There has been a lot of buzz about the new Arkansas Regional Innovation Hub set to launch later this year in North Little Rock. The public-private partnership is a model that its executive director said was not specific to just central Arkansas, but could work in other regions of the state, including Fort Smith.

Warwick Sabin, a Little Rock state representative who became executive director of the non-profit in September 2013, said the innovation hub is about helping entrepreneurs be successful at home in Arkansas by giving them the tools necessary to achieve success.

"The Arkansas Regional Innovation Hub is designed to promote more entrepreneurship and startup business development in Arkansas," he said. "And it does that by providing resources, equipment, tools, access to programming and networking opportunities and really trying to connect and align all of these entities that are doing good work in this area in our state."

It does that through four key elements — the Art Connection, the Launch Pad, the Silver Mine and the STEAM Lab. ARHub.org explains each element:
• The Art Connection: "The IN place for North Little Rock teens, with studios where they can put their artistic abilities into profit mode."
• The Launch Pad: "The IN place for makers, tinkerers, inventors, innovators and even small and big companies looking for a cool place try out ideas and make new things."
• The Silver Mine: "The IN place for incubation, acceleration and co-working, and for finding all the support you need to morph great ideas into profitable business ventures."
• The STEAM Lab: "This super hot place IN the middle of the Argenta Innovation Center (the ARHI's headquarters in North Little Rock), incorporates elements of science, technology, engineering, arts and mathematics. It's perfect for training, networking and hobnobbing with other makers, doers, engineers and artists."

The ARIH is similar to other business incubators across the nation, and according to Sabin — an Arkansas alum who earned his masters degree at Oxford University before returning to the Natural State — the goal is to retain Arkansas talent as well as attract new talent to the state.

"And one of the biggest problems we've had over the years is keeping our most talented people in this state because either they feel like they don't have access to educational opportunities, or they feel like they don't have access to capital and they have to go outside the state to get the investment capital they need to make their idea a reality,” Sabin explained. “But if we can create an environment here where through education and access to resources, people are developing their native talents and then we're able to retain them because we're giving them the opportunity to create a business or work with a company that does what they're interested in, when they're successful, that will serve to attract talent and that virtuous cycle continues."

Overall, Sabin said if the ARIH is successful with individuals who may join the non-profit and make use of its resources, it will do more than benefit ARIH and participating entrepreneurs, it will be a boon to the Arkansas economy.

‘WHAT PROGRESSIVE CITIES DO’
And it is that long-term benefit to the economy that has Fort Smith business and community leaders interested in seeing something similar spring up in the western Arkansas region.

Steve Clark, founder and CEO of Fort Smith-based Propak Logistics, said cities like Fort Smith cannot ignore what other cities are doing to attract business, including the development of business incubators such as the Innovation Hub.

"I think I'd approach it from the angle that cities that want to refer to themselves as progressive, they do what progressive cities do," he said, adding that the challenge is getting the right group to back such an idea locally.

"The difficulty is where does something like this fit? Is it the Chamber? I can argue it doesn't fit there. Their job is to recruit existing businesses to Fort Smith. Does it fit at the university? Not really. They find themselves in the theoretical and not the practical."

Sabin said the ARIH was its own entity, but had also formed partnerships with a variety of groups, namely Arkansas Manufacturing Solutions. Additional funding and support has come from the Wingate Foundation, Delta Regional Authority, the Arkansas Economic Development Commission, as well as the North Little Rock Economic Development Commission. He also said the key is unity instead of division.

"Even if you're a community that doesn't have a lot of resources, you can accomplish things by forging partnerships across mutual interests that exist among organizations, municipalities, counties and states. I think there's an imperative to do that because we need to make the most of what we have. Whatever I think of Arkansas, I think that we're a state of 3 million people, which is smaller than most metropolitan areas around the country. And we cannot afford to divide ourselves up on the basis of geography or any other distinctions that may exist. We work a lot better when we take advantage of all the resources that exist within the state, when we hold hands and work together."

POTENTIAL OBSTACLES
While Fort Smith businessmen are interested in trying to get something like the ARIH launched in the region, they know it will not be an easy task. The memory of the region's last effort at a similar effort at the University of Arkansas at Fort Smith still lingers.

Dr. Paul Beran, chancellor of UAFS, acknowledged the lack of success with the university's now-shuttered Innovation and Entrepreneurship Center and said efforts in the last few years to re-launch the IEC have been unsuccessful.

"The vision was that somehow the IEC was going to be a generator of ideas and thus (bring investment in) new small business thus jobs, but it never really panned out that way. Frankly, as far as the university's piece in this, I did a very extensive community-wide conversation about this two years ago in which we talked about the IEC and what it would take to recreate the IEC in a more meaningful way for the community. And frankly, the conversation stopped and there has never been any more mention of it."

He said success for a business incubator depended on more than one entity to house such a facility and to fund it, as well, and he said so far, no one has stepped up to the plate.

"Always follow the money and you will find why something's happening or why it's not happening," he said.

LEADERSHIP NEEDED
Tim Allen, president and CEO of the Fort Smith Regional Chamber of Commerce, spoke along the same lines and said to his knowledge, there's been no meaningful action to move forward with any proposals or plans for any sort of business incubator in the region.

"We do need to pursue starting up some sort of innovation system and I've heard of some different meetings about getting it going, but I haven't seen anyone willing to step up and get it going,” Allen said.

Clark said while that may be true at this point, it was not due to a lack of will.

"Everything rises and falls on leadership. Typically these are a cooperative arrangement between public and private (entities). I know there is interest with private. I can't speak for (the public sector). ... I think there's definite interest. Do I think that the business community will step up? I absolutely believe the business community will step up."

As for timing, Beran — who said the university would welcome efforts to create a business incubator to the area — cautioned individuals expecting a group of leaders to step up tomorrow to create an organization out of nothing, calling it a "pollyannish approach" to business innovation.

That said, Allen "would like to think that it would be sooner rather than later."

"However, I'm not quite sure I know the answer to the question. Maybe we'll get to the point where we're not willing to settle for the status quo. Maybe we'll realize that we're losing some of our young and creative minds and maybe when we get to that point, people will say it's time to do it and do it now. I'm not sure if that's in the next year or two or five. It's happening all around us and I think we should explore the opportunity more and have some serious talks about it."

Clark said whatever discussions there are about how to launch in the Fort Smith area a business incubator similar to the Innovation Hub, the region does not have the time to wait.

"I think in the end, the message is (that) we can't be disappointed when we don't get what we want if we're not doing the things necessary to be heard. We need to emphasize that Fort Smith is willing to invest in the infrastructure for a healthy entrepreneur ecosystem. If we want to be seen as relevant in terms of talent, (attracting) and keeping our best and brightest, I think we have to find our position on this field as it relates to entrepreneurship, not just saying we're going to help for the sake of entrepreneurship, but a definitive plan and definition of success."

The filing period for positions on the Fort Smith Board of Directors closed Thursday (May 29) at noon with only one race contested.

City Director/Vice Mayor Kevin Settle and Mayor Sandy Sanders had no opponents in their re-election bids, and former Rep. Tracy Pennartz will not have a challenger in her run for the position five at-large city director position. The position five seat opened up when City Director Pam Weber announced she would not seek re-election after one term on the Board.

The only opposed race is between former City Director Don Hutchings and Parks Commissioner Sherry Toliver, who both are running to replace retiring City Director Philip Merry. Merry will hold the position seven at-large seat until Dec. 31.

Reached for comment Thursday, Sanders said he was excited to know he will be serving another four years in the mayor's office.

"It feels good, naturally, to have the opportunity to serve another four years and there are a lot of things I think we need to focus on with the remainder of this year and the next four years."

The mayor said his focus this year and in his next term will continue to be economic development and making Fort Smith a place that is attractive for jobs and for students graduating from college and looking to start their careers.

"I think we need to focus on things more attractive to that younger, attractive population," he said. "We need to continue to work with the governor and the Chamber (of Commerce), the AEDC (Arkansas Economic Development Commission) on projects."

Another focus in the next term will be preparations for the city's 200th anniversary at the end of 2017, he said.

Pennartz said she looks forward to getting back to elected office after being term limited out of the state House of Representatives and losing a race for state Senate in 2012.

"I'm looking forward to another opportunity to be of public service. I have a strong belief in public service and of course (I am) looking to the future of Fort Smith, what we can do policy-wise that will propel us into these next years. I'm looking forward to working on whatever issues come before the Board."

As the year finishes out through the next seven months, Pennartz said she would focus on diving into the issues as she begins to be an observer at the Board meetings, study sessions and other activities involving the Board. Pennartz said while there is only one contested race, she did not take that as a lack of engagement on the part of Fort Smith's citizenry.

"I guess from one perspective that's a complement to my prior public service and people's feeling that I would do a good job for the city and them as a director."

Sanders said while there may only be one competitive race, the city's residents are still engaged and participating in shaping the future of the city.

"I think we have a lot of people who at some point in their life may run for the Board, but they have young families and say to themselves, 'OK, do I want to go to a Board meeting or watch my son play baseball or my daughter play volleyball?' People may be interested, but the timing may not be right now," he said.

He said people often find themselves serving on other city boards or commissions that are less of a time commitment before choosing to run for the Board later on.

In the race to replace Merry, Sanders declined to make endorsements and said instead that he would be ready to work with whoever was victorious on November 4.

"I know them both, I know them well. There is no endorsement because I'll need to work with all seven members of the Board."

Settle did not respond to comment for this story.

Fort Smith-based ArcBest Corp. – formerly known as Arkansas Best Corp. – is expanding its corporate presence in the region with a $30 million plan that will see the construction of a new office building and data center at Chaffee Crossing and the addition of an estimated 975 corporate jobs by 2021.

Officials with the transportation holding company and state and local officials gathered Friday (May 30) afternoon at the Fort Smith Convention Center to make the announcement. Executives with ArcBest said holding company corporate offices and ABF Logistics employees will locate in a new office building planned for construction at Chaffee Crossing near the scenic area of the McClure Amphitheater.

“We need room to expand,” ArcBest President and CEO Judy McReynolds told the large crowd gathered at the Fort Smith Convention Center for the announcement.

Walter Echols, a vice president at ArcBest and head of real estate for the company, said the new corporate building could be between 120,000-square-feet and 150,000-square-feet. Designs are in early stages, and he is not sure if the structure will be a basement and three floors or a basement and four floors. Part of the design goal is to build a structure that blends in with the location at Chaffee Crossing near the scenic area of the McClure Amphitheater.

“We really want to tie it in aesthetically to the ridge line there,” Echols explained.

Construction on the new office complex is set to begin this fall.

