So far no Northwest Arkansas companies have become subzones of Foreign Trade Zone 14 in Little Rock. Rumors that a new foreign trade zone was coming to the area do not appear to be accurate given the issue was researched and discarded a year ago.

A foreign trade zone (FTZ) is the same as a free trade zone with the foreign trade zone moniker the most common in the United States, according to the Small Business Administration.

An FTZ is a class of special economic zone where companies can import goods that may need to be reconfigured or manufactured then either put into the US economy or re-exported to another country. No duty fees are charged on those components until the finished product goes into the U.S. commerce. Essentially, the FTZ acts as “foreign soil” despite being geographically located in the United States.  

About a year ago there was an effort to research applying for an FTZ in Northwest Arkansas but the idea was vacated. The Northwest Arkansas Council worked with several people more than a year ago to explore whether a free trade zone was needed in the area, and concluded that it isn’t needed.

“We hosted a group meeting to answer questions about what a FTZ does and doesn’t do. We priced the application/requirements process for us, and we stopped there,” said Rob Smith, spokesperson for the Northwest Arkansas Council. “Our alternative is that we can refer people to the Little Rock Free Trade Zone. They have a unique arrangement that allows them to extend their zone to individual companies anywhere in the state.”

The Arkansas Economic Development Commission is the grantee for FTZ 14 (the Little Rock Port), said spokesperson Scott Hardin.

“In this role, we approve subzone requests (subzones of FTZ 14),” he said. “We also monitor subzone reports from all FTZs in the state (subzone reports are completed annually). AEDC certainly supports the establishment of Foreign Trade Zones or subzones in the state as we want to take full advantage of any opportunity to help Arkansas companies with foreign trade.” 

James Firestone is the director of operations for the Little Rock Port Authority explained that when a subzone is approved, it must be for a specific product purpose. For example, a whiskey distributor could import glass, which is usually has a high duty, then “reassemble” the product into gift packs. The imported product also can’t be intermixed with locally produced products.

Usually a subzone must be two hours of driving time from Little Rock because of the inspections that customs agents must perform at the companies but the customs agents have been willing to work with them to accommodate companies that might be outside that range, Firestone said.

So far there are four subzones of FTZ  14: Shaw Mid States Pipe Fabricating, Inc. in El Dorado; Lion Oil Company in Jackson, Miss.; and Husqvarna Outdoor Products, Inc. in DeQueen and Nashville.

At one point a company with operations in the Fort Smith region applied to produce wind turbines, Firestone said. Mitsubishi, which completed an almost $100 million 200,000-square-foot wind turbine assembly plant in Fort Smith, never operated the plant.

What Northwest Arkansas does have is a Port of Entry, which is at the Rogers Airport, said Dan Hendrix, CEO of World Trade Center Arkansas. The only other Port of Entry in Arkansas is located in Little Rock.

A Fort Smith automobile dealership is getting national attention for its efforts in the world of social media.

According to a press release from the Driving Sales Executive Summit, Harry Robinson Buick GMC's social media team, headed up by Social Media Manager Cathy Nesbit, will be one of only five dealerships nationally to be recognized for "best ideas" at the group's Las Vegas convention in October.

The idea garnering Nesbit and the dealership attention is its "Free Gas Friday" promotion that has run weekly since the start of the year. According to Nesbit, she and a photographer seek out a vehicle with either a Harry Robinson front-mounted license plate or a Harry Robinson sticker on the rear and award the driver with a goody bag and a $50 gas card.

After Nesbit or someone from the dealership awards the winner with a gas card, the entire event is then uploaded to the station's YouTube channel.

"We wanted a video series and a way to honor our loyal customers specifically and just do something that they were eligible for," Nesbit said.

While the series rewards loyal customers with free gas, the efforts are gaining national attention and resulting in increased conversions to the company's website where new and used vehicles are listed for purchase.

"We put the videos on Facebook and our YouTube page. On Facebook video plays, we've had over 24,000 views and I checked Friday and we had 33,123 views on YouTube," she said, adding that another 456 views had been logged since Friday.

Nesbit said the numbers were a vast improvement from the year prior, when the company had only logged 8,000 views on its YouTube channel.

Beyond the "Free Gas Friday" promotion, other promos like "Test Drive Tuesday" were pushing up the views and also driving traffic to the dealership. Nesbit said a third of sales could be tied to customers having previously seen the information online.

"And that's traceable. If you're asking me, it's much much higher. But we have to be able to prove every number and I'm a numbers person, (and) the average is 33.3%," she said.

But the numbers were not always so strong, according to General Manager Renee Durham. Durham said Nesbit started at the company four years ago and was brought in without a defined job description.

