…It would lower our risk by probably 2% to 3%. Maybe 4%. So that's what we're looking at right now. I don't know if we can make it work yet or not."

And while other municipal and county governments have seen substantial increases in insurance costs that could be tied to the Affordable Care Act, Crawford County's costs have remained lower. But it has not been without working with their insurer to secure a better deal, Hall said.

"They started out this year with a request from us for a 16% increase in rates which was 170-something some odd dollars. And we negotiated with them and wrangled with them and begged and pleaded and got them down to 4%, which was about $40,000," he said. "If we can make this deal work on the supplement, we can save almost $30,000. So that would mean we would actually still exactly the same amount (expended for health insurance that) we had last year."

And while it appears as though the county negotiated a good deal for themselves and the employees, Hall was very clear in saying that the good rates and good coverage is unlikely to last beyond FY14.

"I have warned all the employees that they better be happy with this one because it will not last. Unless we do something to lower our risk rates, because we pay 100% of the insurance. We have a good plan and we it's one that they've had for 14 years. And so we get to keep that plan without increasing deductibles or decreasing benefits."

Even though county employees are getting to keep a health insurance plan that is paid for by the county, there is a trade off this year as county employees will not be getting any raises. That includes the highest paid county officials, Hall and County Sheriff Ron Brown, who are both paid slightly less than $51,000 per year.

Blount said even though the budget is not yet balanced, the county is in far better financial shape going into FY14's budget proceedings versus FY13.

"I am pleased so far at how the elected officials have worked toward making the budget as small as possible," she said. "I think they have tried to look at ways to cut. That has helped us a lot. Last year, we were looking at a $850,000 deficit. They have really stepped up to the plate and tried to help out."

Union-backed groups and individuals announced Thursday (Nov. 21) a series of protests planned at Wal-Mart Stores on Black Friday and at the home office on Friday (Nov. 22), the one year anniversary of last year’s holiday protest.

Protestors called attention to the National Labor Relations Board’s announcement earlier this week that found Wal-Mart Stores illegally threatened "reprisal" against workers who protested on Nov. 22, 2012, in a number of states where strikes were held.

The NLRB has asked Wal-Mart to settle the claim or risk a suit being filed in the coming weeks. Wal-Mart said it is looking into the next steps and would soon make a decision regarding the request for settlement.

On Friday morning (Nov. 22), the workers who claim they were fired after last year’s protest will visit the home office to urge Wal-Mart to live up to the anti-retaliation policy it professes to follow, according to an email announcement from Making a Change at Walmart.

“We know that there are more labor events planned in the coming days. We certainly respect the unions’ right to protest,” said David Tovar, spokesman for Wal-Mart Stores Inc.

In an email to the media on Thursday, Tovar posed the question: How many of the people attending the planned strikes are current Wal-Mart associates? Do any of them work at this store?

He shared an infographic that claims the 30,000 workers and supporters that reportedly took place in strikes and protests last year is false. Wal-Mart said 5 of its workers walked off their shifts and 120 workers participated in demonstrations, while more than 1 million other employees worked on Black Friday. Tovar said the largest union-sponsored event took place in Los Angeles, with one Wal-Mart employee protesting for every 25 union sponsored protestors.

He said Wal-Mart welcomes a broader conversation around the economy and service industry jobs.

“As a large employer with many entry level jobs, we have a responsibility to be a part of this conversation, and you’ll see us engage in it over the coming weeks and months. We must all work together in a constructive manner to rebuild America’s middle class. Creating good jobs and real career opportunities means expanding education, training, and workforce development and we’re ready to do our part,” Tovar noted in the email.

A possible big gamble on a country club, an investment spark in downtown Fort Smith and the success of a Catholic school principal are part of the Nov. 8 Friday Wire for the Fort Smith region.

NEWS & ANALYSIS
• Club money
Can they do it again?

That’s the question many have about Lance Beaty and Dr. Stephen Nelson, partners in FSM Redevelopment Partners. That’s the company that took a financial gamble on what has proven to be a successful makeover of the former Phoenix Village Mall property and is now considering at least a $7 million deal to acquire and renovate Fianna Hills Country Club in Fort Smith.

Beaty has confirmed he is working with club owners David Mille and Jim Shields on buying the club and 18-hole golf course. Both sides are in the due diligence phase, with a goal to close on a deal before the end of the year.

It could prove to be an interesting makeover for the more than 40-year-old property if the deal goes through.

• Downtown spark?
Speaking of interesting investments, Fort Smith businessman Steve Clark says renovation of the historic Friedman-Mincer building in downtown Fort Smith is on track, but that it is “impossible to fully appreciate” what it has taken just to get the structure to the point where architects and designers could begin work on renovation details.

The historic and white tiled Friedman-Mincer building – also known as the OTASCO building – at the intersection of Garrison Avenue and Towson Avenue in downtown Fort Smith was built in 1911. Clark announced in May he would restore the structure and move his Propak corporate offices to the building.

Let’s hope Clark’s progress continues and that it has a positive impact on the east end of Garrison Avenue in downtown Fort Smith.

ICYMI
Following are a few stories posted this week on The City Wire that we hope you didn’t miss. But in case you missed it ...

• ‘Significant’ changes possible for Fianna Hills Country Club
The company that took a financial gamble on what has proven to be a successful makeover of the former Phoenix Village Mall property may soon invest at least $7 million in the acquisition and renovation of the Fianna Hills Country Club in Fort Smith.

• A Long Road Back
Former Arkansas Attorney General Steve Clark details his long road back when he fell from grace after a felony conviction for theft of property while serving as AG in 1980.
According to Clark, the days following his conviction only seemed to emphasize the true weight and reality of the situation.

• Education dedication
Sharon Blentlinger is pretty much a rock star in the world of parochial schools. She has been at the helm of Immaculate Conception Elementary School's leadership for 27 years, after serving as a teacher there for nearly a decade.

NUMBERS ON THE WIRE
$7 million: Initial estimate from FSM Redevelopment Partners on the cost to acquire and renovate the Fianna Hills Country Club in Fort Smith.

1,470: Number of homes sold in Crawford and Sebastian counties during the first 10 months of 2013, ahead of the 1,357 sold during the same period of 2012.

$176,072: Estimated economic impact to the Fort Smith regional economy from the teams gathering to play in the Heartland Conference volleyball tournament at the University of Arkansas at Fort Smith.

100+: Number of GAP stores in which a t-shirt designed by Danielle Kling of Muldrow, a University of Arkansas at Fort Smith graphic design student, is being sold.

OUTSIDE THE WIRE
• Apple's new headquarters gains approval of Cupertino City Council
The Cupertino City Council voted unanimously Tuesday to reduce the annual tax break it gives Apple (AAPL) -- America's most valuable company by market capitalization, with a net income last year of $41.7 billion -- by 15 percent. Having wrung that concession from its richest corporate resident, the council then voted unanimously to give its final blessing to Apple's proposed new headquarters. The spaceship-shaped building has now officially landed.

• A Dow Jones record
The Dow industrials closed above 16,000 for the first time on Thursday as stocks rebounded from three days of weakness, after economic data pointed to a slowly improving labor market and subdued inflation.

• A game changer
The Democratic-controlled U.S. Senate, in a historic and bitterly fought rule change, stripped Republicans on Thursday of their ability to block President Barack Obama's judicial and executive branch nominees.

WORD ON THE WIRE
“I applied for about 40 jobs. I have a pretty good resume, until you get to that part that says alcoholic and felon."
– former Attorney General Steve Clark speaking about his journey from a rising political star to convicted felon to his pardon by then-Gov. Mike Huckabee to his current role as President and CEO of the Fayetteville Chamber of Commerce.

"It's a pretty big detail. That's a pretty big detail, when you're looking at alcohol sales and it looks like you're going to circumvent this board to do that. That's what it looks like to me."
– Sebastian County Justice of the Peace Shawn Looper, addressing County Judge David Hudson during Tuesday's (Nov. 19) Quorum Court meeting about media reports that the Parks Advisory Board had discussed pursuing annexation of the golf course at Ben Geren Regional Park into the Fort Smith city limits

"Food pantries are starting to buckle. Each has only a certain level of support to give the community. Some are reducing the amounts of food they give. Others are reducing their hours. We've even had closures. Those with the ability to give to help are asked to help local food pantries with food, funds or volunteer help.”
– Ken Kupchick, director of marketing and development for the River Valley Regional Food Bank, said about the rising demand for food support in the Fort Smith metro area

Arkansas’ jobless rate rose to 7.5% in October, the highest level for the year, thanks primarily to the largest number of unemployed in the state in the past 20 months and a slight decline in the labor force size.