The company will retain its high-profile, 195,000-square-feet corporate headquarter building on Old Greenwood Road in Fort Smith. That facility, which opened in early 1995, is expected to provide space for the consolidation of ABF Freight and ArcBest Technologies offices. Moving corporate and logistics jobs out of the existing corporate headquarters will allow room for expansion at ABF Freight and ArcBest.

“That anticipated growth, combined with space enabled by the new facility, supports the creation of 975 new jobs in Fort Smith through 2021,” noted the ArcBest statement.

There are now between 1,300 and 1,400 ArcBest corporate jobs in the Fort Smith area. 

‘BETTER THAN MIDDLE-CLASS JOBS’
Grant Tennille, executive director of the Arkansas Economic Development Commission, attended the announcement event.

“Two days, two great announcements in Fort Smith,” Tennille said in his opening statement, referring to the news on Thursday (May 28) that Georgia-Pacific is investing $40 million in its Fort Smith Dixie plant.

Tennille said the investments by ArcBest and Georgia-Pacific show a faith in the people and institutions of the region, and are proof that the regional economy “can come back from tough times.” He said the regional economy will benefit greatly from the “better than middle-class jobs” – in terms of salary and benefits – that will come from the ArcBest expansion.

“The best way to grow the economy is to partner with your existing companies,” Tennille said, adding that he believes the region has the workforce and the educational institutions to provide the high-skill jobs needed to be competitive in job recruitment and retention.

Tennille also confirmed that ArcBest consolidating its “intensive” data center operations in Fort Smith sends a message to the corporate world that the ever-changing data-driven environment can find a home in Arkansas.

“We’re supporting some of the most data-intensive environments in Arkansas ... that’s a fantastic message for the state,” Tennille said.

With similar “big data” operations with Bentonville-based Wal-Mart Stores Inc., Springdale-based Tyson Foods and Lowell-based J.B. Hunt, he said the challenge of Arkansas leaders is in providing the educational offerings to feed talented people into those jobs.

Tim Allen, president and CEO of the Fort Smith Regional Chamber of Commerce, said the ArcBest decision “is a testament to Fort Smith’s diverse economy.”

“They (ArcBest) know first-hand that quality of place, affordability and the tremendous asset we have in (the) University of Arkansas – Fort Smith make Fort Smith a place worth investing in,” Allen said in a statement.

HISTORIC GROWTH
Arkansas Best began as a small local freight hauler –  OK Transfer – in 1923 operating in the Fort Smith area. With a market cap of around $1.12 billion, the company now employs more than 11,000 and has grown organically and through acquisitions to provide global shipping and logistics services. Fort Smith attorney Robert A. Young Jr. bought the a small regional trucking company in 1951 and through several acquisitions grew the company to a national freight carrier.

“He would have been excited about it,” ArcBest Board Chairman Robert A. Young III, said when asked what his father, Robert A. Young Jr., would have thought about the expansion news. “And he would have loved to see the growth that has allowed this to happen. ... I’ve often said I’d like to have him back for 15 minutes to see it now.”

Young III, also said he father would be pleased to see company diversify with logistics, moving operations and other non-asset (non trucking) businesses.

“He would have understood that thoroughly. He was very much a forward thinker,” Young said.

SUBSIDIARY GROWTH
ArcBest’s largest subsidiary is less-than-truckload carrier ABF Freight System. The non-asset subsidiaries are Panther Premium Logistics, ABF Logistics, FleetNet, ABF Moving and ArcBest Technologies (formerly known as Data-Tronic.). ArcBest officials have said growth in the non-asset businesses are necessary to diversify the company’s revenue stream and to help reach a goal of $3 billion in revenue in 2014.

The non-asset based businesses in the ArcBest portfolio generated $4.459 million in operating income during the quarter, a big improvement over the $134,000 during the first quarter of 2013. Total revenue during the quarter was $577.904 million, 10.98% better than the first quarter of 2013 and well ahead of the consensus estimate of $551.35 million.

However, the company reported a loss of $5.2 million during the quarter, thanks primarily to an unusual number of severe winter weather days. However, the loss was better than the $13.395 million loss the company recorded in the first quarter of 2013. The tough first quarter follows a positive financial performance in 2013. Net income during 2013 for ArcBest was $15.8 million, much better than the $7.7 million loss in 2012 and the most the company has earned in a year since 2008.

Shares of ArcBest (NASDAQ: ARCB) closed Friday (May 30) at $42.77, down $1.01. During the past 52 weeks the price has ranged from a $44.63 to a $17.68 low.

ARCBEST PRESS RELEASE
Fort Smith, Ark., May 30, 2014 – ArcBest Corporation (Nasdaq: ARCB) today announced that it is under contract to purchase 40 acres of land at Chaffee Crossing, Fort Smith, Ark., for construction of a new corporate headquarters facility as the company continues plans for significant growth at all of its operating subsidiaries.

ArcBest, a holistic provider of transportation and logistics solutions, has exceeded the capacity at its current Fort Smith general office on Old Greenwood Road and has been leasing supplemental office space at a separate location since early 2012. The company has since outgrown the capacity at that location, which currently houses the ABF Logisticssm subsidiary personnel, as well.

ArcBest has previously announced its goal to grow total corporate revenue to $3 billion by the end of 2015, with $1 billion coming from its emerging businesses. In 2013, revenue grew 11 percent to $2.3 billion.

“As one of the area’s largest corporate employers with a bright future and growth plans ahead of us, we are excited to announce construction of this new facility in Fort Smith,” said ArcBest President and CEO Judy R. McReynolds. “With plans for growth at all of our operating companies, including ABF Freightsm, ABF Logisticssm, Panther Premium Logisticssm and FleetNet America®, it is important that we develop additional space to accommodate these expanding businesses. Our decision to build a new facility in Fort Smith for the ArcBest and ABF Logistics companies underscores our long commitment to this area, and we are grateful for the commitment from the city, the Fort Smith Chamber of Commerce and the state to help us meet our needs.”

Future plans include relocating ArcBest corporate and administrative functions and ABF Logistics personnel to the newly constructed office building which is anticipated to be smaller than the existing 195,000-square-foot corporate center facility on Old Greenwood Road.

ABF Freight System Inc., the company’s flagship subsidiary, is expected to remain located at the larger existing facility, along with ArcBest Technologies, the company’s IT solutions group. This will allow for minimal disruption to operations at these organizations when construction work gets underway at the Chaffee Crossing location. In addition, the eventual relocation of ArcBest and ABF Logistics employees creates room for growth and expansion at ABF Freight and ArcBest Technologies at the existing facility.

That anticipated growth, combined with space enabled by the new facility, supports the creation of 975 new jobs in Fort Smith through 2021.

“This announcement underscores that Fort Smith is a great American city from which to run a business with solutions that span the globe,” said Grant Tennille, executive director of the Arkansas Economic Development Commission. “We thank ArcBest for expanding their Fort Smith headquarters, which will benefit the region for years to come, and for making a vote of confidence in the strength of Sebastian County’s workforce through this action.”

Fort Smith Mayor Sandy Sanders said the new facility marked another important note in the long history for ArcBest in Fort Smith.

“For 90 years ArcBest has been an outstanding Fort Smith company, providing substantial employment opportunities for people in this area, and throughout the nation,” said Mayor Sanders. “This announcement is not only great news for the company, but for Fort Smith and the many people who will gain jobs as a result of this continued growth.”

Officials from the Chamber of Commerce also applauded the announcement.

“The ArcBest announcement today is a testament to Fort Smith’s diverse economy,” said Tim Allen, CEO and President of the Fort Smith Regional Chamber of Commerce. “ArcBest is expanding in Fort Smith because they are committed to the River Valley, as they have been for more than 90 years. They know first-hand that quality of place, affordability and the tremendous asset we have in University of Arkansas – Fort Smith  make Fort Smith a place worth investing in. ArcBest is a long-standing pillar of this community. It is refreshing to know that they have been a significant part of Fort Smith’s history and will continue to be part of our future.”

Gov. Mike Beebe typically travels to a community when a $30 million deal that could create almost 1,000 jobs is being announced. But he did not attend such an announcement Friday in Fort Smith because the company expanding in Fort Smith is also the company that may move up to 400 jobs from North Little Rock to Memphis.

Officials with Fort Smith-based ArcBest Corp. announced Friday (May 30) the expansion of their corporate presence in the region with a $30 million plan that will see the construction of a new office building and data center at Chaffee Crossing and the addition of an estimated 975 corporate jobs by 2021.

News of the corporate expansion in Fort Smith comes as the company is considering consolidation of a majority of its North Little Rock terminal operation to a planned $20.5 million terminal expansion in Memphis. The move could cut up to 400 jobs from the North Little Rock operation.

As part of a cost-cutting move, ArcBest consolidated or closed eight terminals in 2013 and did the same with 22 terminals in the first quarter of 2014. ABF Freight now operates with 247 freight service centers.

“While there can be no assurances, annual expense savings associated with these network changes, which will fluctuate based on business levels and the profile and geographic mix of freight, are currently estimated to be in a range of $10 million to $12 million,” the company noted in its first quarter 10-Q filing with the U.S. Securities and Exchange Commission.

Grant Tennille, executive director of the Arkansas Economic Development Commission, attended the announcement in Fort Smith, and told The City Wire that it would have been “odd” for Beebe to be in Fort Smith as North Little Rock faces a major job loss. Tennille said the state is fighting to keep the jobs in Arkansas.

"Over the last year, ArcBest has either been consolidating or closing about two dozen of these terminals around the region," Tennille said in a Friday morning television interview with Roby Brock of Talk Business & Politics. "They have looked at whether or not the math makes sense for them to close North Little Rock and move those operations to Memphis. They have not made a final decision. We are working closely with them and have been talking about putting a retention package on the table to keep them here."

“The Governor feels fairly strongly that he represents all the constituents of Arkansas ... and he felt like it would just be odd” to be in Fort Smith celebrating new jobs while central Arkansas may soon lose up to 400 jobs, Tennille told The City Wire.

Tennille stressed that ArcBest was “not being punished” for its plans to move the jobs, and that Beebe realizes ArcBest has to make decisions that are in the best interests of the company and its shareholders. He also said Beebe is supportive of several efforts that may result in creating more jobs in the Fort Smith area.

“I am completely certain ... that I’ll be back here before the end of the year,” Tennille said.

A statement from Beebe’s office to Talk Business & Politics – a content partner with The City Wire– confirmed Tennille’s assessment of why Beebe did not attend ArcBest’s announcement.

"While we’re excited about ArcBest’s new headquarters and new jobs in Fort Smith, we’re still monitoring the potential (and unrelated) shutdown of another ArcBest-owned facility in North Little Rock," said Beebe spokesman Matt DeCample. "With those employees facing possible layoffs, Governor Beebe felt it wouldn’t be appropriate for him to personally be part of today’s announcement."

In the interview Talk Business & Politics, Tennille said the "real story" is the explosion of growth in technology jobs emerging from existing Arkansas firms not traditionally thought of as data driven.