"When we identified social media as being important in marketing and recognizing our employees and customers, we added a social media person," she said.

And even though Harry Robinson could have gone with any number of national firms that specialize in social media and web management, Durham said the decision was made to hire Nesbit and have her build the position and the new marketing arm of Harry Robinson from the ground up.

During that time, Nesbit has taken strategies she has developed on her own and strategies used in other larger markets and applied them locally to take Harry Robinson to a new generation of digitally connected customers, reaching not only the Fort Smith region but others, as well.

In that time, Nesbit has done what many in the automotive world find impressive — she has taken social media and made it one of the primary drivers of customers at the dealership.

"It's nearly unheard of for a dealership to capitalize on any kind of traffic to their website from Facebook specifically. And our number one referrer of traffic outside of Google and Yahoo! is Facebook," she said.

And with the nation's automobile dealerships watching Oct. 12-14 in Las Vegas, Nesbit will have five minutes to explain her social media strategy for "Free Gas Friday" and who knows? She could be chosen by a panel of judges as having the best marketing idea in the auto industry for 2014.

The two major party candidates for Arkansas Attorney General tout their experience as positives for voters to consider this fall, but don’t worry — this race also has its fair share of controversies.

Republican Leslie Rutledge of Little Rock and Democrat State Rep. Nate Steel of Nashville, who are joined by Libertarian Aaron Scott Cash of Springdale in the race, recently sat down with Talk Business and Politics to talk about their campaigns.

The position has been a steppingstone for individuals seeking other offices. Democrats Mike Beebe and Mark Pryor parlayed their terms as attorney general into higher office as did one-time AG Bill Clinton.

Rutledge, a Batesville native, is seeking to become the first Republican and first woman to be elected to the post, while Steel is seeking to become the fourth consecutive state legislator — joining Pryor, Beebe and current occupant Dustin McDaniel — to be elected.

In recent days, there has been controversy over an ad being aired by the Republican Attorney General’s Association (RAGA) in which Rutledge appears. The commercial, called the “salt shaker” ad, has Rutledge sitting at a table, talking about issues involving state and federal government.

Critics of the ad, including the pro-Democratic Southern Progressive Fund, contend Rutledge and RAGA are coordinating their efforts and may be violating the rules of independent expenditure spending. Arkansas’ ethics rules define independent expenditure activity as “expressly advocating the election or defeat of a clearly identified candidate for office” that is made without “arrangement, cooperation, or consultation” with a candidate, committee, or their representatives.

The RAGA ad does not advocate voting for or against Rutledge. It also does not identify her as a candidate for Attorney General. Rutledge says the interaction between RAGA and herself is above board. She points to a 2006 Arkansas Ethics Commission advisory opinion that involves advocacy issues involving Arkansas Right to Life in defending the arrangement. The opinion quotes the 1976 Supreme Court case, Buckley v. Valeo, involving campaign finance issues and California Pro-Life Council v. Getman, a 2003 9th U.S. Circuit Court of Appeals case.

The 2003 ruling, reads in part, “Communications that discuss the record and philosophy of specific candidates, like the one before us, do not constitute express advocacy under Buckley and MCFL unless they also contain words that exhort viewers to take specific electoral action for or against the candidates.”

“I appreciate RAGA being willing to talk about important issues and where I stand on them. If this election is about issues, then I will win,” Rutledge said.

When asked if she views the ad as coordination between her campaign and RAGA, she added, “Yes, legally.”

Steel said he has questions about the ad, but is unclear on if it violates any particular rules.

“I can’t answer that just by seeing the ad,” he said. “It certainly suggests some kind of coordination. I don’t know how it would be possible to produce an ad and speak directly into the camera without coordinating, but I don’t know how it was produced or aired. I would just be speculating.”

A new RAGA ad out this week as a follow-up to the “salt shaker” ad is more aggressive in its message. It seeks to attach Nate Steel to President Obama, calling him a “lap dog” for the administration. The ad advocates for Rutledge saying she’ll be “a guard dog” against the President as Arkansas Attorney General.

The ad follows the traditional formula of using footage and photos obtained in the public domain and does advocate for and against the candidates in the race.

The Democratic Attorneys General Association has not aired any commercials on Steel’s behalf or against Rutledge, but a group known as the Committee For Justice And Fairness has spent six-figures in support of Steel in an ad that touted his toughness as a prosecutor. The Justice and Fairness group is based out of Denver and supports Democratic attorney general candidates nationwide, according to the Center for Public Integrity.

ISSUES, RECORDS & PHILOSOPHIES
The Arkansas Attorney General’s race has already been heavily influenced by outside group spending. In the GOP primary, Rutledge was assaulted with an estimated million dollars in negative campaign ads and mailers by the Judicial Crisis Network, which promoted the candidacy of Republican David Sterling.