The October jobless rate was up from the 7,4% in September and higher than the 7.2% in October 2012, according to the Friday morning (Nov. 22) report from the U.S. Bureau of Labor Statistics.

Arkansas’ labor force was an estimated 1.321 million in October, down just 0.05%, compared to September and down almost 2% compared to October 2012.

The number of employed in Arkansas during October was 1.221 million, a drop of 2,096 compared to September and a drop of 29,575 compared to October 2012 – or down 2.36%.

Arkansas’ annual average jobless rate fell from 7.9% during 2011 to 7.3% during 2012. Also, October marked the 57th consecutive month that Arkansas’ jobless rate has been at or above 7%.

The number of unemployed rose to 99,570 during October, up from the 98,403 in September and up 2.2% compared to the 97,402 in October 2012.

Greg Kaza, director of the Arkansas Policy Foundation and an economic researcher, said the October report does not reflect well on the state’s economy.

“Today's employment report for October continues the unprecedented decline in Arkansas' civilian labor force. The decline is documented in state labor market records that date to the mid-1970s,” Kaza noted in a statement to The City Wire. “Arkansas' civilian labor force contracted to 1,321,500 in October, well below its level (1,352,800) in June 2009 when the Great Recession ended and a new expansion started.”

ARKANSAS SECTOR NUMBERS
In the Trade, Transportation and Utilities sector — Arkansas’ largest job sector — employment during October was an estimated 254,100, up from 252,000 in September and well ahead of the 246,500 during October 2012.

Manufacturing jobs in Arkansas during October totaled 155,500, down from the 155,400 in September and below the 155,200 in October 2012. Employment in the manufacturing sector fell in 2012 to levels not seen since early 1968. Peak employment in the sector was 247,300 in February 1995.

Government job employment during October was 215,000, up from 214,300 in September and below the 216,000 during October 2012.

The state’s Education and Health Services sector during October had 176,600 jobs, up from the 175,700 during September and up from 173,300 during October 2012. Employment in the sector is up more than 25% compared to October 2003.

Arkansas’ tourism sector (leisure & hospitality) employed 102,600 during October, up from 101,900 during September, but below the 103,400 during October 2012. At a revised 103,700, January 2013 marked a new employment high in the sector.

NATIONAL DATA
The BLS report also noted that 38 states had unemployment rate decreases from a year earlier, 10 states had increases, and two states had no change. The national jobless rate during October was at 7.3%, and was down from the 8.1% in October 2012.

Nevada had the highest unemployment rate among the states in October at 9.3%. The next highest rate was in Rhode Island with 9.2%, followed by Michigan at 9%. North Dakota again had the lowest jobless rate at 2.7%.

The October jobless rate in Oklahoma was 5.5%, up from 5.4% in September and 5.2% in October 2012.

Missouri’s jobless rate during October was 6.5%, down from 6.9% in September and up compared to 6.7% in October 2012.

Dennis Wemyss, a graphic design student at the University of Arkansas at Fort Smith, and Josh Pham, an information systems student at the University of Arkansas at Fayetteville, planned to be observers at a business event last weekend. Instead, it ended up being one of the most important weekends of their lives.

The two friends, both of Fort Smith, attended Startup Weekend NWA on Nov. 15-17 simply planning to network with other professionals and assist would-be entrepreneurs as they vied to win the competition that awarded the best startup venture.

Instead, they decided to enter their own business concept – a website called Exposure that connects photographers with potential clients – into the competition, winning first place, earning a slew of prizes and receiving publicity that they say will change their lives forever.

“It was definitely the biggest weekend of my life,” Wemyss said. “I’ve already received job offers and internships from people I’ve never heard of.”

Pham echoed Wemyss’ statements.

“I probably wouldn’t give this weekend up for anything,” he said. “I’m thrilled that we got first place, but a lot of the credit goes out to the people who put together Startup Weekend.”

Pham had conceived of the winning idea last year but had yet to develop it into an actual business model before the weekend of the competition. That proved convenient, as the competition requires contestants’ concepts for businesses to be nothing more than a basic premise that they will develop into a working business model over the course of the weekend-long event.

Pham and Wemyss estimated they worked a total of 42 hours developing the business over the weekend before the final presentation on Sunday. And Wemyss, who had no background in public speaking, pitched the idea to judges and won Best Pitch in addition to the team placing first.

Wemyss said the conciseness of their presentation, coupled with the fact that they only had three team members – the third being Darrick Buralli, a programmer at Dillard’s in Little Rock – helped them to win the competition.

“We addressed a solution to a problem, and we were concise with everything, and I think the judges liked that,” he said. “The average number of people on a team was seven, and we were blessed to have a small team because a lot of larger teams had problems agreeing on what they wanted to do.”

Judges included a Chief Technology Officer from Dillard’s and several Chief Executive Officers of local businesses. The award for first place included three hours of legal consulting from Smith & Hurst, 30 hours of brand consulting from the advertising agency Stone Ward, printed branding materials from the brand agency Moxy Ox, four hours of technical consulting from RevUnit, $300 in field agent credits, and one year gold subscription to the web design website Treehouse for the entire team.

Pham said Exposure was the employment website Monster and image hosting website Flickr “fused into one.”

“Exposure lets you connect to a photographer wherever you need a photograph taken,” he said. “So let’s say you’re going to Hawaii for your honeymoon. You’re not going to want to pay to fly a photographer out there. Instead, you can put a request on our website, and photographers in Hawaii will reply to the request and submit portfolios to show you what work they’ve done. From there, you can decide which photographer you’d like.”

Wemyss added that it has benefit for the client and the photographer.

“It gives the photographer work and a chance to build his or her portfolio,” he said. “It works out for both parties.”

A first-place finish at the local competition now enters them into the Global Startup Battle, where their idea will compete against others from around the world. But the two aren’t as worried about the global competition as they are about getting their business off the ground.

“Our goal is to have Exposure functioning by the early spring, and by summer, we’d like to have good investment and rolling in regular customer bases,” Pham said. “This competition gave us a great head start.”

Startup NWA Weekend is a grassroots movement to help grow entrepreneurship at a local level. Startup Weekend organizers and facilitators can be found in over 200 cities around the world. Sponsors of Startup NWA Weekend included Innovate Arkansas, Arkansas Business, Smith & Hurst and The Iceberg.

Fort Smith City Director Keith Lau asked for scenarios to reduce $2.2 million from the city's 2014 proposed budget at Monday's (Nov. 18) and City Administrator Ray Gosack today (Nov. 22) released a scenario that would result in layoffs, furloughs and the closure of fire station coupled with increases in fees and permits.

Lau had asked for the cuts as a result of general fund revenues in fiscal year 2014 only coming in at $45.716 million while the fund had projected expenditures of $47.919 million, resulting in Lau's request for a cut of $2.203 million.

Gosack first tackled the request by looking for revenue enhancements:
• Increasing franchise fees from 4% to 4.25%, resulting in additional revenue of $389,000;
• Increasing transit fares, resulting in additional revenue of $30,000; and
• Increasing alcohol-related permits and fees, resulting in revenue of $89,000.

In all, revenue enhancements would result in $508,000 in additional funding.

To tackle the remaining $1.695 million deficit in expenditures over revenue, Gosack worked with all city departments to reduce appropriations.

The biggest cuts to the general fund came to the police department, which showed expenses reduced by $667,200. The cuts included eliminating all animal control services and the boarding of animals at the Humane Society. Additionally, no calls for animal services will be answered by the police department.

The proposal released Friday (Nov. 22) also proposes eliminating two dispatchers, one records clerk and one police officer, which will result in longer response times for both emergency calls and records requests, Gosack said.

The department to show the next highest figure in reductions was the fire department, which could lose $332,000 in funding.