"The real story is we keep seeing these businesses that historically we thought of as one thing – a trucking company – it's getting ready to hire 1,000 data analysts. Data is driving everything," said Tennille, who hinted that more announcements of this caliber may be in the works.

More than 40 state business leaders met with Gov. Mike Beebe at the Governor’s mansion last week to discuss job openings, skills gaps, and the need for more coordination among workforce agencies, schools and private enterprise to lower unemployment and thwart a workforce exodus expected in the coming years.

The primary concern is the state’s manufacturing base, which currently employs about 154,000 workers as of April 2014.

The national average for manufacturing wages is roughly $40,000 a year, while the state average is $36,000. However, there are a number of manufacturing incomes in Arkansas that can reach the high five-figure or low six-figure range.

Randy Zook with the Arkansas State Chamber of Commerce, who organized the Governor’s mansion meeting, contends that Arkansas companies have tens of thousands of job openings, but not enough workers to match them. He suggests that the situation could worsen if major problems aren’t quickly addressed.

There has been a rebirth in U.S. manufacturing in recent years, although Arkansas’ manufacturing sector has been sluggish compared to other states. New manufacturing jobs are less blue-collar and more high-tech in nature; however, traditional manufacturing job openings are expected to grow due to forthcoming retirements from the baby boomer generation.

Other factors such as disinterest from younger generations, a lack of key skills, and fewer job candidates have Zook and manufacturers clamoring for more coordination between education/training programs and existing industries.

Earlier this year in the state’s fiscal session, State Sen. Jane English secured a commitment from Beebe and her fellow legislators to overhaul Arkansas’ workforce training efforts in exchange for her vote on the Private Option renewal funding. Two months later, officials say progress is being made, but nothing concrete has been presented publicly in terms of change.

Privately, there are worries that government bureaucracy combined with self-preservation among the state’s educational institutions — from high school through college — can’t pivot quickly enough to address a workforce situation looming towards a “crisis” point.

“Businesses’ role is to communicate needs clearly. The state’s role is to be responsive,” says Arkansas Economic Development Commission director Grant Tennille, who was present at the mansion meeting.

Talk Business & Politics asked Tennille, Zook and the two major party candidates for Governor if the state needs a “workforce czar” — an individual with the authority to cut bureaucratic red tape who could also flex enough political muscle to make changes quickly, efficiently, and in the best interests of industry.

Tennille said he thinks the current construction of the Governor’s Workforce Cabinet are “in lockstep” to make the changes promised to Sen. English during the fiscal session. He is not sold on the notion of a workforce czar.

“I hesitate to introduce new bureaucracy to anything,” he said. “I think that the next Governor can serve ably as the workforce czar as long as he makes his priorities very clear to his cabinet level directors and commits to knocking down any barriers that might crop up. I think that one of our challenges right now is the communication between the policy makers at the 10,000-foot level and the people on the ground locally. I think that’s where the meat of this problem lies.”

Zook said the idea has merit, particularly if there is going to be a fast transition.

“[It] depends on how fast you want things to get better,” said Zook. “Fast? I think it would be a very smart move to, perhaps, not put somebody in a new role but assign a role at a very high level within the Governor’s staff or the Governor himself.”

Mike Ross, the Democratic candidate for Governor, has proposed a reorganization of the Governor’s Workforce Cabinet, which includes AEDC, the Department of Workforce Services, Department Career of Education, Department of Higher Education, and other agencies.

Ross would rename the group as a “Cabinet for Economic Development” and previously said he would have John Burkhalter, a businessman and the Democratic nominee for Lt. Governor, as the chair of the effort if Burkhalter is elected.

“Instead of having a single czar, Mike Ross has already announced his plan to create the Governor’s Cabinet for Economic Development, a statewide coordinated effort made up of key agency representatives that will provide better coordination, increased communication and a stronger, more unified strategy for our state’s workforce services and economic development efforts,” said Ross spokesman Brad Howard. “This alliance will bring together all of our resources on a regular basis to help the state of Arkansas become more efficient, more effective and more productive – and create a better trained workforce that will help Arkansas attract more and better-paying jobs.”

Howard said Ross plans to announce additional workforce services and economic development plans in the coming weeks.

Ross’ rival, Republican gubernatorial nominee Asa Hutchinson has proposed a restructuring of the state’s workforce efforts through eight regional councils. Hutchinson’s plan would require high schools, two-year colleges, and local employers to assess jobs needs across their regions and coordinate a plan of action for educating potential workers for those available jobs.

“As I announced in March, increased emphasis on workforce training is essential to industrial recruitment and job growth in Arkansas. My plan includes streamlining workforce education to reduce duplication and to make sure tax dollars are targeted to education that matches the job creation priorities of the various regions of our state,” Hutchinson said.

“I will work with the legislature to meet these goals, but I would not designate a ‘workforce czar’ or assign the leadership role to the Lt. Governor. The Governor is the right person to lead this effort toward effective workforce education,” he added. “Improving workforce education is such a priority that the direct leadership of the Governor is essential to success.”

The federal Environmental Protection Agency announced a far-reaching and controversial plan Monday (June 2) that it says will cut carbon dioxide emissions 30% by 2030 from 2005 levels, a move that would effectively limit Arkansas’ and the nation’s reliance on coal-fired electricity generation.

President Barack Obama’s new  “Clean Power Plan,” however, will include an option that allows Arkansas regulators and stakeholders more time to develop and submit a workable plan beyond the earlier announced June 2016 deadline – a move that Entergy Arkansas and the Arkansas Electric Cooperative Corp had requested.

In announcing the new plan on Monday morning, the EPA said the new guidelines would move the U.S. toward a cleaner environment and fight climate change while supplying Americans with reliable and affordable power.

"Climate change, fueled by carbon pollution, supercharges risks to our health, our economy, and our way of life.  EPA is delivering on a vital piece of President Obama's Climate Action Plan by proposing a Clean Power Plan that will cut harmful carbon pollution from our largest source – power plants," EPA Administrator Gina McCarthy said in a news release.

Coal-fired plants now supply nearly 53% of Arkansas’ electricity demand – relying entirely on coal deliveries via railcar from Wyoming, according to U.S. Energy Information Administration.

ARKANSAS REACTION
Duane Highley, president of the Arkansas Electric Cooperative Corp., said Monday that the EPA plan will result in higher utility rates in Arkansas.

“We are disappointed that this EPA rule will reduce our use of coal, which is our most economical and reliable fuel to generate electricity,” said Duane Highley, president and CEO of AECC. “Although the proposed rule leaves the precise implementation details to the states to develop, the inevitable result will be the use of more expensive fuels, such as natural gas.”

The AECC is the wholesale supplier to 17 regional electric distribution cooperatives in Arkansas that have more than 500,000 customers.

Highley also said the EPA plan could impact utility reliability.

“This past winter's experience highlighted many reasons why power generation should not put all of our reliability eggs in the natural gas basket,” Highley said in a statement. “There were gas plant failures, pipeline freezes and wholesale natural gas supply disruptions. Our nation needs and deserves a diverse energy supply portfolio to keep the lights on. By reducing the amount of coal in our generation mix, prices will go up and reliability could go down.”

U.S. Sen. Mark Pryor, D-Ark., who is locked in a close re-election battle with U.S. Rep. Tom Cotton, R-Dardanelle, criticized the EPA plan.

“I have serious concerns that the EPA’s proposal will undermine the affordable and reliable electricity Arkansans currently enjoy. I will continue to speak with Arkansas stakeholders to gauge how this rule could impact our state’s economy and jobs,” Pryor said in a statement. “Last week, I asked the EPA to extend the comment period once this proposal was released. I’m pleased this request was granted, and I would urge consumers, businesses and utilities to make their concerns heard.”

Not surprising, the EPA plan also was criticized by U.S. Sen. John Boozman, R-Ark.

“President Obama’s proposed regulations for power plants will hurt Arkansas families, farmers and businesses, without providing any significant benefits. Congress rejected the President’s cap-and-trade policy, so now he is bypassing the will of the legislative branch and imposing a similar plan bit by bit. President Obama says it won’t cost much and that if you like affordable energy, you can keep affordable energy, but like his other promises, we know that actions speak louder than words,” Boozman said in a statement. “The U.S. Chamber of Commerce predicts that the President’s plan will shrink the economy by at least $51 billion and destroy more than 200,000 jobs each year between now and 2030. This is another example of bureaucrats trying to control climate from their desks in Washington, with no concern for the pain it will cause.”

COAL USE HISTORY
In 2013, U.S. coal mines produced just fewer than one billion short tons of coal, the lowest output level since 1993. More than 90% of this coal was used by U.S. power plants to generate electricity, EIA statistics show. Yet, while coal has been the largest source of electricity generation in the United States for more than 60 years, its annual share of total net generation declined from nearly 50% in 2007 to 39% in 2013 as some power producers switched to more competitively priced natural gas.

According to the EPA, the new proposal will take these four steps to reach the president’s carbon emission goal by 2030:
• Cut carbon emission from the power sector by 30% nationwide below 2005 levels, which is equal to the emissions from powering more than half the homes in the United States for one year;
• Cut particle pollution, nitrogen oxides, and sulfur dioxide by more than 25% as a co-benefit;
• Avoid up to 6,600 premature deaths, up to 150,000 asthma attacks in children, and up to 490,000 missed work or school days—providing up to $93 billion in climate and public health benefits; and
• Shrink electricity bills roughly 8% by increasing energy efficiency and reducing demand in the electricity system.

According to the EPA, the new plan will be implemented through a state-federal partnership under which states identify a path forward using either current or new electricity production and pollution control policies to meet the goals of the proposed program. The proposal provides guidelines for states to develop plans to meet state-specific goals to reduce carbon pollution and gives them the flexibility to design a program that makes the most sense for their unique situation, the EPA said.

Also, states will be able to choose the right mix of generation using diverse fuels, energy efficiency and demand-side management to meet the goals and their own needs, federal officials said.

“It allows them to work alone to develop individual plans or to work together with other states to develop multi-state plans,” the EPA said.

Also, federal officials said today’s proposal includes a flexible timeline for states to follow for submitting plans to the agency—with plans due in June 2016, with the option to use a two-step process for submitting final plans if more time is needed.  States that have already invested in energy efficiency programs will be able to build on these programs during the compliance period to help make progress toward meeting their goal, the EPA said.

ARKANSAS IMPLEMENTATION MOVES
John Bethel, executive director of the Arkansas Public Service Commission, said state regulators with the PSC and Arkansas Department of Environmental Quality will begin holding stakeholders meeting later this month to begin developing plans on the new EPA regulations.

Originally, the EPA set the deadline to finalize the standards by June 1, 2015. States, including Arkansas, were required to submit their implementation plans to EPA by June 30, 2016. Given today’s announcement, those dates could now change.