The ads attempted to link Rutledge’s positions to those of Democratic President Obama and former House Speaker Nancy Pelosi. Many political observers contend the attacks backfired and helped propel Rutledge to her historic run-off victory.

And while third party ad spending may influence the AG’s race, there are plenty of issues and philosophical approaches to the office that define these two major party candidates for the state’s top legal post.

During a recent campaign appearance in Jonesboro, Rutledge said she would like to expand the current Cyber Crimes unit with the AG’s office, going after internet predators and scam artists.

She said local departments often do not have the funding to handle major cases and that her experience as a deputy prosecutor will help. She said the program is one place where the AG’s office can do some work.

Steel said he supports the Cyber Crimes Unit and wants to see the program succeed.

“I carried the enabling legislation in the state House to give the Attorney General the authority to subpoena,” said Steel, who is a former prosecutor. “It is a great investigative tool and does not meddle in the local affairs. It is not a top-down approach and it utilizes the resources that are out there.”

Rutledge also said she wants to work to support efforts on pushing back on the overreach of the federal government.

A perfect example is Obamacare, where 28 attorneys general filed suit or amicus briefs on the federal law when it went to the Supreme Court, Rutledge said.

“We have to make sure people know it is the role of the Attorney General. It is not a Republican or Leslie Rutledge thing,” Rutledge said.

Also during her recent Jonesboro stop, she touched on questions about the Environmental Protection Agency.

“The EPA has its foot on the throat of farmers and business owners in our state,” Rutledge said. “We also need a fair business environment.”

For his part, Steel said there are plenty of state issues to deal with.

“I am frustrated with Washington as much as the next guy. But the parole and child predator problems in the state are big. It is a huge disservice to just focus on D.C.,” Steel said.

Steel has rolled out a multi-point plan that he says he’ll take to the state Legislature on Day One.

“My opponent said there is no need for the Attorney General’s office to have a legislative package for this upcoming session,” Steel said in a late August press conference. “Because your legislature convenes every other year, that’s a long time for the many problems I’ve mentioned to go without resolution. We can’t look to a national agenda for marching orders.”

Rutledge says while she doesn’t have plans to bring a package to the state capitol, she will work with state agencies to help educate officials on the law’s boundaries.

“We need an attorney general to work to make sure that state agencies do not go beyond the scope of the statutes. From what I am hearing, I am hearing it is a big problem,” Rutledge said. “We need a strong governor and a strong legislative branch. We do not need a Big Brother or in my case, a Big Sister. But we need to review the scope.”

Rutledge also questioned a 2013 legislative vote by Steel involving Level 3 and Level 4 sex offenders being allowed in state parks. Steel said he voted present on the bill until a park in his district could get further information.

“The Crater of Diamonds State Park had concerns over it, on whether they could patrol the area,” Steel said. “There was not a single no vote on it and I expressed my support. I voted present until I could hear from Crater … she is trying to make my record something that it is not.”

Rutledge said the record stands for itself.

“It is not a misrepresentation of his record. He was the only representative to vote against prohibiting Level 3 and Level 4 sex offenders in state parks,” Rutledge said.
Steel said he believes public safety is the top priority for the attorney general’s office.

“It does not matter if it is consumer protection, consumer advocacy, victim protection or cyber crimes, it is all about public safety,” Steel said.

Steel said his experience as a prosecutor has helped him in his job as a state legislator as well as in the AG’s race.

“I personally prosecuted murder, rape, child predator and drug cases,” Steel said. “That is the major distinction between us. It is the major difference.”

Rutledge countered that her experience as a deputy prosecutor in Lonoke County, dealing with cases involving foster children, as legal counsel to former Gov. Mike Huckabee, and working in the Arkansas Court of Appeals are examples of her work experience that will guide her in the AG’s role.

Her work with foster children as an attorney at the Arkansas Department of Human Services has come under scrutiny from critics calling on her to release her personnel files with the agency. A partial release of her personnel file indicated that her status for rehire was changed nearly 10 days after she departed the agency.

Both candidates said they opposed Act 570 – a 2013 law that revamped the state’s criminal justice system by changing certain drug-related crimes from being felonies to being misdemeanors.

The Greater Fort Smith Association of Home Builders Parade of Homes kicks off Oct. 3 and its showcase home features design elements that feature both beauty and functionality.

The home, located at 7230 Stonebrook Drive in Chaffee Crossing, boasts 2,201 square feet with design features including a natural gas-powered emergency generator, a garage heater, a multi-head master shower and an outdoor kitchen with a mounted outdoor television.