"(It) would result in a rolling brownout of fire station closures," Gosack wrote in a prepared memo to the Board of Directors. "It's estimated that one fire station would be closed 86% of the time, and that two fire stations would be closed 20% of the time. This lengthens response times for affected areas, increases property damage from fires, impacts firefighter safety, could harm the ISO fire insurance rating, and increases the potential for vandalism/damage to unoccupied fire stations and apparatus."

Also included in the proposed cuts is elimination of outside agency funding for non-profit organizations, which would save the city $162,000.

As a result of the cuts, the scenario to be formally presented to the Board of Directors at its Nov. 26 meeting would result in the elimination of 14 paid staff positions from the general fund and result in furloughs of three to five days in the building safety department, which "will delay response to contractor inspection requests and plan reviews for permits," Gosack wrote.

Asked whether he was intentionally presenting a budget was worse than it had to be, Gosack was direct in denying any such action.

"No. No. And that was one of the instructions to the staff when we began this was to make sure that we were not doing that because I knew it would be one of the criticisms."

Gosack also made clear that all of the recommendations for cuts in the scenario were prepared in a short amount of time, which meant the city's finance and administrative staffs were unable to present multiple scenarios as requested by Lau.

"It took me four days to put one scenario together. I don't have weeks to put multiple scenarios together," he said. "I've worked on nothing else but this since Tuesday morning (Nov. 19). And frankly, it's just putting the same marbles in a box and shaking them up and hoping they roll out differently, and they're not going to."

Lau said he had not yet seen the proposal and made clear his view that Gosack was purposefully trying to project the bleakest scenario possible in order to win public support for the original FY14 proposal.

"Gosh dang it, if you're not playing it out in the media, then what the hell are you doing? I can't express how frustrating this stuff is to me. This isn't how this works in the business world. We don't get emotionally involved and we take actions that are the best decision at the time."

Addressing Lau's concern that the city budget was not only balanced, but that it was on a "collision course" come FY2015 when deficits were projected to be over $10 million, Gosack said it was due to departments making anticipated requests for more funding than they would reasonably be approved for.

As an example, the police department requested $16.21 million for FY14 and has projected spending at $19.911 million in FY15, a 22.83% increase.

"What's caused that to happen is when the police department estimated their 2015 budget, they asked for a 25% increase in their budget, and that's not going to happen," Ray said firmly, adding that other departments had done the same and it was nothing different than in previous years. "Just like if you had gone back to the 2013 budget, you would have seen the '14 column and it was a lot higher than what the '14 budget ended up being."

Gosack said the explanation was no different than what he told Directors on Monday.

"It was explained, but it didn't fit the belief."

Lau was clear in stating that no matter Gosack's assertion, the budget presented to the Board was not balanced and the city continues on a collision course with financial disaster.

"All that detail is fine. I can't tell what is the best (thing to cut). But the policy should be that we have a balanced budget. I don't personally believe in the state of Arkansas' (view) of budgeting, which is allowing you to spend more than you bring in."

And even though Lau has pushed the issue, he knows he may not have the votes on the Board to implement a change is fiscal policy.

"It could be an exercise in futility if we don't get anything done, but it's not an exercise in futility to get the citizens informed of what's going on," he said. "If it gets that point out there and then it doesn't happen, so be it. That's what democracy is and that's why we have seven Board members, because we're not all going to have the same opinion."

The budget cut scenario released today is the only item on Nov. 26's study session agenda. The Board will meet at noon that day in the Fort Smith Public Library Community Room.

Gosack said he hopes for a vote on a budget by the Dec. 3 regular meeting of the Board.

The world’s largest retailer will have a changing of the guard early next year as CEO Mike Duke announces his retirement to be succeeded by 46-year-old Doug McMillon.

The anticipated CEO change has made headlines in recent months, and Wal-Mart’s Board of Directors made it official on Monday (Nov. 25). McMillon will be the CEO effective Feb. 1, 2014. (See the video of the announcement from Wal-Mart at the end of this story.)

A Jonesboro native and University of Arkansas graduate, McMillon will be the youngest to ascend to CEO since founder Sam Walton, who was 44 when the first Wal-Mart was built in Rogers. McMillon is the CEO of Walmart International. The company said it will announce McMillon’s successor by the end of the fiscal year. David Cheesewright, who oversees retail operations in Europe, Africa, Canada and the Middle East, is expected by many Wal-Mart watchers to succeed McMillon.

The company said Duke will retire Jan. 31 after serving five years in the CEO role. He will be 64 in December and has reigned over Wal-Mart during one of the retailer’s most fruitful periods for investors.

"This leadership change comes at a time of strength and growth at Walmart," Rob Walton, chairman of the Wal-Mart Board said in a statement. "The company has the right strategy to serve the changing customer around the world, and Doug has been actively involved in this process. The company has a strong management team to execute that strategy." 

The retail giant has flourished under Duke’s leadership approaching a half trillion dollars in total annual revenue, a record stock price set earlier this year growing market cap by $70 billion since he took the helm in February 2009.

Analysts and insiders have predicted Duke would retire after the end of this year, capping off 19 years of leadership at Wal-Mart and some 44 years in retail. As an engineer, some of Duke’s earlier contributions at Wal-Mart include the redesign of the logistics and merchandising systems.

Last year Duke earned a total of $20.7 million, up from $18.1 million a year earlier. The higher pay was a combination of a 4% rise in annual salary and a fatter bonus based on improving sales.

Duke received a base salary of $1.3 million and stock awards of $13.6 million. His performance-based cash bonus jumped to $4.4 million up from $2.9 million, according the filing.

Other compensation totaled $644,450, the perks included $101,947 for the use of the company aircraft.

"This is a great company and it has been an honor to help advance Sam Walton's vision of giving people around the world a better life," Duke said in the statement. "Our associates make it all possible and I've learned so much from them. No matter where I traveled, our associates continued to inspire me with their commitment to living our values, serving our customers and taking care of each other."

According to Wal-Mart, Duke will remain as board chairman and as chairman of the executive committee of the board. Duke will also stay on as an advisor to McMillon for one year.

MCMILLON’S TIME
“Many have believed for several years that Doug McMillon would one day assume the CEO role, I guess now his time,” said Alan Ellstrand, UA professor with expertise in corporate management and governance.

He said given McMillon’s age, he is set up to serve out what could be a decade in this role, like both Lee Scott and David Glass.

McMillon has served as CEO and president of Walmart International since 2009. During that period, he has overseen the operations of more than 6,100 stores and some 823,000 employees in 26 countries outside the U.S.

For the past 18 months, McMillon has dealt with ongoing investigations regarding alleged violations of the Foreign Corrupt Practices Act and also undertaken a complete overhaul of the retailers own internal controls against corruption in the future.

“That experience is huge for McMillon and he also has been schooled in the corporate culture having worked his way through the ranks and previously serving as CEO of Sam’s Club,” Ellstrand said.

During McMillon’s oversight, Walmart International has grown annual sales by 38.8% between fiscal years 2010 and 2013. Through half of fiscal 2014 annual sales rose 2.9% from the same period last year.

MCMILLON HISTORY
From 2006 to February 2009 McMillon served as CEO and president of Sam’s Club, an operating segment of Wal-Mart, with sales of more than $46 billion during his tenure.

Like Walton, McMillon majored in business and spent the early part of his career in merchandising. Analysts have said McMillon has the expertise and charisma to move the company forward while also being faithful to the culture he was schooled with under the tutelage of Walton and Glass.

In 1984, McMillon began his career with the company as a summer associate in a Walmart Distribution Center. In 1990, while pursuing his master degree, he rejoined the company in a Tulsa, Okla., Walmart store.

He serves on the board of directors of the U.S. China Business Council as well as Dean’s Advisory Board for the Walton College of Business at the UA. He is also a board member for Crystal Bridges Museum of American Art.

Last year McMillon earned $9.563 million, down from $10.96 million in the prior year, challenging global growth was cited for the decline in his performance income.

November is a bittersweet month for fourth generation family banker Jon Harrell, who is the president of First Bank’s Northwest Arkansas region and new chairman of Harrell Bancshares of Hampton, Ark.

It’s been three years this month since First Bank purchased two branches – Rogers and Siloam Springs – from Signature Bank of Arkansas and Harrell took over as market president.

Earlier this month First Bank announced the acquisition of First Community Bank of Crawford County, which will help grow the southern Arkansas bank’s footprint on the western side of the Natural State.