Teresa Marks, director of the Arkansas Department of Environmental Quality, said her department and PSC officials have scheduled a meeting to discuss the EPA proposal on June 25 with about 20 stakeholder groups representing utilities, state agencies, environmental advocates, energy efficiency experts, consumers and other interest parties. 
 
The Arkansas environmental chief said she was pleased state regulators will have the flexibility to adapt a plan that is going to fit the needs of Arkansans. She added that her department has the unenviable task of briefing the groups about the controversial guidelines.

“I think we have a lot of work ahead of us to determine what options or combinations of options will work best here in Arkansas,” Marks said of the 645-page proposal. “We will be pouring through it over the next several weeks.”

Wal-Mart shareholders week is a global affair with 5,000 delegates visiting from 27 countries and every state where Wal-Mart operates under 71 banners. The Wal-Mart representatives began arriving at Northwest Arkansas Airport on Saturday, and the company estimates that 14,000 will attend Friday’s (June 6) shareholders meeting.

The group from Massmart, Wal-Mart’s South African venture, sang, danced and waved their national flags as they made their way down the escalator into the main lobby area at the airport on Saturday. This is third year Massmart employees have traveled to Bentonville for the annual meetings.

“The associates chosen to attend have a full week of activities. The majority of them are arriving on Sunday (June 1). They are housed at the University of Arkansas and they will attend meetings and tour the area ahead of Friday’s annual shareholder event,” said Kayla Whaling, spokeswoman for Wal-Mart.

Wal-Mart said there will be 30 buses of delegates and media that will be shuttled around the region throughout the week. They visit stores, the Walmart Museum, the Bentonville Square, the University of Arkansas and other areas of interest.

Bentonville, Fayetteville and Rogers see the majority of the economic benefit from the annual event that will draw around 14,000 to Fayetteville for Friday’s (June 6) shareholder meeting at Bud Walton Arena.

The University of Arkansas expects to earn about $1.26 million for the week. That breaks down to $436,000 from the use of its dorm facilities, according to Steve Voorhies, manager of media relations at the UA. He said there will be 4,500 Wal-Mart guests staying on campus, as the retailer has reserved 2,250 room at a nightly rate of $28.

Food services for the week will also rake in about $500,000. Voorhies said there are other service fees that the UA collects for the week. Based on last year, he expects those services to total approximately $325,000 as follows:
• Police Department – $102,704;
• Facilities Management – $721;
• Parking and Transit – $106,571; and
• Athletic Department – $115,873.

He said the amount paid to the UA Athletic Department is strictly reimbursement of expenses because there is no rental fee charged.
 
“When you talk about benefit to the university it’s really not the dollars. It’s the exposure we get as people from all over the country and all over the world – shareholders and associates who spend time on campus and in Northwest Arkansas. They go away with a fresh perspective on the university, the region and the state,” Voorhies said.

Kathy Deck, director for the Center for Business and Economic Research at the University of Arkansas, said the biggest draw in terms of traffic is for the Friday meeting at Bud Walton Arena. However, she said it is unknown know how many people traveling here and plan for an overnight stay. She said the 5,000 or so Wal-Mart workers will be here for the full week, but because they stay at the university, hotels don’t see the benefit.

Between 50 and 100 members of the media also attend for part of the week. Some coming from as far away as Japan and the United Kingdom. The Embassy Suites in Rogers hosts a few meetings during the week and also benefits from the out-of-town media who stay there.

“We have not formally studied the economic impact from this week, but we know it always occurs in June and we think it is on par with a Razorback football game in terms of revenue generated,” Deck said.

On a greater scale, she said the week puts Northwest Arkansas in a positive light, the benefits are more reputational than economical.

“It opens this region up to the world,” Deck said. “For those in the global workforce this may be their first trip to the United States.”

SURPRISE ENTERTAINMENT
Shareholders never know who will show up to join the celebration during Friday’s meeting. In recent year’s they have been treated to musical performances from the likes of John Legend, Jennifer Hudson, Celine Dion, Lionel Richie, Mariah Carey, Josh Groben, Taylor Swift and the Zac Brown Band. 

All eyes will be peeled at the local Walmart stores Wednesday or Thursday afternoon, trying to spot the host for this year’s event. Past hosts include: Hugh Jackman, Ben Stiller, Jamie Lee Fox and Justin Timberlake. The host usually makes a video at a local Wal-Mart store which is shown during Friday’s meeting. All bets are on the new Walmart to Go convenience store in Bentonville as the site for this year’s host video.

The two free concerts already announced this year will feature Jason Aldean and Cole Swindell on Tuesday, June 3. Foreigner, Styx and Don Felder will take the stage at Bud Walton Arena on Wednesday, (June 4).

The value of building permits in Fort Smith, Greenwood and Van Buren were a combined $16.345 million in the month of May. The total represents a decline of 52.76% when compared with May 2013, which itself was a standout month for the year overall when looking at building permits.

So far, year-to-date figures are only slightly higher than the same period for last year. Building permits in the three cities were a combined $81.295 million for the period, an increase of 0.81% over the same five month period last year, which saw building permits total $80.643 million.

FORT SMITH
The city of Fort Smith issued 180 permits during the month of May, totaling $13.494 million. The figure represents a decline of 55.77% over the same month last year, when 206 permits worth $30.506 million were issued.

May 2013 represented a month full of several commercial projects, including a new $13.6 million pumnp station on Jenny Lind and a $1.986 million of the Phoenix Expo Center. The former expo center was converted to office space for HMA, the parent company of Sparks Health System. The office complex has since opened with hundreds now employed at the site.

By comparison, last month only saw one commercial building constructed at a cost of $1.051 million with 15 remodels, which only totaled $6.127 million. In all, only $9.354 million worth of building permits were issued on 25 projects.

GREENWOOD
The city of Greenwood saw the most improvement of all three cities, with five permits issued with a value of $532,466. During May 2013, no permits were issued in the city.

But the figures are still down when compared with May 2012, when five permits were issued at a value of $733,540. The latest total represents a decline of 27.41% decline between the two years.

VAN BUREN
Van Buren saw $2.319 million in building permits issued in May, a decline of 43.387% from May 2013.

The $3.164 million expansion of Tankersley Foods was the primary driver of last year's figures.

Driving figures in May 2014 is a $2 million commercial building project at 323 Access Road. The site was once a small distribution center for Yellow Freight, though the site has been closed with little activity since being bought by Southeastern Freight.

According to Service Center Manager Scott Lackie of Southeastern Freight Lines, the company is renovating the site and anticipates moving its 38 employees from its Fort Smith service center to the Van Buren location by the end of the year. He said any additional hiring for the site would depend on freight levels at the facility, though Lackie said the maximum number of employees the Van Buren site could accommodate would likely be around 40.

2013 RECAP
Combined values in the three cities during 2013 were $203.037 million, compared to $157.32 million during 2012. The 2013 value is above the $201.079 million in 2011.

Fort Smith closed 2013 with the largest share of valuations, logging $177.687 million (a one-year increase of about 30.24% from $136.428 million in 2012), while Van Buren was the next largest with $17.067 million (a one-year increase of 38.96% from $12.282 million in 2012). Greenwood posted an additional $8.283 million, the only city to show a decrease from the previous year's total of $8.609 million (a decrease of 3.79%).

The gains in the Fort Smith market were largely from industrial construction projects at Chaffee Crossing, the construction of Mercy's new orthopedic hospital along Phoenix Avenue and various municipal construction projects across the city.

The departure of the of the A-10 flying mission at the 188th Fighter Wing means more than just the flying Razorbacks are leaving Fort Smith's airport, so is firefighting protection for the flying public.

According to Fort Smith Regional Airport Executive Director John Parker, the airport will lose its firefighting protection once the Air National Guard shuts down firefighting operations on Oct. 1. That means that between now and the beginning of October, the airport has to figure out how to comply with Federal Aviation Administration regulations stating that commercial airports with passenger service must have firefighter protection on site during operating hours.

The airport has two options, Parker said. The first is to contract out to a private vendor or the Fort Smith Fire Department for protection. The other option is to form its own fire department to serve the airport.

Cost estimates are unknown, but Parker told airport commissioners during a study session Monday (June 2) that the airport having to provide its own fire protection services would likely result in a deficit for the airport.

"We have a limit on revenues and available funding for this particular mission. I believe any course of action that we go into without generating a new revenue source somewhere will place us in deficit spending, but not to the extent that we initially thought."

According to Parker, the budget prepared for the current fiscal year was created with the assumption that the airport would have to begin its firefighting mission in the middle of the year at what was expected to be around $350,000 in costs. Instead, the Guard extended the mission of its fire department to Oct. 1, giving the airport additional time to figure out how to move forward.

Master Sergeant Terry Edwards, fire chief of the 188th's fire department, said two of its trucks, along with the fire station within the ANG base, would be used by the new airport fire department as part of an agreement in the works between the military and the airport. With the agreement, Parker said the airport would save hundreds of thousands of dollars each year by not having to finance the purchase of new fire trucks.

Parker said the airport would not raise rates on commercial passengers as a way to balance the budget or return to profitability, but instead would likely work out a deal to raise the lease rate on the National Guard, though nothing is certain at this point.

In discussions about which route to go, Parker presented commissioners with the facts about all different routes that could be undertaken by the airport.

Regarding contracting services with a private company, Parker said whichever company won the bid for a potential contract would take care of meeting certifications for firefighters and maintaining equipment, but said the cost could be prohibitive.

"Remember, on the estimates that we receive, we're talking about a company that's not doing this for civic service, they're doing this for profit. So those costs will be a little bit higher. But private companies … would be responsible for providing the elements of the contract."

Should the city be contracted, Edwards said it had eight former 188th firefighters on staff with the Fort Smith Fire Department with certifications necessary to meet FAA requirements. But Parker said with either the city or a private contractor, either may choose to have higher staffing levels than is required by FAA regulation, which would cost the airport a considerable amount more money than creating its own fire department.

Should the airport develop its own department, Parker said the airport would likely hire four firefighters who would work varied shifts. The fire department would be in operations about 20 hours per day, or 7,300 hours per year. On average, each firefighter would likely work a total of 2,080 hours per year with some overlapping coverage.

While the ANG has several firefighters on staff 24 hours per day, Parker said it would be possible to have only one firefighter on duty at many times since FAA regulations for an index B airport, the ranking for Fort Smith Regional, only require a single individual able to man equipment on duty during operational hours.

Wages for any staff to be stationed at the fire department have not yet been determined, Parker said, as everything is still in the discovery phase as the commission decides which route to take.

Regardless of which route the commission chooses, Parker said should a major emergency occur at the airport, it would have to rely on the assistance of Fort Smith's fire department, which could quickly respond from fire houses on Dallas and Phoenix Avenue.