The home, built by Fort Smith-based Carrington Creek Homes, also features 26 windows bringing natural light into all the main living quarters, including the dining room, living room and kitchen.

"I think one of the things that is a little more unique than most homes (are) the big open windows. Now the ones over there will roll out. But you don't walk into a house and see a bank of windows that's great big where you can see out," said Melody Harshbarger, who did the interior decorating of the home and is handling marketing for Parade of Homes sponsor Arkansas-Oklahoma Gas Corp.

She said a design element of smaller windows upon the entry coupled with the dark woods throughout and decorative lighting provide the home with a "story book" feel.

Among the unique features of the 2014 Showcase Home is the natural gas generator, which is powered by a connection to AOG and will atomically kick on should power go out for any reason. With the generator having a direct connection to the utility, its capability is virtually unlimited, Harshbarger said.

"It's the first time there's ever been one in the showcase home. There's been generators before, but this is a (natural) gas-powered generator," Harshbarger added.

Stephanie Stipins, executive director of the Greater Fort Smith Association of Home Builders, also noted the home's inclusion of a tankless natural gas-powered hot water heater.

Both natural gas features add to the cost of building a home, Stipins said — the generator runs about $6,000 while the tankless hot water heater adds about $2,500 in cost — but the overall cost of the home and all its features are on par with other homes in the Chaffee Crossing area.

With all the features of the showcase home, including the natural gas amenities and an outdoor kitchen, the home comes in at a price of $289,500, or about $132 per square foot.

"This whole division is roughly around the $300,000 price range," she said. "… We feel like we underpriced this a little bit. We felt like it was a higher price point, but we didn't want to overprice it for its area. So it's actually a bargain for all the amenities it has."

Harshbarger said whoever purchases the showcase home each year gets one of the region's most updated, advanced homes that she said comes with that extra little "oomph."

"They get an extra bang for their buck, so to speak," Harshbarger said.

"Plus the prestige of owning the showcase home," Stipins added. "So much time and resources have gone into this home and to own that home has to be very beneficial to the new owner, as well."

The time and resources going into the Stonebrook home include more than 30 local vendors working to complete construction of the house in time for the Parade of Homes.

In the 27 years the Home Builders have sponsored a Parade of Homes and had a showcase home, there have been ups and downs in the market, with the housing bubble of 2008 being the most recent example.

But Stipins said activity has started to shift and return to the Fort Smith region. In the region, building permits have increased 10% for the first eight months of 2014. Last month in Fort Smith, new residential permits were valued at $3.313 million and accounted for 77.66% of all residential construction permits issued.

From August 2013 to August 2014, permits increased by 5.66% in value in the city.

Stipins said a lot of the drive in Fort Smith has been activity happening at Chaffee Crossing, adding that the planned Arkansas School of Osteopathic Medicine and construction of a new headquarters for ArcBest had made the former military property the hot spot in Fort Smith residential construction.

"According to the National Association of Home Builders, we're on a record high for the improvement in home sales. We continue to climb since last August, new home sales have continued to climb. And in the Fort Smith area with developments at Chaffee Crossing … the desirability of living in Chaffee has increased as well."

The Parade of Homes runs from Oct. 3 to Oct. 12, with homes open from 1 p.m. to 7 p.m. daily featuring 17 different homes across Sebastian County.

More information can be found at FortSmithHomeBuilders.com.

Building permits for the three largest cities in the Fort Smith region dropped 55.86% from September 2013 to the same month this year.

The cities of Fort Smith, Greenwood and Van Buren had collective permits of $22.728 million in September, down 55.86% from September 2013's total of $51.494 million.

Driving the totals during September of last year were two commercial building projects. One, a $26.2 million permit for the new Mercy Orthopedic Hospital set to officially open Friday (Oct. 3) at the intersection of 79th Street and Phoenix Avenue. The other permit was a $6.35 million permit for relocation of Smith Chevrolet from the corner of Zero Street and Towson Avenue to a location at 6500 Autopark Drive along Interstate 540.

Permits for September 2014 were on par with September 2012, when $22.822 million in permit values were issued.

Collectively for the year, the three cities have seen a decline of 9.49% in permit value from $175.487 for the first nine months of 2013 to $158.836 million for the first three quarters of 2014.

Driving permits during the first third of the year was the city of Fort Smith, with $136.634 million in permits. Van Buren tallied $16.404 million in permits, while Greenwood came in last at $5.799 million.

FORT SMITH
The city of Fort Smith had a total of 195 permits issued in September to reach its $22.078 million value for building permits. That value represents a drop of 55.82% from the same month last year, when 191 permits were issued at a value of $49.976 million.