But the news of this recent bank purchase was immediately followed by family tragedy as the bank’s board chairman, 72-year-old Searcy Harrell and father to Jon, was killed when the plane he was piloting crashed in Washington County. The senior Harrell was on his way to see grandson Max Harrell’s football game in Rogers.

This untimely death meant Jon Harrell would assume the role of board chairman for Harrell Bancshares, one of the oldest family owned banks in the state dating back to 1907.

 “The family owns 60% of the growing bank, with the balance owned by a few outside investors,” Harrell said. “My dad had been chairman for 20 years, taking over from his dad. I am the fourth generation Harrell to hold the seat.”

Banking professor and analyst John Dominick has known the Harrell family for 40 years. He first met Jon Harrell’s grandfather in 1970 when Dominick was the Arkansas Bankers Chair for the University of Arkansas.

“Then a few years later Jon Harrell was one of my banking students at the University of Arkansas, who later worked for Signature Bank where I serve on the board. This family has a long history of being fine bankers. They’re just good people who have managed to grow a very successful bank throughout many years,” Dominick said.

CRAWFORD COUNTY
Harrell said the recent acquisitions in Crawford County are an exciting opportunity for the growth of the First Bank brand.

The deal is subject to regulatory approval from the Arkansas State Bank Department and the Federal Deposit Insurance Corporation. Upon approval, which is expected in first quarter 2014, First Community will merge into First Bank. First Community had total assets of $67 million as of Sept. 30, the most recent filing with the Federal Deposit Insurance Corp.

“We like the staff in these locations and plan to keep them in place once the deal is complete. Our hope is to get in there and help work out some problem loans so we can begin to growth the business, following the same plan we had in Northwest Arkansas during the past three years,” Harrell said.

First Community Bank of Crawford County has been under enforcement actions with regulators since July 2012 and came under heightened scrutiny for capital deficiencies in September of this year. The pending purchase from First Bank will infuse the Crawford County bank with the capital it needs to shake free from the two enforcement orders.

The bank has reported losses of $1.031 million through three quarters of this year. Since 2010, the bank has lost more than $6 million linked to a steep rise in non-performing loans. At the same time the bank curtailed lending and its capital equity was eroded to “unsafe” levels, according to the federal enforcement orders.

Terry Carson, president of First Community, will become market president for Crawford County.

“Our bankers are looking forward to the opportunity of providing expanded financial services to our customers in Crawford and surrounding counties with the support of First Bank’s ownership and management team,” Carson recently noted.

Dominick said Crawford County is a competitive banking market showing signs of growth given its location along Interstate 40.

“I think First Bank will do just fine in this market,” Dominick said.

NWA GROWTH
It’s been exactly three years since Harrell took charge of First Bank’s two branches in Northwest Arkansas. He said the bank has expanded their loan portfolio by 50%, and nearly all of that growth came from the two Benton County branches.

First Bank reported total loans of $187.55 million as of Sept. 30, up 10% so far this year. Going back to 2010, the bank has grown its loans from $113.7 million, an increase of 65% during the three year period.

“We have been pleased with our growth in Northwest Arkansas and plan to open a new loan production office in Fayetteville in January,” Harrell said.

The bank has pocketed $1.825 million in net profits through three quarters of 2013. Since expanding into Northwest Arkansas in the fall of 2010 the Hampton-based bank has earned $6.79 million in net profits.

During the same period, the bank has managed to maintain exemplary capital ratios demonstrating it core financial strength. Dominick said the loan demand in western Arkansas is more robust than in south Arkansas where First Bank is based and operates thee different institutions. He said the recent acquisition in Crawford County added to the Benton County branches gives the First Bank some diversity, a good idea for any bank.

BY THE NUMBERS
$320 million: The estimated assets of the pro forma First Bank
$30.4 million: The combined capital equity of First Bank and First Community Bank
7: The number of cities where First Bank will have locations: Hampton, Camden, Junction City, Rogers, Siloam Springs, Van Buren and Alma.

Retail analysts lined up Monday morning (Nov. 25) to assess what might be behind Wal-Mart’s decision to appoint Doug McMillon as its CEO and discuss their thoughts on what to expect next at the retail giant.

There had been two candidates – Walmart International CEO Doug McMillon and Walmart U.S. CEO Bill Simon – in the running, according to public opinion. The Walton family and the rest of Wal-Mart’s board chose culture and merchant tenure as the two trump cards in McMillon’s hand.

Carol Spieckerman, CEO of New Market Builders, said McMillon’s international experience should be a plus in his role as CEO. She gave two reasons for her assertion.

“First of all, Walmart is perhaps the only international retailer poised to fulfill the promise of “global e-commerce” from an omni-channel perspective. Most if its U.S.-based competitors are still trying to figure out how to integrate bricks and clicks – Walmart is doing so on a global level and accelerating its efforts through strategic acquisitions such as Yihaodian in China. Secondly, Walmart’s international business is a terrific learning lab for its multi-format and localization efforts, both of which are critical to its omni-channel strategy, as these stores serve as distribution hubs for the thousands of unique items that Walmart offers online,” Spieckerman explained.

However, Spieckerman said McMillon’s challenges are significant.

“The term ‘merchant’ still gets thrown around in retail these days but the implications and expectations have to expand,” she said. “That is perhaps Mr. McMillon’s biggest challenge and opportunity as retailers evolve from their store-centric past and into harnessing digital-first strategies.”

SIMON’S FATE
Leon Nicolas, retail insight exec with Kantar Retail, wonders what the implications will be for the U.S. business, with McMillon's move to the top.

"For instance, will Bill Simon remain at the helm of Walmart US? If not, does Duncan Mac Naughton assume the helm of US operations? There could be a domino effect there," Nicholas said.

He said word in the industry for sometime has been that Simon could have political aspirations in his future, given his previous public service work in Florida.

Courtney Reagan, a retail analyst with CNBC, also said lots of eyes are now on Simon’s  fate wondering if he will also make an exit.

Brian Sozzi, CEO of Belus Capital Advisors, believes Simon will stay on as CEO of Wal-Mart U.S. because he is connected to the brand, but said at some point he could get pushed out. Sozzi, through Twitter, also said of McMillon: “New Wal-Mart CEO has been groomed for this spot, has touched all parts of organization”

Sozzi also said the decision to go with McMillon suggests the company has concerns about the future of its U.S business and that international growth in the near term may slow.

THE NATURAL
Others said the naming of McMillon has been in the works for some time as he as been prepped for the role and is the perfect candidate to lead Wal-Mart through these challenging and evolutionary times for retailers.

"We're encouraged by this," said Joe Feldman, a senior retail analyst at Telsey Advisory Group. "I would bet that very little would be different and think that's part of why the stock's barely moving at this point. It's going to be a seamless transition."

Wal-Mart shares (NYSE: WMT) rose slightly on the news trading at $80.42 up 61 cents in normal volume in the morning session. The shares have traded between $67.37 and $80.57 during the past 52-week period.

David Schick, retail analyst with Stifel Nicolaus, said the new is merely confirmation of what many thought would happen.

“Perhaps it will be an extra happy holiday for the McMillon family at home,” he said.

Schick said the decision doesn’t necessarily indicate more focus on U.S. and less on international, but it does underscore what has already been happening at the company as the retailer works on increasing its small store development in the U.S. and matching that intensity with the omni-channel strategy.

“I don't know that it's a deemphasis of international but there's new talking points and directions for the domestic business as part of their emerging story,” Schick said.

Budd Bugatch, senior analyst with Raymond James & Associates, agreed that McMillon was the heir apparent. He said the decision is “vintage Wal-Mart and an example of the retailer in a very rational way going about their business.”

FCPA WOES
One issue that won’t change even with a CEO transition is the ongoing investigation into alleged violations by Wal-Mart officials of the Foreign Corrupt Practices Act, according to Jeffrey Sonnenfeld, an expert in corporate succession and Dean of Executive Programs at Yale University. 

On CNBC Monday he reminded the public that Duke and former CEO Lee Scott have been implicated as having knowledge of alleged FCPA violations. They could face some legal action when the investigation is finished. He said the board seats of Duke and Scott could be in jeopardy pending the findings of the FCPA investigation.

Sonnenfeld said McMillon is a clean image and calm influence for the company going forward and he is already a board member, a position that Simon does not have.