But he said the last incident that resulted in an actual emergency response was a wheel fire on a commercial jetliner in 2009, adding that the reduction in staffing levels from the ANG to an airport-run fire department would not put the flying public at any greater risk.

"I only say all that to say this is not an issue where we would have to run to the runway every day or every week. It's a rare occurrence, actually, in the long run and even rarer that it goes to the true extent that we have a true emergency on the ground. It's one of those services that we never want to have to employ but we need to be prepared to employ it based on the FAA requirements."

Parker said adding the firefighting mission to the airport's responsibilities would cause many changes over the coming months, including updating the airport's emergency plan and the capital improvement plan with the FAA, which will require the addition of a new fire department building at a reimbursement rate of 90% from the FAA, leaving 10% of the cost to the airport.

Parker reminded commissioners that Fort Smith was not alone in the challenges it faced as a result of the change in firefighting status at the airport.

"We're not alone in all of this. There are a number of airports that are going through the same situation where aircraft were removed from tenant National Guard installations or civilian airplanes. So we're not the first to have to go through this."

Leslie Rutledge and David Sterling are in a full-fledged street brawl with a week to go in their run-off for the GOP Attorney General nomination.

The two Republicans have taken potshots at each other for weeks questioning each others’ conservative credentials and political experience. In addition, third party groups have spent hundreds of thousands of dollars in the race.

Rutledge led the ticket in the May 20 Republican primary with 47% of the vote, while Sterling finished the night with 39% support heading into a June 10 statewide run-off.

On Sunday (June 1), Sterling rolled out new charges that Rutledge had voted in Democratic primaries from 1998 through 2008, had not voted in any state elections in 2010 and 2012, and had donated to the Democratic Party of Arkansas at one time in the past.

Rutledge fired back saying Sterling represented in his legal practice a company peddling pornography, an act she says contradicts his Christian and family values platform as well as should be troubling for someone seeking office to oversee a division dedicated to Internet predators.

Also in the mix, a new six-figure wave of TV, radio and web ads and direct mail pieces claiming Rutledge is against a “stand your ground” law — a charge she denies. The Judicial Crisis Network (JCN) is paying for the media which also states Rutledge holds the same position as Barack Obama and Nancy Pelosi and it touts support for Sterling’s candidacy. Sterling denies coordinating with the group and says there is nothing inaccurate in the JCN claims.

Rutledge has also picked up the endorsement of the May 20 GOP primary third-place finisher, Patricia Nation. The winner of the run-off faces Democrat Nate Steel and Libertarian Aaron Cash in the November general election.

RUTLEDGE DEFENDS

Rutledge says she did vote in those Democratic primaries on her record — some in Independence County, some in Pulaski County. In the earlier years, she voted for Democratic friends and colleagues running for prosecutor positions and judgeships when Arkansas had partisan elections in those offices and Republican primaries were largely limited to Northwest Arkansas. Judicial elections became non-partisan in 2002, while prosecutors just moved to non-partisan status in the 2014 cycle.

Rutledge’s voting history, obtained through public records from the Pulaski County Clerk’s office, shows she did vote in the 2008 GOP Presidential primary (she says she cast a vote for Mike Huckabee) as well as this year’s 2014 primary. She consistently voted in general elections from 1996 through 2008.

In 2010 and 2012, Rutledge is not listed in Arkansas records as voting. She says she was out-of-state working for the Republican National Committee and its ancillary organizations. She also contends she voted in Virginia while working for the RNC during those years.

“While I was bleeding Republican blood in the heat of battle against the Obama/Pelosi liberal agenda as Counsel at the Republican National Committee and spending much of my time there, I voted in Virginia for all Republican candidates,” Rutledge told Talk Business & Politics. “The reason why Mitt Romney and Paul Ryan were on the ballot in all 50 states is because I was the lawyer who handled that for the RNC and Romney for President — working with all 50 Secretaries of State, preparing and filing the forms signed by Republican Speaker of the House John Boehner.”

Sterling has also pointed out that Rutledge made a contribution to the Democratic Party of Arkansas in 2007. Records show that Rutledge did contribute $104.50 to the DPA early that year, which she says was her payment for a ticket to Gov. Mike Beebe’s inaugural ball.

Rutledge said she was a state employee at the Department of Human Services at the time and, post-election, she bought the ticket and was unaware that the money would be routed through the DPA. She said she gave money to and supported Asa Hutchinson’s gubernatorial bid in the 2006 election cycle.

There are other high-profile Republicans on the 134-page DPA report with similar 2007 inaugural contributions, including Daryl Bassett, Carl Bayne, Julie Benafield Bowman, and J.J. Vignault — all of whom worked in and for the Gov. Mike Huckabee administration.

“In 2007, I was an attorney for the State of Arkansas going to court with foster children. I had worked tirelessly for Asa Hutchinson in the 2006 gubernatorial campaign, but because I was an attorney for the State and Mike Beebe had won, I bought a ticket to attend the Gubernatorial Inaugural Ball which is much different than an outright contribution to a political party,” Rutledge said.

She added that she traveled the state for Hutchinson in 2006, would go to his campaign headquarters at lunch and after work hours, and took personal vacation time from her state job to volunteer in his unsuccessful effort.

OpenSecrets.org and other Arkansas Ethics Commission filings note that Rutledge has also financially contributed through the years to GOP candidates including George W. Bush, Mike Huckabee, Asa Hutchinson, Tim Griffin, the Arkansas GOP, and some state representative candidates. No Democratic candidates appear through an OpenSecrets search.

“I have contributed to countless Republican committees and candidates over the years,” Rutledge said. “There are no public records of Sterling contributing to any Republican candidate.”

STERLING DEFENDS
Sterling does not show up in any searches on OpenSecrets.org nor in any cursory review of other candidate contribution reports. When asked about his contributions history, he reiterated that he has never given to Democrats, but didn’t speak to the absence of Republican contributions.

Sterling’s voting history, provided by the Pulaski County Clerk’s office, shows he has voted in Republican primaries from 2000 through 2014. He did not vote in the 1998 primary election in Pulaski County, but his 1996 history shows he voted in a primary and run-off election that year.

Clerk’s records don’t indicate in which political primary he cast his ballot in 1996, but there was a Presidential primary combined with a U.S. Senate race and Second District Congressional races that year. The Democratic and Republican primaries went to run-offs that spring with Bud Cummins winning the GOP nomination and Vic Snyder earning the Democratic nod for Congress. Winston Bryant defeated Lu Hardin in the Senate Democratic primary.

“I have always voted in a Republican primary. I was living in Hope during the primary in the spring of 1998, serving as the Assistant City Manager. I voted in the Republican primary that year in Hempstead County. I moved back to Pulaski County in the fall of 1998 and voted there in the General,” Sterling said in an email to Talk Business & Politics.

Rutledge has charged that Sterling’s legal representation of Cupid’s Lingerie, an adult novelty store with six retail locations in central Arkansas, was a client he should have declined. According to its web site, Cupid’s sells “adult novelties & toys, lingerie, vibrators, sexy nightwear, sex toys, and costumes.” A review of the web site also shows that Cupid’s sells XXX movies by DVD and on-demand.

Sterling represented Cupid’s in a 2009 lawsuit against former employees that it claimed stole company secrets while opening up their own competing shop. Revelations of his representation led to the “un-endorsement” of conservative TV patriarch and former State Sen. Jim Bob Duggar back during the primary.

“Due to new revelations and recent developments the Duggar family has decided to withdraw its endorsement of David Sterling in the 2014 race for Arkansas Attorney General. The family wishes both candidates well, but will not be making any endorsement at this time,” the family said through a spokesman in late March.

When asked by email why he took Cupid’s as a client and if it conflicted with his conservative or Christian views, Sterling did not directly address the questions.

“Rutledge is launching a personal attack on me regarding a private business matter from five years ago. She’s doing this in a desperate attempt to avoid explaining why she voted in five Democrat primaries and even gave money to the Democrat Party of Arkansas,” Sterling wrote.

“This race is about which candidate can most effectively use the Attorney General’s office to protect state authority and individual liberty from an overreaching Obama Administration. My opponent has a record of voting for Democrats and donating to the Democrat Party. I have a record of consistently voting for Republicans and have never donated to the Democrat Party. As Attorney General, I will fight to rein in an overreaching federal government,” he added.

THE RACE GOES ON
The volleys look certain to amplify in the coming days.

In response to the JCN attack ads, Rutledge’s campaign has denounced the accusations. Previously, she stated her position on the “stand your ground” law that the ad accuses her of being soft on. She said she thinks current statutes already address concerns. Rutledge has indicated she would be willing to work with the state legislature to make it even stricter as long as it was done in an “accurate, unambiguous, and constitutionally sound” manner.

Wes Manus, a spokesman for Rutledge, fired back on the claims that his candidate has a similar position to former Speaker of the House Nancy Pelosi, which the JCN ads claim.

“The people of Arkansas know Leslie Rutledge worked tirelessly as Counsel at the Republican National Committee to fire Nancy Pelosi. And, while Leslie was working 14-hour days fighting Obama and Pelosi’s liberal agenda, her opponent was filing a lawsuit in Pulaski County to help one of Arkansas’s largest pornography distributors, Cupids Lingerie,” he said.

Sterling has kept his latest messaging focused on Rutledge’s voter history.

“David Sterling has a 100% Republican primary voting record, and he has never contributed to the Democrat Party. Leslie Rutledge likes to talk about her party credentials, but the facts are that Rutledge has voted for Democrats and contributes money to the Democrat Party,” he said in an email to supporters and the media.

When asked if they would support the eventual Republican nominee or if they might consider the Democratic or Libertarian candidates in the race, neither candidate provided a response.

Heated and conflicting legislative testimony related to more than $6 million in deficits within a University of Arkansas division will not be investigated further for perjury, according to Larry Jegley, prosecuting attorney for the 6th Judicial District of Arkansas.

Jegley, in a letter dated June 2 to Arkansas Legislative Auditor Roger Norman, said he could not find enough in the conflicting testimony given by University of Arkansas Chancellor G. David Gearhart and former UA employees to warrant more review.

“While there may be differing versions of the events and discussions concerning the matters at issue, none rise to meet the standards of meriting further actions under Ark. Code Ann. Section 5-53-102. We now consider this matter closed,” Jegley wrote.

Norman had asked Jegley to investigate the legislative testimony for potential perjury among the witnesses.

UA BUDGET PROBLEM HISTORY
In February 2013, Gearhart asked auditors for the Arkansas General Assembly and the University of Arkansas System to perform independent audits of spending within the university’s advancement division. Prior to Gearhart’s request for the audit, Brad Choate resigned as vice chancellor of the division and Joy Sharp resigned as budget director of the Advancement Division.