Commercial projects were the low point for the city of Fort Smith in September, only bringing in $5.179 million on 42 permits.

It was a different story for residential permits, which includes multi-family and duplex. In total, $11.009 million in residential permits were issued across the spectrum from single family to multi-family. The total number of permits issued across the three different residential categories stood at 128, bringing the average residential permit to $86,009.

GREENWOOD
Only three permits were issued in Greenwood last month with a total value of $194,000.

The figure represents a decline of 73.77% from last year's total permit value of $739,650, largely driven by residential developments in the city.

The total last month also represents a decline of 76.29% from September 2012, when the city issued permits valued at $818,360.

VAN BUREN
The city of Van Buren also had a large decline from September 2013 to September 2014, dropping 41.35% in value from last September to the same month thisyear.

Driving Van Buren's building permits during this same month last year was new duplex construction, with eight new units being approved along North 24th Street for a collective total of $425,000.

Residential construction continued to drive figures last month, with $367,000 in permits issued in the city. An additional $73,500 in permits were issued for construction of swimming polls and two sign permits were issued at $16,060. No commercial building permits were issued in the city last month.

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.

Gov. Mike Beebe thanked hundreds of Southwestern Energy Co. employees on Wednesday (Oct. 1) for not only boosting the state’s economic fortunes over the last decade, but for also investing $10 billion in Arkansas to help lessen the nation’s dependence on foreign energy sources. 

“As a result of what you are doing, America now has more than 100 years of natural gas,” Beebe said of the nation’s domestic supply of the shale-produced energy resource.

Beebe made his remarks at the Conway Expo Center, where Southwestern executives from the company’s Houston headquarters joined nearly 1,000 employees who had traveled to Central Arkansas from across the Fayetteville Shale in their distinct white “SWN-logo’ed” natural-gas powered trucks. The occasion was to celebrate the energy giant’s 10 year anniversary as the leading natural gas producer in the Arkansas shale play.

Southwestern, whose Arkansas roots go all the way back to the 1920s as a Fayetteville-based natural gas provider, celebrated the milestone by recognizing employees for their contributions to the company and helping to put Arkansas on the “global energy map.”

Southwestern CEO Steve Mueller began the two-hour celebration by sharing that the Fayetteville Shale played a major role in the company’s growth from a small, struggling Arkansas-based drilling concern into the nation’s four-largest natural gas producer. 

“Arkansas is where it all started,” Mueller told the cheering employees. 

“This is certainly a milestone in the development of the play, and I’m proud of our role in its discovery and production,” he said. “Our work together in the Fayetteville Shale play has helped make us a strong company and put the state on the map as a major contributor to the country’s energy supply.”

Beebe followed Mueller and echoed the Southwestern CEO’s comments by telling the company‘s employees they have help strengthen America’s national security because the U.S. no longer has to purchase high-priced natural gas from unfriendly nations, including Iran and Russia.

“We know how (natural gas) transforms our economy, but what people don’t often talk about is what it has done for our national security,” Beebe said. “How many thousands of lives will be saved? How many times will we not have to go into harm’s way ... because of the work you do to get this resource out of the ground?”

Altogether, Southwestern officials said the company has invested more than $10 billion in development into the Arkansas shale play over the past decade. That capital investment is also largely responsible for making Arkansas one of the top natural gas producers in the U.S.

According to the U.S. Energy Information Administration (EIA), Arkansas is the eight largest producer of marketed natural gas with more 1.14 trillion cubic feet (Tcf) of production. Between 2004 and 2008, as Fayetteville Shale drilling and development matured, Arkansas’ annual production of marketed natural gas jumped nearly 140% from 187 billion cubic feet (Bcf) to 446.5 Bcf, EIA statistics show.

Then in 2009, Arkansas first joined the list of the nation’s top 10 marketed natural gas producers when sales of Arkansas natural gas spiked 53% to 683 Bcf of production. In 2010, Arkansas natural gas sales continued on an upward trend, jumping 35.7% to 927 Bcf of annual production, according to EIA figures.

Since 2011, despite fewer drilling rigs, Arkansas' marketed production moved over a trillion cubic feet for the first time, joining other top natural gas producing states in the top tier – including Texas, Colorado, New Mexico, Pennsylvania, Oklahoma, Wyoming and Louisiana.

Severance tax collections in Arkansas reached an all-time high of $77.3 million in fiscal 2014, pushed upward by stronger natural gas prices and better drilling techniques and production at the wellhead, industry experts say.

For the fiscal year ended June 30, 2014, gross natural gas severance tax revenue were up more than 50% from $50.6 million for fiscal 2013, according to tax data compiled by the Revenue Division of the Arkansas Department of Finance & Administration.