No one knows exactly what will happen to the city of Fort Smith's general fund budget once the Board of Directors meets for a third budget meeting on Tuesday (Nov. 26). But what is nearly certain is the expectation of at least some fireworks between the administration and the Board.

At issue is Director Keith Lau's request of City Administrator Ray Gosack to cut about $2.2 million from the city's budget. The amount is the difference between expenditures of $47.919 million and revenues of $45.716 million for the city, which Lau has said shows the city taking part in deficit spending.

Gosack has contended that the city is simply rolling over end of year balances into the following year's budget, meaning the city is not deficit spending.

Lau has held the position that the city must cut spending and have a higher end of year balance (now set at 7.5%, though Lau has said he would like it to be higher) in order to prevent a coming collision of lower revenues and spending levels in FY15 that appear to be at current rates or higher, resulting in more than $10 million in projected deficit spending.

He requested multiple scenarios for cutting expenses at the Nov. 18 budget study session. Gosack was able to only prepare one scenario to present to the Board given a week to develop the scenarios.

The proposed cuts were made public Friday (Nov. 22), which included increases in fees coupled with cuts to all city departments resulting in the proposed cut of 14 full-time staff positions from the general fund and furloughs in the building safety department.

In response to Gosack's presentation of the proposed cuts on Friday, Lau accused Gosack of using the media to advocate against the cuts.

"Gosh dang it, if you're not playing it out in the media, then what the hell are you doing? I can't express how frustrating this stuff is to me. This isn't how this works in the business world. We don't get emotionally involved and we take actions that are the best decision at the time."

‘PRETTY SEVERE’
Gosack would not respond directly to Lau's accusation Monday (Nov. 25), though he said the information made public should not have been a surprise to the Board.

"No to your first question," he wrote in an e-mail. "The information was made available to the board, media and public at the same time – when the meeting packet was posted on the (city's) web site."

Lau again reiterated his position by e-mail Monday after having a chance to review all of the proposed cuts, again saying he was not pleased with the scenario presented by Gosack. When asked where he would propose making cuts, Lau simply responded, "That's Ray's job."

"I want a general fund budget that reduces or eliminates the $2.2 (million) deficit between revenues and expenses and maintains a stable end of the year fund balance preferably the 15% mandated as good fiscal policy by the (Board)."

Director George Catsavis did not hold back on his view of the proposed budget cuts.

"I saw what (Gosack) proposed. I thought it was pretty severe," he said.

PARKS CUTS
Director Pam Weber also found the cuts to not be "very palatable." In order to move forward on the budget, she said it will take the Board making a series of decisions at the Tuesday study session.

"We are facing three options - stay at 7.5% (end of year balance), make necessary cuts to get to 15%, we can try Ray's cuts or do like we did a few years ago when we cut $750,000 from the budget and went line by line," she said. "I think first we've got to decide if we go (with) 7.5% or 15% or some point in between and how do we get there?"

Regardless of which decision is made, it appears that big changes could be in store for the budget though no one can articulate a clear vision of where the cuts would come from specifically. Catsavis pointed to various parks projects as over-extending the city's general fund.

"As Pam Weber (has previously) said, we're not going to be able to afford the projects we're building," he said. "It's going to catch up with us."

It is a point Weber made again Monday.

"I want to look at the Parks Department funding because I do think possibly that we are going to, by adding all of these new projects, we are going to put future pressure on the Parks Department budgets with maintenance issues and that type of thing."

"I do not want to see parks cut," said Director Philip Merry, though he conceded that Weber had a valid point which was worth exploring.

PUBLIC SAFETY CONCERN
Weber made clear that she wanted to do all she could to protect public safety funding for the police and fire departments, the two departments to experience the largest chunk of cuts in Gosack's Friday proposal.

"I think my thing is there are certain areas I'm uncomfortable with and I want to revisit those areas. I'm uncomfortable with the Police Department funding (cuts of over $600,000)."

Merry said he found Gosack's list of proposed cuts "unacceptable" and asked that he go back and find other areas for cuts. Should Gosack not present a set of budget cuts that he and other Board members finds acceptable, Merry said he was prepared to start the budget process from scratch.

"This is in my mind, but I'm not ready to make it my recommendation yet - (take) existing expense loads and priorities as it is right now and take the original budget as it is submitted and put it in a holding pattern and dig deep between now and February. And maybe we do need to have a (budget) year where we built it from scratch. Whenever you do a budget, you can have everyone tell you what they need and whether you agree with it."

BUDGET DEADLINE DEBATE
Weber said she was ready to look at the budget line by line to see where cuts were necessary, though protecting police and fire funding would be a challenge as the two combined with the Parks Department make up 70% of the general fund budget. But she said she'd be willing to go beyond Gosack's deadline of adopting a budget by Dec. 3.

"Technically we don't have to pass a budget until Feb. 1," she said.

Even though Weber is openly flirting with the idea of extending the budgeting process, Gosack said Friday (Nov. 22) it was imperative to get a budget passed as soon as possible.

"Well, I'm hopeful the Board will direct us to proceed with adoption of the budget in the Dec. 3 meeting. It sends a strong message when a governmental organization can adopt its budget in advance of the start of the fiscal year. It sends a strong message that we've got our financial plan in order, we know what we're going to do and we can adopt it before the fiscal year begins. And we've always adopted our budget the first meeting in December. I can't recall a year when we didn't adopt it in early December."

Weber said she would like to see Ray's desire for an adopted budget come to pass, but it will not be easy.

"The city's going to pass a budget. Is it more difficult this year? Yes, it's more difficult. But I hope we can pass a budget by Dec. 3 or in the month of December. I'm willing to do whatever the Board deems necessary to pass a budget in the month of December."

Merry was less certain of December adoption and had a message for Gosack.

"We can…go through each line item with a ruler in every department. If the law says we really don't have to have it until February, then go through it and remove every single speck of dust. Please, Ray, go back and make some recommended cuts and get back to us."

The Board will meet at noon Tuesday (Nov. 26) in the Fort Smith Public Library Community Room.

There will be no beer sales in the near future at Ben Geren Regional Park’s golf course.

The Sebastian County Quorum Court decided Monday (Nov. 25) to nix the idea that was first raised as a new source of revenue for the financially-troubled public course.

At issue for the court were two different issues – whether to abolish the Parks Advisory Board and whether to pursue annexation into the city of Fort Smith in order to legally be able to sell alcohol (Fort Smith, considered the northern half of the county, is wet while the remainder of Sebastian County is dry).

In discussing the purpose of the Parks Advisory Board, Justice of the Peace Danny Aldridge said the board of seven provided good information that the Quorum Court could take under consideration.

"They present a lot of good ideas, exchange a lot of information and I think it's to (Sebastian County Judge David Hudson's) interest and the parks superintendent's best interest to hear what these people say that are getting the pulse of the users of the park on a daily basis and have to deal with the soccer league and the softball league and the miniature golf," he said. "I think it would be a real shame to abolish this advisory board that does have some good input."

The Parks Advisory Board, which had no voting power, did not always present the best ideas but they were worth hearing out, according to Aldridge.

"At least they're putting ideas out there and trying to find a way to solve problems. And certainly seven heads or five heads is better than one in trying to get this resolved."

The problem the Parks Advisory Board was trying to resolve was a projected budget shortfall for the golf course, which The City Wire reported in September was on track to lose $150,000, the third straight year the golf course would not turn a profit for the county.

Justice of the Peace Bob Schwartz said he thought the board was not an assistance to the Quorum Court in any way.

"Danny, I know where you're coming from on that. But really, I've been on this Quorum Court for about 16 years and we've had advisory boards and look at how we're going down hill. I don't see where they're helping. Actually, they can't vote on nothing. We have to vote for it. So they're hanging out there on a wing and having their meetings - taking up time and expense and all that - I personally don't think we need it because it hasn't provided anything."

Even if the board has ideas, such as alcohol sales, the ideas have not been brought before the court by a member of the board.

"They never come to vote on them. They don't vote either. We have to approve them. So I've never seen someone on the Board come up here and talk to us about it. The judge hasn't let us know. ... It's just something we need to get rid of and it's something we can take care of through the Quorum Court."

Justice of the Peace Shawn Looper, who first brought up the issue of alcohol sales before the court after reading of the Park Advisory Board's suggestions in local media, suggested the Quorum Court direct Hudson to create a Parks Committee of three justices of the peace.