In September 2013, state lawmakers heard conflicting testimony from fired University of Arkansas spokesman John Diamond who said he was told by his superiors to destroy documents related to a budget shortfall in the UA Division of University Advancement. Gearhart called the allegations "astounding,” "absurd" and "pathetic."

In late August, Chris Wyrick, then the newly-named UA vice chancellor for university advancement, fired Diamond. The act came in the aftermath of the discovery of a multimillion-dollar budget shortfall in UA's fundraising arm, the Division of University Advancement. Diamond disputed how UA should work with news media on reporting the deficit and its causes. Diamond has also alleged that UA officials told him to destroy documents related to a budget shortfall in the UA Advancement Division.

Diamond has since been hired as interim associate vice president for external relations and strategic communications at the University of Wisconsin.

Norman also forwarded in September an investigative report to Prosecuting Attorney John Threet of Fayetteville. Threet eventually decided to not pursue an investigation based on the audit report.

‘CULTURE OF COVER UP’
In January, the Joint Performance Review Committee of the Arkansas Legislature heard from Brad Choate, who ran the University of Arkansas’s fundraising division. Choate suggested a “culture of cover up” by school officials. Choate called himself the fall guy for problems that he said had been building since Gearhart ran the Advancement department.

“Frankly, this is another example of a pattern of shameful behaviors designed to protect themselves rather than be honest and accountable. Ladies and gentlemen, something is rotten in Fayetteville,” Choate told the committee.

Gearhart disputed Choate’s assessment, and said Choate “failed to carry out his duties and responsibilities as vice-chancellor by ignoring his duty to manage and supervise budgetary matters.”

In a UA statement issued Monday (June 2), Gearhart welcomed Jegley’s decision.

“I appreciate the diligence that Prosecutor Jegley put in to this review,” Gearhart said. “I believe this is the appropriate conclusion. We remain actively engaged in moving forward toward our goal of being nationally recognized as a top 50 public research university.”

Wal-Mart Stores Inc. is celebrating 52 years as a retailer, and while the discount juggernaut’s shares are trading around $77, performance has been lackluster for the past 12 months relative to its previous annual gains. Shares have posted gains of 1.43% in value since the annual meeting in June 2013.

The performance pales in comparison to the Dow Jones Industrial Index in which Wal-Mart is listed. The Dow Jones index has returned a 9.59% gain in the same 52-week period. The broader S&P 500 posted gains of 17.26% in the same 12-month period.

The only other retailer in the Dow Jones Industrial Index is Home Depot, which does line up somewhat with Wal-Mart demographically in the U.S. The home improvement retailer’s share gains are also muted at 1.45% over the past 52 weeks. The shares of other discount retailers like Dollar General have also struggled in the past year. Dollar General shares are up 0.43% over the past 12 months.

None of the retailers, including Bentonville-based Wal-Mart, began calendar 2014 with a bang. Wal-Mart shares have struggled since hitting a high of $81.37 in early December on hopes of a solid holiday. Shares are down nearly 3% since January, after a volatile performance in the back half of 2013.

“The retailer blamed harsh winter weather for keeping consumers indoors during crucial months. Now, with summer sales on the way and back-to-school shopping soon to follow, the Arkansas mega-retailer is looking to reverse its fortunes by taking on its competitors. This includes offering discounts on titles Amazon has stopped carrying, because of its ongoing beef with publisher Hachette, and plans to carry more organic goods to compete with Whole Foods, which has seen its stock struggle in 2014,” notes Jonathan Mariano, senior editor and analyst at The Street.

That said, analysts are split on their opinions about the retail giant’s shares. The 20 brokerage houses that closely follow Wal-Mart for Thomson/ First Call have an average target price of $81 for the shares, with a hold or neutral recommendation. Wal-Mart is trading at nearly 15 times projected consensus earnings for fiscal 2015. 

Shares of Wal-Mart stock (NYSE: WMT) closed Monday (June 2) at $76.76, down 1 cent. During the past 52 weeks the share price has ranged from a high $81.37 to a $71.51 low. Shares were trading slightly higher – gains of around 0.2% – in Tuesday morning trading.

Even with the small price gain in the past year, the share price is higher heading into the 2014 shareholders meeting (June 6) than during the same time in 2013. In fact, during the past 10 years, the share price heading into shareholders week has been lower only once (June 2009) than the previous year.

BULLS VIEW
Raymond James & Associates analyst Budd Bugatch recently reaffirmed his “overweight or buy” position for Wal-Mart Stores after the weaker-than-expected first quarter earnings.

Bugatch did lower his target price to $83 from $85 based on sluggish operational performance. The firm also reduced its fiscal 2015 guidance to $5.25 per share on revenue of $486 billion, citing the challenging headwinds from weather, SNAP income adjustments and higher benefits costs under the new health care law.

Wal-Mart anticipates benefit costs to increase about $100 million per quarter, based on higher enrollment numbers for health insurance during the first quarter of fiscal 2015.

“Given Wal-Mart's continued investment in small format stores, commitment to integrating E- commerce with brick and mortar stores, and attractive valuation, we remain constructive on the shares,” Bugatch noted.

ON-THE-FENCE
Brian Gilmartin, a portfolio manager at Trinity Asset Management and contributor to the Fundamentalis blog site, noted just ahead of Wal-Mart’s recent earnings call that he “expects Wal-Mart and retail in general to trade better into the 2014 summer.” He said the shares are fairly valued at $80.

Gilmartin said there is still the lingering Mexican bribery scandal and declining store traffic which has persisted for five consecutive quarters. He said the retailer has been able to compensate for the lower traffic with better pricing or better average ticket.

“The longer-term issues around Wal-Mart are still present and are not under the company's control,” Gilmartin said. 

Noting that Wal-Mart has created more wealth than even Warren Buffett in the last half of the 20th Century, Gilmartin said Wal-Mart is persistently challenged to grow revenues at something more than “low single-digit” percentages in an environment where GDP grows 2% and inflation hovers at 1% to 1.2% annually.

BEARISH VIEW
The Value Investor notes that Wal-Mart continues to woo investors with its 2.5% dividend yield and aggressive stock repurchase plan, retiring shares at a rate of 1% per year.

However, the bears don’t see the recent investments in small format and e-commerce generating enough new sales in the next couple of years to make up for the stagnation that has persisted for some time in its core business. At best the bears note that the handsome dividend yield makes Wal-Mart more of a hedge play than a growth story.

“It is important for Wal-Mart to lower costs in order to increase margins and profits. Its dividend growth was low in the past year, and I am not expecting major growth this year. But it is a good stock with limited risk for defensive investors.” according to Winning Strategies analysts and contributors to Seeking Alpha.

Belus Capital Advisors CEO and Chief Equities Strategist Brian Sozzi has been vocal about red flags he sees in Wal-Mart’s underlying business.

“Not only does buying interest in Wal-Mart shares look foolish in light of the first quarter figures, but it stands to be completely reversed in coming months based on the numerous fundamental disappointments in the quarter from a company that has grown too big to manage properly,” Sozzi noted to investors on May 15.

He also notes that the past five lackluster quarters for Walmart U.S. have been under CEO Bill Simon’s watch. Sozzi said he is unimpressed with Wal-Mart’s underlying business from “missing easy comps to overusing the severe weather excuse.”

“Right into the weak first quarter earnings and second quarter guidance letdown and continued pressure on return on investment are those tech investments online paying off. ... This management team is full bore on repurchasing stock,” which Sozzi said he sees as another red flag.

Benton County is one of the fastest growing areas in the Natural State in part because of job creation, quality of life and strong public school systems. But a recent study by consumer advocacy site NerdWallet shows that Bella Vista and Centerton in Benton County top the rest of the state as the best places for homeownership.

Only one city in the Fort Smith region, Greenwood, cracked the top 10 list. Other Fort Smith metro cities ranked in the NerdWallet study were Van Buren (16), Mena (18), Alma (26), and Fort Smith (37)

NerdWallet crunched the numbers for all 62 Arkansas communities with more than 5,000 residents to find the best cities for homeownership in the state. Here’s what the best cities had in common:
• Home values were less than $200,000 in all but two places;
• In half the places homeowners spent less than 25% of monthly income on housing; and
• 18 of the 20 cities gained population between 2010 and 2012.

The criteria in this study looked at three main questions: Are homes affordable?; Can you afford to live there?; Is the city growing?

BELLA VISTA APPEAL
Bella Vista ranked No. 1 with an 89.3% home ownership rate, the highest in the study. The cost of home ownership in Bella Vista as a percentage of household income was 23.4%, the lowest in the study. The city population grew 6.7% between 2010 and 2012. Despite the growth, median home prices at $152,300 were 8% less expensive than in neighboring Bentonville, based on the 2010 U.S. Census data 5-year estimates.

Bella Vista is part of the Bentonville School system, also the highest ranking large school in the state according to standardized test scores. The city is diverse, having began as a retirement resort in the 1960s. The homes feature wooded lots, six lakes and seven golf courses, with several parks and indoor as well as outdoor swimming facilities. Bentonville, by the way, was ranked 11th on the list.

Paul Bynum, analyst with MountData.com, reports that there were 874 homes sold in Bella Vista during 2013, unit sales in the city rose 16% from 2012 and total sales volume was $127.498 million, up 19% from the prior year. The city also boasted the shortest days on market across the two-county are at 49 days. In this active market median home prices rose 5% from 2012 to $130,700, which is well below the Census estimates.

Helen Dankser, an agent with Crye-Leike in Bella Vista, said she wrote nine new sales contracts in April. The Bella Vista sales office for Crye-Leike saw a record month in April, with sales up 29% from a year ago. Dansker said buyers of all ages are attracted to Bella Vista because of the amenities, good schools and opportunity for secluded lots – located within a very short distance to the main highway or one of the country clubs or lakes.

Bella Vista has one of the higher median household income levels at $5,118 per month, just a few dollars shy of Bentonville — the highest median income in the two county area at $5,140 per month. Bryant, Maumelle and White Hall each have higher median monthly household income estimates than Bentonville, according to the Census estimates.

CENTERTON BOOM
Centerton, also part of the Bentonville School system, came in second for the best place to own a home in Arkansas. Centerton’s population exploded 13% between 2010 and 2012. 

The median home price was an affordable $140,000 according to the Census projections, which was 15.6% less expensive than neighboring Bentonville. Major street widening of Arkansas 102 has made accessibility to and from Centerton much easier in the past year. 

The study gave Centerton an overall score for homeownership of 73.7, good enough for second place in the state. The home ownership rate is 67.9%, less than Bella Vista, but more than the 57.3% in Bentonville and the 55.9% in Siloam Springs.

Median household income in Centerton is an estimated $4,842 per month. The cost of homeownership in Centerton averages about 25.1% of household income. This was a little higher than the 23.4% average cost in Bella Vista, but cheaper than the 27% average cost estimated in Bentonville.