At the same time, collections of $8.44 million in July, the beginning of fiscal 2015, put the state on track to top $100 million for the first time since the state began keeping such records.

A decade ago, Southwestern began development of the Arkansas shale play by spending nearing $8.5 million to drill about 20 test wells in the basin in August 2004. Today, Southwestern plans to invest nearly $900 million in the Fayetteville Shale properties, which includes participating in nearly 460 to 470 company-operated wells.

Altogether, Southwestern has spudded a total of 4,110 wells in the Fayetteville Shale since its commencement in 2004 through the end of 2013, of which 3,538 were operated by Southwestern and 572 were outside-operated wells. Of these wells, 527 were spud in 2013, 491 in 2012 and 650 in 2011. Of the wells spud in 2013, 525 were designated as horizontal wells.

In addition, Southwestern has seen continuous improvement in its drilling practices in the Fayetteville Shale, the company said. In 2013, Southwestern’s operated wells had an average completed well cost of $2.4 million per well, average horizontal lateral length of 5,356 feet, and an average time to drill to total depth of 6.2 days from re-entry to re-entry.

After the event, Southwestern Senior Vice President Paul Geiger said the Fayetteville Shale will be viable for years to come, especially with the industry’s improving technology and drilling techniques. Geiger, who is based in Houston, was appointed in May to head the company’s Fayetteville Shale operations.

“The most exciting thing to me is that we got another decade (of production), based on what we know today,” Geiger said.

Michael Paladino and Joe Saumweber met while working at Rockfish as a software developer and business strategies specialist working primary in the retail sector. In September 2012 they jumped ship to launch RevUnit, a Bentonville-based boutique digital software development company. It was a good jump.

Paladino said the duo bootstrapped the business with a little help from friends and family and have grown the venture to 14 employees in just two years with small offices in Dallas, Las Vegas and most recently St. Louis.

“We started really small scale. Joe and I both working out of home offices until we could begin to grow our client base,” Paladino said. 

Paladino said they sought out business outside the retail segment to start in hopes of developing new relationship in other industries. But retail has always been a sweet spot given their experience in that sector.

The digital software tech company has since added large corporate clients such as Mary Kay, Virgin Hotels, and Park Place Dealerships, a high-end auto group in Dallas. Paladino said they recently signed on to help Sam’s Club with proprietary technical work, and with Unigroup, which owns Mayflower and United Van Lines.

Sam’s Club, under the leadership of CEO Rosalind Brewer, has made an effort to use more digital technology with its member base. The timing of this effort coincided with RevUnit’s circling back to the retail sector and the two were able to connect on a deal.

SMASH METRICS DEAL
There’s no shortage in companies that need help with digital software applications that allow them to connect with customers though mobile phones, kiosks, tablets, social media, web or at the point of sale. In January, RevUnit acquired Smash Metrics for an undisclosed amount. The deal provided digital marketing capabilities for RevUnit’s software development.

“When I was home sick from school as a kid, one of my favorite movies to watch was Field of Dreams. At a great turning point in the movie, Kevin Costner hears a voice that whispers, ‘If you build it, they will come.’ While this was true for Costner and his long lost father, I have found it to be utterly false in every other aspect of life. Especially digital,” Saumweber said.

Saumweber adds that when RevUnit “builds it,” it is Smash Metrics that makes sure people “will come.” For true techies, marketing can be a dirty word, but Paladino said even the best software is of no value if people can’t find it and use it effectively. He said the Smash Metric team in Las Vegas have already helped the firm expand their client list.

CONNECTIVE SOLUTIONS
Paladino said digital technology is helping businesses of all types connect with their customer bases directly and personally.

“We think of ourselves as problem solvers for companies that need to make those connections, whether it’s an auto dealership in Texas or Sam’s Club in Bentonville,” he said.

One of the more recent successes has been a customized digital app RevUnit developed for Park Place Dealerships to communicate with its client base. He said there hasn’t been much work done in the space, but the demand is there and they are getting lots of calls from other dealers wanting a similar product.

“Park Place Dealerships can provide a personalized experience created by an ongoing connection with their clients through the mobile app we built for them. The app allows their clients to view their vehicle information, retrieve service info and schedule their appointments. It also gives them immediate access to the dealership sales and management force through a message option,” Paladino said of customize product.

Paladino is excited about the work RevUnit is doing in hospitality with Virgin Hotels. He said a new hotel opening in Chicago has hired RevUnit to develop an app that will provide management a way to engage with their workers.

He said now that RevUnit has added several large clients and a marketing arm they are in a better position to call on bigger companies in the retail and supplier community, hence the new business with Sam’s Club.