"As we continue to lose more and more money there, we need to get more and more involved. The judge is in control of that, he's administrator and all of that. But we need to be more and more involved in what's going on at the golf course. …Sometime we have to take responsibility and say, 'OK. This is what we've got to do.'"

While the Quorum Court did vote to abolish the Parks Advisory Board and abandon any plans to seek annexation for the golf course into the city of Fort Smith, essentially killing the plan to introduce alcohol sales as a revenue source, no action was taken by the court or Hudson on appointing a committee of three court members to serve on a parks committee.

In other business, the Quorum Court voted to approve several budgetary items which will allow the court to vote on a budget ordinance at its December meeting.

Among the items to be approved was a $75,918 reduction in expenditures at the golf course which will eliminate four full-time positions and create five seasonal part-time positions that do not carry benefit packages.

Additionally, the court approved 2% pay raises for elected department heads, such as the county judge, sheriff, treasurer and other executive-level elected officials. The 2% pay raises were also extended to all county workers, regardless of position. The only people to not receive a 2% pay raise next year will be the Quorum Court, which voted to eliminate funding for the raise. The only member of the court to vote for a pay raise was Justice of the Peace Tony Crockett.

The court also voted to approve appropriating $115,961 from the Treasurer's Commission fund in support of the county's Information Technology department.

That traditional Thanksgiving dinner will cost a little less year thanks to lower turkey and milk prices, according to the Arkansas Farm Bureau. But before the feast can be digested, retailers promise to deliver a huge helping of pre-Black Friday bargains.

The 28th Annual Farm Bureau survey indicates $42.63 will feed a family of 10 this year,  which is a 5.5% savings from a year ago.

The statewide average is based on responses volunteers who surveyed food prices at 11 grocery stores and supermarkets across the state. They were asked to report the “best in-store price” of 12 items included in the meal. They are allowed to take advantage of advertised specials, excluding discount coupons and purchase requirements.

“The fact the cost of the traditional Thanksgiving dinner is more than $2 lower than last year remains a testament to the efficiencies of our food production system,” said Randy Veach, Arkansas Farm Bureau President.

LOWER PRICES
He said the savings are somewhat remarkable given the drought many farmers have endured the past several years. Food prices in the Natural State came in 13% cheaper than the $49.04 average reported in the national survey.

“Lower prices on turkey and sweet potatoes account for much of the price difference from a year ago. Turkey supplies have increased this year due to lower feed prices, while sweet potatoes benefited from this year’s milder growing conditions. Both of these items were negatively impacted by the heat and drought in 2012,” said Travis Justice, chief economist for Arkansas Farm Bureau.

After rising sharply two years ago, the average price of a 16-pound young tom turkey this year fell $2.26 to $15.59 (98 cents per pound). Turkey prices are higher nationwide. The American Farm Bureau reported an average of $1.36 per pound.

Milk, sweet potatoes and cranberries each cost less this year saving consumers nearly $1 on their traditional Thanksgiving meal. Other items included in the meal that saw modest price declines were a package of brown and serve rolls, frozen green peas, a pound of carrots, and half pint of whipping cream. These price decreases were mitigated by higher costs for stuffing mix, canned pumpkin, celery and frozen pie shells.

The $42.63 state average cost this year, is the best value consumers have seen since 2010, reversing a two-year higher trend.

PRE-BLACK FRIDAY
Retailers like Wal-Mart, Best Buy, J.C. Penney, Target, Toys R Us and Macy’s have announced they are open Thanksgiving evening and pulling overnight sales marathons through Friday night.

Despite a few protests regarding the Turkey Day deals, Wal-Mart said it will kick off its Black Friday specials at 6 p.m. Thanksgiving Day – this is a two-hour advance versus last year. Meanwhile, Kmart is set to open at 6 a.m., and will stay open for a full 41 hours straight.

Wal-Mart has sweetened the deal for its employees who work this Thanksgiving, providing them with dinner at work and a 25% discount. Duncan Mac Naughton, Walmart’s U.S. chief merchandising and marketing officer most employees are “really excited” to work the holiday.

“We appreciate each of our associates and the time that they dedicate,” he said.

Wall Street analysts said this year is expected to brutal for retailers who are each vying for more of the consumer wallet.

Wal-Mart has aggressively marketed toward consumers this year with price matching guarantees backed by an broad advertising campaign, said CNBC Courtney Reagan.

“I won’t be surprised if Wal-Mart picks up market share this year, because cash strapped consumers need and want those great deals Wal-Mart is offering online and in stores.” Reagan said.

REMAIN CLOSED
That said, other retailers like Costco, Sam’s Club, Dillard’s, Apple, Cabela’s and Home Depot has stood firm on their decision to remain closed Thanksgiving Day.

Paul Latham, Costco’s vice president for membership and marketing, told the Huffington Post that the warehouse club wants to give its employees time with their families, as they work especially hard throughout the holiday season and they deserve the day off.

Charles Redfield, vice president of merchandise for Sam’s Club, said the Wal-Mart subsidiary will close the clubs on Thanksgiving Day, but the Sam’s Club Black Friday Savings Event will begin at 7 a.m. on Friday, Nov. 29.

Dillard's also will close all 299 stores on Thanksgiving Day "to honor our associates with their family time," said spokeswoman Julie Johnson Bull.

HIGH STAKES

Between Black Friday and Christmas retailers will make between 30% to 40% of their total annual sales and with six less shopping days this year retailers across the board have already started giving Black Friday deals.


An estimated 33 million people, or 23% of those surveyed by the retail federation, said Thanksgiving will find them in stores at some point. Nearly 70% or an estimated 97 million consumers plan to be out shopping on Black Friday.

"It is evident that Americans are in the holiday spirit, despite their cautious approach to spending," said Pam Goodfellow, director of Consumer Insights at Prosper Insights & Analytics, the firm that polled more than 6,000 consumers for the National Retail Federation Survey.

Shoppers venturing out on the evening of Thanksgiving (Nov. 28) and Black Friday (Nov. 29) may want to avoid the intersection of Rogers Avenue and Interstate 540 in Fort Smith.

The reason, as it has been since January, is the ongoing construction on the interstate, according to District 4 Engineer Chad Adams of the Arkansas State Highway and Transportation Department. The construction has created bottlenecks and slowed traffic during slow times. Traffic could come to a halt on sections of the road that lead to the more popular shopping locations in Fort Smith.

Adams said his department was unable to change traffic flows or patterns either on I-540 or on Rogers Avenue due to the construction project.

"There's no method in place to deal with it," he said of the potential traffic snarls. "The configuration is the same - two lanes in either direction on Rogers Avenue."

And while there are two lanes open in either direction on I-540, traffic backups have already started with some motorists having to sit through several traffic light rotations before being able to move down the avenue.

Asked whether the Fort Smith Police Department was planning any special preparation for the increase in holiday shopping traffic along the city's major retail corridor, Sgt. Daniel Grubbs said the Super Bowl of shopping would not be different than any other day.

"We treat it as a normal holiday," he said. "We've kind of seen a slide in some of those major issues we have to face. But it's a part of life. We understand it will be an issue. (We asked people to) just slow down, be a defensive driver and take basic safety tips. As far as anything particular or specific, special assignments, we have nothing planned at this point."

Sgt. Randall Dias of the Arkansas State Police Troop H Headquarters in Fort Smith said his department was also not making any special preparations in anticipation Black Friday.

"There are limited things we can do except prepare to handle the inevitable crashes that will occur."

He said while there is some increase in the number of incidents that occur on Black Friday, it has not typically been a major issue. But that was before I-540 was reduced to one lane in both directions earlier this year.

"Everybody's got to go to Best Buy and get their laptops at 4 a.m. So we know there will be traffic to deal with," Dias said. "If you get one crash, what is going to be different this year is the construction. If you get one crash, it'll bottleneck everything up for a while."

Dias added that multi-car accidents were more likely to occur in the construction zone.

"Of course, we're talking about rear end collisions," he said. "Sometimes it's the second or third car back that pushes them into each other. Also, what happens is if there is one crash like that maybe a half-mile back, there could be another crash because of the resulting backup."

Grubbs urged the public to not worry about any problems that could arise.