Centerton is the site for the second Bentonville High School and Wal-Mart is in the midst of building a supercenter and a neighborhood market in Centerton creating about 400 jobs in this small community. Mercy also recently broke ground a new medical clinic in Centerton.

Other Northwest Arkansas cities making the list included Siloam Springs (17), Rogers (19), Lowell (20), Farmington (27), Springdale (40), and Fayetteville (62).

Link here for the ranking of all 62 Arkansas cities compared.

Despite a fiscal year-to-date decline in individual income tax collections, Arkansas’ largest source of tax revenue, gross tax revenue for the fiscal year is up 0.6% and the state is on track to be able to fully fund the budget. However, May gross revenue fell 4% compared to May 2013.

Year-to-date gross revenue (July 2013-May 2014) totaled $5.626 billion, just 0.6% above the same period last year and above forecast by 0.3%, according to the report issued Tuesday (April 4) by the Arkansas Department of Finance and Administration.

Collections have declined relative to how the fiscal year began. The gross collections were up 3.4% after the first six months of the fiscal year, and 0.9% above forecast. After the first four months of the fiscal year, the gross revenue was up 4.1%.

Individual income tax collections for the fiscal year totaled $2.824 billion, down 1.2% from last year and just 0.4% above the budget forecast. Year-to-date sales and use tax collections were $1.993 billion, up 2.7% above last year but 1.2% below the budget forecast. The sales and use tax collections were up 4.8% four months into the fiscal year and up 3.9% six months into the fiscal year. Income taxes and the sales and use tax collections are the two primary sources of state revenue.

Corporate income tax collections for the first 11 reporting months of the fiscal year totaled $374.2 million, up 4.1% compared to last year and 5% above forecast.

MAY NUMBERS
May gross revenue was $425.3 million, down 4% from last year and 6.2% below forecast.

John Shelnutt, head of the Department of Finance and Administration’s Economic (DFA) Analysis & Tax Research division, said a shift in corporate income tax collections altered the May results, but said the revenue is expected to meet state budget needs.

“Results in May reflect a shift of approximately $20 million in Corporate Income tax collections previously reported in April but normally expected in filings for May. This one-month shift boosted April results at the expense of May while year-to-date results now reflect a more realistic look at performance with one month remaining in the fiscal year. The budget is on track to be fully funded,” Shelnutt noted in his report.

Individual income tax collections during May totaled $203.6 million, up 1.2% compared to May 2013 and below forecast by 1.7%.

Sales and use tax collections during the month totaled $180.7 million, down 1.8% from last year and 5.2% below the forecast. Sales and use tax 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.

OTHER TAX COLLECTIONS
Alcoholic beverage
May 2013 - May 2014: $47.1 million
May 2012 - May 2013: $46.6 million

Games of skill
May 2013 - May 2014: $35.9 million
May 2012 - May 2012: $32.6 million

Tobacco
May 2013 - May 2014: $201.2 million
May 2012 - May 2013: $209.5 million

Insurance
May 2013 - May 2014: $68.6 million
May 2012 - May 2013: $65.1 million

COLLECTIONS HISTORY
Tax collections during fiscal year 2013 (May 2012-May 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 May 2010-May 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.

This bidding for breakfast sausage could get expensive. What began as a $6.5 billion bid by Pilgrim’s Pride for Hillshire Brands, has now seen Pilgrim’s up its bid to $7.7 billion to counter a $6.8 billion counter offer by Springdale-based Tyson Foods.

Tyson Foods’ officials would not comment Tuesday about a next move, but the company, in a better financial position than Pilgrim’s, can afford to push the bidding higher.

In an era of higher competition in the low-margin commodity chicken business it’s no wonder Pilgrim’s Pride and Tyson Foods are each actively pursuing Hillshire Brands. Pilgrim’s upped the ante introducing a higher bid of $7.7 billion on Tuesday (June 3) in a deal that would pay Hillshire shareholders $55 per share, a $5 premium over Tyson Foods $50 cash bid offering on May 29.

Pilgrim's revised proposal is not subject to any financing conditions or contingencies, according to the company release. 

“Pilgrim's is confident the transaction is strategically and financially compelling, and creates considerable value for the shareholders of both Pilgrim's and Hillshire. Pilgrim's anticipates run-rate cost synergies in excess of $300 million annually to come from operational and value-chain efficiencies and, in addition, significant growth opportunities in higher margin branded products, both in North America and internationally,” Pilgrim’s CEO Bill Lovette noted in the release. 

He said Pilgrim's expects the increased cash flow from the combined company and the realization of synergies will allow it to rapidly pay down the initial acquisition debt. 

The winners to date have been Hillshire investors as the stock price has rallied another 9% on Tuesday (June 3) to $58.45, up $4.88 on Pilgrim’s counter offer. Shares of Hillshire Brands are up 65% in the past month from the acquisition offers by Pilgrim’s and Tyson Foods.

The offers were unsolicited by Hillshire Brands who had already planned to acquire Pinnacle Foods, a $4.3 billion deal announced May 12. Pilgrim’s and Tyson have both said their offers do not include Pinnacle Foods. 

Tyson hinted during its calls with media and analysts last week that it is financially able to raise the stakes of the offer if necessary. Wall Street is waiting to see if Tyson management will counter the $55 per share bid laid down by Pilgrim’s today.

Hillshire’s Board of Directors said Tuesday it will enter into formal talks with Pilgrim’s Pride and Tyson Foods.

“Hillshire Brands is party to a merger agreement with Pinnacle Foods pursuant to which Hillshire Brands agreed to acquire Pinnacle Foods for per share consideration of $18 in cash and 0.5 shares of Hillshire Brands common stock,” the company said in a statement.

Hillshire also noted that its Board of Directors is not withdrawing, modifying, withholding or qualifying its recommendation with respect to the Pinnacle merger agreement and the merger, or proposing to do so, and is not making any recommendation with respect to either the Pilgrim’s Pride or Tyson Foods proposals.

“Hillshire Brands does not have the right to terminate the Pinnacle Foods merger agreement on the basis of either of these proposals or enter into an alternative acquisition agreement with either of these parties prior to termination. There can be no assurance that any transaction will result from these proposals,” the company noted.

Officials with Pilgrim’s Pride and Tyson Foods said they would pay the $163 million termination fee payable to Pinnacle Foods if one of their offers is accepted.

Alexia Howard, senior research analyst at Sanford Bernstein, said last week the deal make sense for Tyson because its gives them more brands at the end of the of supply chain. Those “value added” products deliver higher margins than food service and commodity meat sales at Tyson Foods.

“It could be a deal of lifetime for Tyson,” she said.

She said the Tyson offer at 13.4 times earnings was the priciest merger and acquisition offer seen this year in the food sector. That was before Pilgrim’s counter offer on Tuesday.

Howard said the fit with Tyson is solid given its diversified protein businesses. It’s not as good of a fit with Pilgrim’s who does not have a domestic pork business. 

TheStreet's Jim Cramer said he does not recommend Hillshire Brands to sell because he thinks the stock could move higher in the bidding war between Tyson and Pilgrim’s who want to move into higher margin offerings. 

Tyson shares (NYSE: TSN) were trading down more than 3% on the news of the higher Pilgrim’s bid. Tyson shares were trading at $42.07 in the heavy volume in the afternoon session (June 3). Pilgrim’s shares (NASDAQ: PPC) also lost ground trading around $25.34 down more than 2% in the afternoon session.

The U.S. Marshals Museum's Finance Committee advanced a proposed $3.176 million budget Tuesday (June 3) that includes funding for architecture and exhibit design for the museum.

According to Marshals Museum President and CEO Jim Dunn, the proposed budget includes $1.6 million for a three phase architectural design phase to take place during fiscal year 2015, as well as $808,000 for three phases of exhibit design.

The exhibit design has been awarded to Brent Johnson design of Boston, Dunn said, while the museum is in contract negotiations with Polk Stanley Wilcox of Little Rock and Cambridge Seven and Associations of Cambridge, Mass., for architecture design the firms will complete for the museum.

Beyond the combined $2.408 million in design fees included in next year's budget, Dunn said an additional $768,000 has been budgeted for operations for the year. The budget will come up for a vote before the annual meeting of the Marshals Museum's board of directors on June 10.

With design work soon expected to get underway, Dunn said the museum still plans to officially break ground on Sept. 24, with a targeted opening date of 2017.

"We hope to have some preliminary conceptual designs from exhibit designers later this year," he said, adding that the conceptual drawings will give the public its first glimpse into the long-awaited museum to be built along the banks of the Arkansas River.

But Dunn said breaking ground and hiring designers does not signify the end of the museum's fundraising efforts. Quite the opposite, in fact.

"We still have a lot of money (to raise). Just because we're breaking ground doesn't mean the job is done. Still a lot (to raise) and a lot in the pipeline."

When reached for comment Tuesday, Dunn said he could not recall exactly how much the museum had raised to date, though he said fundraising has continued in order to break ground as expected in September.

He said in August 2013 that the museum would need to raise an additional $10 million to $15 million"to reach the 'threshold' of between $30 million and $35 million needed to break ground and begin construction. Dunn is also banking on new market tax credits for partial funding of the museum, which he said should bring in nearly $10 million."

The museum is also counting on banking $4 million to $5 million on the sale of commemorative U.S. Marshals Service coins to be marketed by the U.S. Mint.

Dunn said the overall cost of the building itself was in excess of $50 million, but said up to this point the figure was just an estimate without hard data to back it up. With the money set aside to pay the design firms, he said the numbers should start coming together to better reflect the final totals that need to be raised in order for the museum to be completed on time.

"The capital goal is $50 million. We've still got startup, staffing and expenses and operations and fundraising fees in addition to that. What we're going to be able to do reasonably soon is now that we have exhibit designers under contract and architects almost under contract, we'll be able to work on a budget instead of project goals."

The June 10 meeting of the Marshals Museum board will take place at the River Park Events Building, 121 Riverfront Drive, at 11 a.m.

The Fort Smith Board of Directors will hear the city's side of recent allegations by attorney Matt Campbell that the city was billed for legal services never provided in its defense of a lawsuit brought by Campbell.

Campbell, a Little Rock-based attorney and counsel for a group of police officers engaged in a whistleblower lawsuit against the city, made the claims on his Blue Hog Report blog.

City Director Philip Merry brought the issue to the forefront at the end of Tuesday's (June 3) Board meeting, where he asked for a certified public accountant (CPA) to do a review of the Daily and Woods Law Firm's billing to the city. He had also proposed forming a five-member council to evaluate whether the city should continue paying an outside law firm to represent the city on a contract basis or whether the city should employ its own staff attorney(s).

In announcing his desire to see an accounting firm review the billing by Daily and Woods, Merry said it was not based on an assumption of guilt.