STARTUP SUPPORT
Another key function of RevUnit is to provide work and service in the local startup community. 

“Working with young entrepreneurs keeps us sharp and it’s fresh and exciting. It’s a good balance with the large custom contract work we are doing,” Paladino said.

Paladino and Saumweber also have a vested interest in Overwatch, the gaming startup they founded with Josh Moody, a high school student at the time. The RevUnit duo were brought in to develop the mobile apps for Apple and Android that go with the gaming hardware manufactured by Cybergun. The system is slated to hit online stores later this year and brick and mortar retailers early next year.

Moody told The City Wire last year when the startup won the Ark Challenge competition that Overwatch was lucky to have the RevUnit development teamin its corner because that meant it could better control the quality and precision of the software apps and it was also better on Overwatch’s slim budget.

“Our involvement with Overwatch goes much deeper than most of the work we do in the startup community. It’s been an exciting sideline venture for us.” Paladino said.

NITROUS EFFECT
Paladino said RevUnit recently joined Nitrous Effect, an agency collective group based in St. Louis. Saumweber subsequently moved to St. Louis.

“This is an opportunity for RevUnit to work collectively with other firms specializing in creative event planning like the Walmart Year Beginning Meeting, to a branding agency, video production and content and creative strategies for instance. Being part of this collaborative group gives RevUnit the ability to offer turnkey operations for larger clients in the retail sector and others,” he said.

Paladino said given their small size and specialized service they could never get an shot a bigger turnkey jobs that included digital app development. He said that is likely to change now they have become one of the six specialty firms in the Nitrous Effect collective group.
http://www.nitrouseffect.com

“We are already getting business from this association like our work with United Van Lines and Mayflower. We are working with these companies to enhance the web traffic to their sites,” he said.

TALENT SHORTAGE
Paladino said the biggest hurdle to RevUnit’s future growth is the shortage of talent in software developers and creative visionaries as well as engineers. 

“Part of the reason we have locations in four cities is because that’s where we could find the talent. It’s also nice to have some geographic diversification, but that’s just part of it,” he said.

Paladino said he has a college degree in computer science but he had to spend six months working in the corporate world before he was of any value in real problem solving. 

“We aren’t graduating enough software engineers and those we do graduate aren’t ready to contribute in the real work world until they can get some practical experience. I am glad I got a college degree but around here we are agnostic toward them. We need developers with experience in popular code languages, real problem solving experience which you can get in online supplemental classes,” Paladino said.

He adds that programs like Nerdies that encourage 13-year-olds to delve into software coding, drone applications and video gaming in a creative setting can go along way in getting this younger generation ready for work world by the time graduate high school.
http://www.nerdies.me/fall-sessions/

“I don’t think there is one answer to solving the talent shortage. It’s going to take lots of effort from universities, corporations, STEM education efforts and programs like Nerdies to ensure there are enough software engineers and creative visionaries for the work demand ahead,” Paladino said.

WHAT’S NEXT?
WIth two years under its belt, RevUnit has proven its feasibility by not having to raise outside capital and still growing its employee base to 14 from two. Paladino said this year the company’s revenue will be three to four times that posted in the first year and he expects that upward trajectory to continue if the overall economy continues improving.

Paladino said there much competition in the digital marketing space, but RevUnit’s ability to customize problem solving apps gives it a slight edge over those firms that use technology to analyze data. 

He rebuked the notion that RevUnit is building a business to sell. Paladino said he does work for plenty of startups with that objective and vicariously through those ventures he can feel what it’s like to cash in and move on.

Instead of selling, Paladino and Saumweber hope in the next five years to have a much larger customer base.

“I want to offer the best digital software applications in the area and everywhere. We are about helping businesses use digital technology to solve their problems and better understand their customers and supply chain. I don’t see that changing,” Paladino said.

The one area the owners would like RevUnit to expand is in more unique product development.

“That would mean continued focus on execution and bringing on more developers if we can find them,” he said.

Labor market numbers continue to go in the wrong direction for the Fort Smith regional economy. The regional workforce declined 3.26% in August compared to August 2013, and the number of employed declined 1.5% in August compared to August 2013.

Despite the tough topline numbers, the Fort Smith metro jobless rate fell to 6.1% in August compared to 6.4% in July. It was also lower than the 7.8% in August 2013, according to figures released Wednesday (Oct. 1) by the U.S. Bureau of Labor Statistics. The August numbers are subject to revision.

The size of the Fort Smith regional workforce during August was 125,055, down from 127,049 during July, and well below the 130,458 during August 2013s. The labor force reached a revised high of 140,253 in July 2007, meaning the August workforce size is down 10.83% from the peak number.