"To pay an officer to sit at the Rogers and I-540 interchange to deal with traffic control – at this point we don't have anything planned. But we are problem solvers. We'll deal with (problems) as we need to."

Asked what drivers should do in preparation to deal with the Black Friday traffic, Adams said he was at a loss.

"It's going to be your normal Black Friday traffic, but it may be down some. You've got no school, no work. So traffic may be a little bit down compared to your normal rush hour everyday traffic. But I don't really know what to recommend on that one."

What could be the final battle over the proposed FY14 budget is to take place Dec. 3 following a decision by the Fort Smith Board of Directors to bring the original budget presented earlier in November.

The decision to vote on the original budget versus a scenario presented by City Administrator Ray Gosack on Friday (Nov. 22) would eliminate the possibility of major budget cuts or layoffs the city would have faced under Gosack's scenario.

City Director Keith Lau requested scenarios to eliminate $2.2 million from the city's general fund budget after the original budget proposal showed the city spending $47.919 million from next year's general fund while the city will only show revenues of $45.716 million. Part of the difference includes spending money from the previous year's ending balance, usually set at 7.5%.

The resulting scenario that was ultimately rejected Tuesday (Nov. 26) included revenue increases of $508,000 and reductions in spending of $1.695 million, which included eliminating 14 personnel positions and some employee furloughs.

Lau also expressed concern about a projected budget shortfall of more than $10 million

Speaking about the proposal, Lau said he was not happy with the proposals and wanted to have a better estimate of spending each year instead of having unspent funds rolled over into the next year's budget which he said shows the city is still spending more than it will bring in.

Gosack said he and Finance Director Kara Bushkuhl had intentionally estimated revenues conservatively, which consequently result in higher year-end balances.

"If we make an estimate of what we think those (departments) are going to underspend - if we blow that estimate, then we're going to have to lay people off because we will not have the appropriation to get to the end of the year."

Lau was not satisfied and went so far as to call Gosack's scenario "unrealistic," adding that he was "asking (Gosack) to put together realistic options that do include cutting services or increasing revenues or cost savings and expenses but laid out to us where we can see it and this Board can make that decision as to what we're going to do."

"What's unrealistic about it? I've got a lot of department heads sitting out here and I think they'll want to hear what's unrealistic," Gosack shot back. "Is it the revenue increases? Or is the types of spending cuts we've made? Or is it something else we've missed?"

"I don't think it's anything in particular. I think it's the way that it was presented, to be honest with you. And I think there's other ways to cut and I think you can get more creative than just cutting right to the bone and lopping everything off. That's not what I intended to get out of that when I asked for options. If I remember right, I asked for options, not option."

Gosack said he did present other options in the Board packet made available late Friday, which included his recommended scenario and additional cuts or revenue increases the Board could consider.

Mayor Sandy Sanders said he viewed the discussion over the last several weeks as a good basis for giving the city direction with regard to the FY15 budgeting process. It was an assertion Director Mike Lorenz agreed with.

"We need to make a direction of what to do in 2015 and if they (the city's finance and administrative staffs) can look at in early 2014 any cuts to make during the year," he said. "But to go back and (gut) something they've already done is a waste of man hours and labor is a problem already."

With the Board moving the budget to a full vote, Gosack said it was a sign to the community that the city's financial house was in order.

"I'm happy the Board's taken a direction to adopt a budget and give us a financial plan for 2014. I think it's important for the community and the city organization that we have a financial plan adopted in December before our fiscal year begins."

Lau said he did not regret the actions that did nothing to stop the upcoming vote on Dec. 3.

"I have said my peace," he said. "I have made my stand and it doesn't look like I'm getting any traction. But if I get them to look at expenses because of this shortfall in the future, I guess I've accomplished something."

Increases were posted for sales tax collections in Fort Smith and the city’s portion of the countywide sales tax, but the amounts collected year-to-date remain below budget estimates.

Each of the city’s 1% sales taxes (1% for streets and 1% for water and sewer projects) collected $1.605 million in the October report, up 0.69% from the same period in 2012.

The collections in the October report were 2.36% below budget estimates. (Because the state of Arkansas has a two-month delay in reporting collections back to the cities, the city of Fort Smith — for budgeting purposes — has historically reflected the collections on a one-month delay. Which is to say, the tax collections remitted to cities in November are from taxes collected in September and transferred by merchants to the state in October.)

For the first 10 reporting months of 2013, each of the 1% sales taxes generated $16.363 million, down 1.02% compared to $16.532 million in the same period of 2012.

The year-to-date collections are also 3.92% below budget estimates.

Collections in 2012 of the two 1% taxes totaled $39.21 million, slightly ahead of the $38.683 million during 2011. The 2011 collections were 3.9% above 2010 collections.

Fort Smith’s share of the county 1% sales tax in the October report is $1.248 million, up 0.39% compared to October 2012. The collection was down 2.12% compared to the revenue estimate.

For the first 10 months of 2013, the countywide tax has generated $12.927 million for Fort Smith, up 0.34% compared to 2012 and down 2.12% compared to budget forecasts. The dip in collections compared to budget estimates has resulted in city officials seeking 4% budget cuts from all departments.

The countywide tax generated $15.279 million in 2012, just ahead of the $15.15 million in 2011, but lower than the peak collection of $16.61 million in 2008.

The countywide tax collection is critical because the revenue is a little more than 40% of the city’s general budget of roughly $42 million. A majority of the general fund budget general supports fire, police and other critical city functions.

AREA COLLECTIONS
Sales tax collections in Crawford County for the first nine months of 2013 total $4.718 million, slightly ahead of  the $4.695 million in the same period of 2012.

Collections in Van Buren for the first nine months of 2013 are $$5.372 million, well ahead of the $2.645 million in the same period of 2012. The city approved a 1% sales increase in 2012 for infrastructure improvements and emergency services upgrades.

Collections in the Sebastian County city of Greenwood totaled $1.494 million, better than the $1.468 million during the same period of 2012.

PREVIOUS ANNUAL COLLECTION INFO (Fort Smith)
2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2012: $39.210 million
2011: $38.683 million
2010: $37.229 million
2009: $37.554 million
2008: $41.226 million
2007: $37.858 million
2006: $36.840 million

Fort Smith portion of 1% countywide sales tax
2012: $15.279 million
2011: $15.15 million
2010: $14.89 million
2009: $15.04 million
2008: $16.61 million
2007: $15.15 million
2006: $14.71 million

A vote taken Monday night (Nov. 25) by the Sebastian County Quorum Court could leave one justice of the peace in violation of Arkansas law.

Justice of the Peace Jim Medley voted for a budget line item during the Monday meeting that would grant more than $170,000 in funding to non-profit organizations, including $24,000 to the Area Agency on Aging of Western Arkansas, where Medley services as president and CEO.

The item was voted on twice Monday evening, first failing and later passing once the Quorum Court was given some clarity regarding what they were voting for.

During the first vote, Medley made no mention of his association with the agency, which he voted to approve funding for as part of the non-profit line item. Prior to Medley's second yes vote, Justice of the Peace Linda Murry asked whether Medley should recuse himself due to his associations with the Area Agency on Aging and the Quorum Court.

"Is it a conflict of interest for Mr. Medley to vote on (the appropriation)," she asked.

"Thank you, Linda, for noting that," Medley said. "I think that if I didn't vote it would be a no. I think the law simply requires me to make you all aware of the potential conflict. I've done that on all of my written forms."

Sebastian County Prosecuting Attorney Dan Shue, who serves as the court's attorney and parliamentarian, said Tuesday (Nov. 26) that while he would have preferred Medley have abstained from the vote, he did not think it ran afoul of the law.

"Just on Roberts Rules of Order (the parliamentary rulebook used by the county), you should abstain. But it's not an actionable, ethical violation."

Shue did note that an Arkansas Attorney General’s opinion is “pretty much on point” with what should have happened during the vote. According to Shue, the opinion reads: “It would be appropriate for the quorum court member to abstain from participating in such decisions.”

Shue’s opinion that Medley’s vote is not a violation of the law differs from that of attorney Matt Campbell of Pinnacle Law Firm in Little Rock, who told The City Wire that he thought Medley was breaking the law.