"No wrong doing is assumed in any way on this motion," he said. "As stewards of other people's money — that being the taxpayer's money — we must assure an open air, objective full review of the process to our taxpayers."

As Merry was making his proposal for the independent committee to review the city's employment or contracting with attorneys for services, Mayor Sandy Sanders cut Merry off and said since he had not presented the items at the beginning of the meeting when directors were asked whether they had items to add to the agenda, it was not a proper motion.

Instead, it was decided that the city's contract with Daily and Woods, as well as the firm's billing of the city, would be reviewed at a June 10 study session of the Board.

LIBRARY MILLAGE ELECTION
In other business, the Board set a special meeting for June 10 prior to the study session to consider a special election in August for a millage increase for the library. According to state law, the city must authorize the library's ability to hold an election to raise its millage.

According to Fort Smith Public Library Executive Director Jennifer Goodson, the library has not had a millage increase in more than 50 years. The library's board of directors is seeking a two mil increase, which would raise the rate on Fort Smith landowners to three mils, or what she said was about $60 per year on a $100,000 home.

The Board balked at holding a special election when no other elections would be held in conjunction to the library vote.

"You know Jennifer, I think the timing is bad," said City Director George Catsavis. "You know how the economy is around here and how people are struggling to pay their bills, including me. I've had to raise the deductible on my insurance to keep my escrow in balance. Two mils doesn't sound like much, but this is a bad time for it."

In response, Goodson said the library wanted to add services, including streaming video, and could not without the millage increase.

In addition to the point of adding services, Goodson said the library has had to dip into strategic reserves during the last two years at a time when it was serving a larger number of patrons, another reason why the library wanted to ask for a millage increase.

City Director Mike Lorenz asked why the library could not wait to hold the election until November in order to save money. Goodson said such a delay could mean the millage vote would get overlooked by the partisan elections locally and at a state level that would be on November's ballot.

In all, she said the cost of an election would be $30,000 and would be paid for out of library funding, meaning the city would not be out any money on the election, nor would the county election commission.

The special Board meeting will take place June 10 at noon in the library, with the study session on Daily and Woods to follow.

SUSTAINABILITY PUSHBACK
The Board also tabled a resolution expressing support for a sustainability initiative proposed by the University of Arkansas at a study session last week.

The Board tabled the resolution following outcry from citizens who fear the resolution was part of a United Nations act that pushed for more sustainable growth on a global level. Attorney Joey McCutchen told the Board that the resolution would also put unnecessary regulation on Fort Smith citizens.

The resolution will be investigated in more detail at a later study session as a result of Tuesday's tabling.

The Board also failed to make a motion to adopt a new governing policy, with the proposed governance policy dying due to a lack of a motion. City Clerk Sherri Gard said as a result, the item would not be brought up for another vote.

Van Buren municipal employees, including police officers and firefighters, could face increasing costs associated with health insurance for spouses and dependents when next year's city budget is created following a rate increase for the city.

The rate increase first came to light during May's city council meeting, when Freeman told city aldermen that the city's municipal health insurance had increased in cost by $133,596 annually, or $11,133 per month. The city's health care plan covers 148 people. No action was taken at the meeting, though Freeman has made a recommendation to the council of increasing the amount paid by city staff to cover for dependents. The city now covers 100% of the premiums for staff and dependents.

While many insurance plan providers have blamed rate increases on the Affordable Care Act, Freeman said the city's increase is simply due to a few catastrophic claims by covered individuals.

To highlight the point, Freeman points to premiums paid by the city of $711,560.10 from Nov. 1, 2013, to April 30, 2014. During the same period, claims paid for individuals covered under the plan amounted to $959,112.94. Incurred but unreported claims amounted to $159,855.35.

In all, the total loss reported by the Municipal Health Benefit Fund for the city was $1.14 million, which amounts to a loss ratio of 160.26%. It was that loss ratio that pushed Van Buren into a higher risk class with the MHBF, resulting in the higher premiums.

Freeman said the city will cover the increase out of reserve funds, but he said it is not sustainable for the long term.

"You come to a certain point that you go, ‘Well, it's been great that the city has always paid for employees and their families 100%.’ But as rates have increased and as the city has grown its employees, those increases in stages go up exponentially. So at some point, yeah, as they continue to go (up), we are going to have to say OK, where's our stopping point? Because we can't continue to absorb this. It's going to cause problems."

The only real way to have the city's premium drop is to have the number of claims go down to where the loss ratio would even out.

According to Arkansas Municipal League Executive Director Don Zimmerman, that has happened for 39 cities across Arkansas last year that take part in the AML's health benefit fund.

"We've got six classes of rates," he said. "Cities work their way up or down depending on their own utilization, as well as utilization of the group."

One way to help reduce the number of claims would be for the city's insured to take part in a wellness program in hopes that it would be a preventative measure.

Another way to try to save the city money is to look elsewhere for coverage, as suggested by Alderman Max Blake.

Freeman said Arkansas Blue Cross and Blue Shield is preparing a quote for the city, though it is unknown at this time whether the provider could give the city lower rates.

While neither Freeman or Zimmerman blamed the ACA for the rate increase on Van Buren and the 22 other cities across the state that saw increases, Zimmerman did say that the health plan was hit with higher fees this year.

"Overall, the impact on our plan is a 1% increase overall. That's the largest increase we've had in seven years. …I think that's got more to do with (catastrophic events), although the new (law) has required some things we had not had to have before such as unlimited caps and adult age dependents to age 26."

Such moves increases risk, Zimmerman said.

Freeman said even if the city gets a better rate from Blue Cross, the city could still stay on the Municipal Health Benefit Fund plan since it does not know whether the rates will stay lower in the long term.

"…that has happened with some municipalities, being part of the Municipal League System, we've seen that happen with some municipal governments where they've switched to somebody and then a year or two years later, they're right back because who they switched to really came in and underbid to get the business and I don't want to do that. I want to make sure we have a good provider and we're not just making a silly decision, I guess you could say."

Whatever happens, Freeman said something must be done and his recommendation to the city council will be limiting in some way how much the city pays for dependent coverage.

Arkansas Attorney General Dustin McDaniel approved the popular name and ballot title for a proposed constitutional amendment that would decriminalize marijuana. The measure is one of two marijuana related initiatives that could make the November ballot.

The “Arkansas Hemp and Cannabis Amendment” would allow for the “cultivation, manufacturing, distribution, sale, possession and use of the cannabis plant” and products derived from it.

The proposal would also allow the General Assembly to regulate the amendment, if it were to pass voter approval, but it states that federal law would still trump state law.

Robert Reed of Dennard, Ark., is listed as the pursuer of the proposed amendment. With the AG’s approval, Reed and his supporters may begin collecting signatures to qualify for ballot access this November. The group must submit more than 78,000 valid voter signatures by July 7 to qualify for the November election.

Officials with Arkansans for Compassionate Care are also working to get signatures to place their medical marijuana question on the November ballot. The petition circulated this year is largely the same as the one that made it to the ballot in 2012 – a ballot initiative that failed by a vote of 48.56% for and 51.44% against.

While the Compassionate Care petition closely mirrors 2012's proposal, there were a few changes. The key difference that is what is known as the “hardship clause,” which ACC Campaign Director Melissa Fults has said would allow individuals who live too far to receive deliveries of medical marijuana or have medical issues that prevent them from driving to grow up to three marijuana plants in the privacy of their own home for personal, medical uses. But she said such a provision in the law is not intended to just let people freely grow pot with no supervision.

"A health department representative can go to your house, ask to see your (medical marijuana) license, ask to see your grow room, to see that you are only growing the three mature plants you're qualified to grow," she said in this previous report by The City Wire.

Also, the medical marijuana effort is an initiated Act, different than the state Constitutional Amendment that Reed is pushing.

Opinions among Arkansas voters on an outright decriminalization of marijuana are unknown, but a recent poll of likely voters found that a medical marijuana initiative could be approved by voters. The Talk Business-Hendrix College poll asked the following question.
Q: A proposal to allow the use of medical marijuana may also be on the ballot through the petition process. It would provide Arkansans the ability to use medical marijuana for debilitating medical conditions with a doctor’s recommendation and to allow patients to purchase medical marijuana at a regulated not-for-profit dispensary. If the election were held today and the measure were on the ballot, how would you vote?
• 45% Yes
• 45.5% No
• 9.5% Don’t Know

In terms of partisanship, Democrats are solidly supportive (56%-33%), Republicans are in solid opposition (60%-28%), and, appropriately, independents split right down the middle.

“Once again, assuming that the voters get the opportunity to speak on the issue in November, it appears we’re once again on our way to a close vote on the legalization of medical marijuana,” Dr. Jay Barth, professor of political science at Hendrix College, said in his analysis of the April 2014 poll.

Possibly more troubling for those who believe marijuana should not be legalized in any way is that voters in the historically conservative belt that stretches from Fort Smith to Northwest Arkansas supported the 2012 measure. Combined, the proposal to allow medical marijuana was supported by 51.5% in Benton, Crawford, Sebastian and Washington counties. However, the measure failed in Benton County (47.4% for, 52.2% against) and Crawford County (47.7% for, 52.6% against).

Sales tax revenues for the city of Fort Smith were up in April, with the revenue gap narrowing in the city for the first four months of the year.

The city's sales taxes (1% for streets and 0.75% for water and sewer projects) collected $2.979 million in the April report, up 3.38% from the same period in 2013.

The total in the April report represents an increase of 0.92% over budget. (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 April are from taxes collected in February and transferred by merchants to the state in March.)

Collections so far in the 2014 reporting period of the two taxes were $11.688 million, while the same period in 2013 saw collections of $11.702 million. The same period in 2012 saw $13.586 million and $12.932 million in 2011.

Total collections in the year 2013 of the two taxes plus the 0.25% fire and parks sales tax were $38.937 million. 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 countywide 1% sales tax in the April report was $1.294 million, up 3.5% from last year's total during the same period of $1.277 million. The collection was up 3.02%, or $38,708, compared to a revenue estimate of $1.283 million for the month.

The countywide tax generated $15.353 million for Fort Smith during 2013, up 0.49% compared to 2012 and down 1.99% compared to budget forecasts. 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 supports fire, police and other critical city functions. The dip in collections compared to budget estimates has resulted in city officials seeking 4% budget cuts from all departments.

The prospect of any budget cuts similar to what happened last year seems to have dimmed with the April report, with revenues appearing to have stabilized. Finance Director Kara Bushkuhl said the report "has a positive trend and is helping to close the gap on the annual revenues."

Bushkuhl said last month that a reduction would be unnecessary, though she said the fire and parks department budgets may need to be adjusted slightly if trends continued, though the April figures appear to show a reversal in trends, at least in the short term.

PREVIOUS ANNUAL COLLECTION INFO
Fort Smith 2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2013: $38.937 million
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
2013: $15.353 million
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