"I can't see how this would be acceptable. When it comes to the rules of conduct for county officers, Arkansas Code Annotated 14-14-1202(c)(1)(A)(i) is pretty explicit that no officer of county government shall: 'Be interested, either directly or indirectly, in any contract or transaction made, authorized, or entered into on behalf of the county or an entity created by the county, or accept or receive any property, money, or other valuable thing for his or her use or benefit on account of, connected with, or growing out of any contract or transaction of a county.'"

Campbell also said it was clear to him that Medley was "interested, either directly or indirectly," and added "that the appropriation violated that rule of conduct. And that's even more true if he refused to recuse and, instead, actively voted to send money to the Agency."

Violation of the law is punishable by a maximum fine of $1,000 and removal from office, he said, adding that either the county prosecutor or a citizen of Sebastian County could file a lawsuit against Medley in circuit court for violation of the rules of conduct according to that statute.

Reached for comment Tuesday at the Area Agency on Aging, Medley said he would consult with an attorney, though he felt that he had done nothing wrong.

"My response is that since you brought this to my attention, I'll be glad to consult with an attorney and get their opinion."

He again reiterated that he had already made the Quorum Court aware of his position.

Asked whether any of the funds from the county could be used to pay his salary at the Area Agency, Medley said no.

"I don't gain in any way. That money goes to services to people in south Sebastian County for things like wheelchair ramps and things of that (nature)."

A request made on Sept. 24 and signed by Medley to County Judge David Hudson and the Quorum Court detailed what Medley said the money would be used for, though no supporting documentation was provided with the request to prove that funds allocated in previous years were used in the same way.

"We will not use it for anyone that can have services paid for by the State or Federal funds," he wrote in the document requesting the funds. "The type of services we will provide are assistance with personal care, homemaking, minor home repair, dentures, eye glasses, medication assistance, wheel chair ramps, shower chairs, etc."

Medley refused to answer questions about his salary or funding for his salary, which the Area Agency reported to the IRS last year to be $324,496, other than to say that no portion of the $24,000 would be used to pay his salary or benefits.

"I'm saying it's inappropriate for you to ask about my salary much as it would be if you asked how much I paid for a car. I don't ask people their salary."

Medley said he believed Murry brought up his association due to his unsuccessful attempts to take away funding for health insurance for families of Quorum Court members.

"Linda Murry brought it up because she's upset about (proposing that) JPs not (receive) health insurance," he said. "I was the one who brought up the motion. When a person does their job diligently, obviously you'll pick up some political opposition."

Murry said Tuesday that she was not attempting to settle political scores, saying that "it just seemed odd and I expected him to abstain from voting on that."

"He shouldn't be taking it personally. Actually, the thing on the health care for the family doesn't affect me. I don't take family coverage. So what he did on health care didn't have an affect on me."

Should Medley's legal counsel advise him that he is in violation of the law, he said he would work to make it right.

From a weather perspective, it may soon get nasty in Northwest Arkansas and the Fort Smith area – with possible “utility interruptions” part of a National Weather Service warning.

AccuWeather.com on Monday (Dec. 2) reported that a large swath of ice and a wintry mix will hit later this week and will likely slow travel and cut power from parts of Texas to Pennsylvania.



“As dangerous cold sweeps southward and eastward over the Plains and Midwest in the wake of a North Central states snowstorm, it will set up a weather pattern favoring a narrow zone of freezing rain, sleet and some snow late this week,” noted the AccuWeather report. “The icy mix will spread from part of northern Texas Thursday to central Kentucky and southern Ohio Thursday night to central Pennsylvania Friday.

In addition to cities in Northwest Arkansas and the Fort Smith area, cities facing travel and power problem include Dallas; Oklahoma City; Little Rock, Louisville, Ky., and Cincinnati.

“There is the potential for ice and a wintry mix to last more than a few hours. In some cases, a buildup of ice may span two days, which could result in sporadic power outages,” according to AccuWeather.

The National Weather Service out of Tulsa on Monday also issued a weather warning.

“Very cold air will combine with north winds to produce wind chill values below zero in parts of northeastern Oklahoma and Northwestern Arkansas on Friday and Saturday,” noted the NWS alert. “Some utility interruptions are quite possible where the heavier freezing rain occurs.”

The NWS warning came with advice to get ready.

“While the potential for this wintry weather is still several days away, it would be a good idea to take advantage of the milder weather ... and make initial preparations for the turn in the weather.”

Fueling the possible snow and ice storm is a storm system producing flooding rains and heavy snow in the Pacific Northwest, according to AccuWeather. The story “will eject into the Plains early this week allowing arctic air to spill southward from Canada.”

Year-to-date tax collections in Arkansas continue to trend higher, but an unusual corporate income tax swing helped push collections in the November report below budget estimates.

Year-to-date gross revenue (July 2013-Nov. 2013) totaled $2.389 billion, 3.5% above the same period last year and above forecast by 1.1%, according to the report issued Tuesday (Dec. 3) by the Arkansas Department of Finance and Administration.

Individual income taxes for the fiscal year totaled $1.115 billion, up 2.5% from last year and 0.2% above the budget forecast. Year-to-date sales and use tax collections were $914.3 million, up 4.1% above last year and just 0.2% above forecast. Income taxes and the sales and use tax collections are the two primary sources of state revenue.

The corporate income tax collections for the first five reporting months of the fiscal year totaled $139.9 million, up 8.7% compared to last year and 7.1% above forecast.

NOVEMBER NUMBERS
November gross revenue was $430.2 million, up 0.6% above last year and 1.9% below forecast.

“Results in November were impacted by swings in Corporate Income tax, a volatile component of general revenue. Gross collections in Corporate Income tax were $4.2 million below forecast and -41.6 percent below year ago levels, while Corporate Refunds were $2.6 million above expectations and 36.6 percent above year ago levels. These monthly results differed dramatically from year-to-date results for the same categories,” John Shelnutt, head of the Department of Finance and Administration’s Economic (DFA) Analysis & Tax Research division, said in the report. “Timing effects in collections compared to year ago activity and the Thanksgiving holiday were anticipated as shown in Sales Tax growth compared to last year.”

Individual income tax collections during November totaled $197.7 million, up 2.7% compared to November 2012 and below forecast by 1.8%. Sales and use tax collections during the month totaled $175.2 million, up 1.2% from last year and 0.5% below the forecast.

A trend of relatively minor growth in sales and use tax collections is evident. The collections, considered a barometer of consumer confidence, ended fiscal year 2013 on a down note. Collections in the segment for the fiscal year totaled $2.124 billion, up just 1.1% compared to the 2012 period, and 1.4% below forecast.

The DFA reported Monday the projections for 2014 and 2015 fiscal year revenue.

Gross general revenues are estimated at $6.203 billion for the current fiscal year (July 1, 2013-June 30, 2014), down about 0.2% from fiscal 2013 collections, according to a report issued Monday (Dec. 2) by Richard Weiss, director of the Arkansas Department of Finance and Administration.

The revenue forecast for fiscal year 2015 is $6.333 billion, up just 2.1% above the 2014 estimate. The 2015 estimate includes an anticipated reduction of $85.2 million from tax cuts approved in the 2013 Legislative Session.

OTHER TAX COLLECTIONS
Alcoholic beverage
July 2013 - Nov. 2013: $21.7 million
July 2012 - Nov. 2012: $20.7 million

Games of skill
July 2013 - Nov. 2013: $15.8 million
July 2012 - Nov. 2012: $13.5 million

Tobacco
July 2013 - Nov. 2013: $94.3 million
July 2012 - Nov. 2012: $97.2 million

Insurance
July 2013 - Nov. 2013: $43.5 million
July 2012 - Nov. 2012: $41.6 million

COLLECTIONS HISTORY
Tax collections during fiscal year 2013 (July 2012-June 2013) totaled $6.214 billion, up 4.9% above the previous fiscal year and up 2.5% compared to budget estimates. One result of the gains was a budget surplus of $299.5 million.

Fiscal year 2013 marked the third consecutive year of year-over-year gains. Arkansas tax collections reversed a negative two-year slide in the 2011 fiscal year, with collections up 4.5% in the July 2010-June 2011 period.

State tax collections for fiscal year 2011 totaled $5.673 billion, up 4.5% above the $5.43 billion in the 2010 period.

The biggest declines in the 2009 and 2010 fiscal years were with individual income tax collections and sales and use tax collections.