The number of employed in the Fort Smith region totaled 116,936 in August, down from 118,964 in July, and an estimated 2,820 jobs below the 119,756 employed in August 2013.

All of the eight metro areas in or connected to Arkansas had jobless rate decreases in August compared to July, and jobless rate declines compared to August 2013. During August, the lowest metro jobless rate in the state was 4.9% in Northwest Arkansas and the highest rate was 8.5% in the large Memphis-West Memphis metro.

FORT SMITH METRO NUMBERS
Unemployed persons in the region totaled an estimated 7,684 during August, below the 7,996 during July, but well below the 10,123 during August 2013.

The Fort Smith area manufacturing sector employed an estimated 18,000 in August, down from 18,200 in July, and down from 18,400 August 2013. Sector employment is down almost 37% from a decade ago when August 2004 manufacturing employment in the metro area stood at 28,400. Also, the annual average monthly employment in manufacturing has fallen from 28,900 in 2005, 19,200 in 2012, and to 18,300 in 2013.

Jobs in the Trade, Transportation and Utilities sector totaled 24,300 during August 2013, down from 24,400 in July and above the 23,800 in August 2013. Employment in the sector reached a high of 25,700 in December 2007.

Employment in the region’s tourism industry set a new record of 9,900 during August, up from 9,800 in July and above the 9,600 in August 2013. The previous record of 9,800 was set in August 2008.

In Education & Health Services, employment was 16,300 during August, up from 16,200 in July and below the 16,700 during August 2013. Annual average monthly employment in the sector has steadily grown since 2005 when it reached 14,000. In 2012 the average was 17,000, but fell slightly to 16,800 in 2013. Employment in the sector reached a record 17,300 in October 2012.

In the Government sector, employment was 17,800 during August, up compared to 16,500 in July and up from 17,700 in August 2013.

NATIONAL NUMBERS
Unemployment rates were lower in August than a year earlier in 322 of the 372 metropolitan areas, higher in 44 areas, and unchanged in six areas, noted the broad BLS report.

The U.S. unemployment rate in August was 6.1%, down from 7.2% from a year earlier. Arkansas’ jobless rate was 6.3% in August, up from 6.2% in July and down from 7.7% in August 2013.

Oklahoma’s jobless rate during August was 4.7%, up from 4.6% in July, and down compared to 5.6% in August 2013. The Missouri jobless rate during August was 6.3%, down from 6.5% in July and below the 6.6% in August 2013.

ARKANSAS METRO AREAS
Fayetteville-Springdale-Rogers
August 2014: 4.9%
July 2014: 5.3%
August 2013: 5.8%

Fort Smith
August 2014: 6.1%
July 2014: 6.4%
August 2013: 7.8%

Hot Springs
August 2014: 6.5%
July 2014: 6.8%
August 2013: 7.6%

Jonesboro
August 2014: 5.7%
July 2014: 6.1%
August 2013: 7.1%

Little Rock-North Little Rock-Conway
August 2014: 5.7%
July 2014: 6%
August 2013: 6.8%

Memphis-West Memphis
August 2014: 8.5%
July 2014: 8.8%
August 2013: 9.5%

Pine Bluff
August 2014: 8.4%
July 2014: 9.2%
August 2013: 10.2%

Texarkana
August 2014: 6.4%
July 2014: 6.5%
August 2013: 7.7%

FORT SMITH METRO AREA HISTORY
Past annual average unemployment rates
2013: 8%
2012: 7.7%
2011: 8.3%
2010: 8.2%
2009: 7.9%
2008: 4.8%
2007: 5.3%
2006: 4.9%
2005: 4.5%
2004: 5.2%
2003: 5.5%
2002: 5%
2001: 4.2%
2000: 3.7%

Republican Attorney General candidate Leslie Rutledge had her voter registration removed by the Pulaski County clerk Tuesday, according to a letter he sent to her. The action creates uncertainty in the race between Republican Rutledge and Democrat candidate Nate Steel.

“We have received documentation indicating that you are registered in the State of Virginia and/or the District of Columbia. Because of this, we have canceled your voter registration in Pulaski County,” Pulaski Circuit/County Clerk Larry Crane wrote to Rutledge. 

Crane said it was his duty under the law to remove her registration. Crane said he was sent a letter from the "Arkansas Libertarian Coalition" detailing her voter registration in other states. The Libertarian Party says they have no clue who that group is and they are not behind sending the information to Crane. 

“Under amendment 51 to the Arkansas constitution, the voter registrar, that's me in this case, has a mandatory duty to cancel the registration of anyone that's not qualified to vote here,” Crane said.

AMENDMENT 51
There are several provisions of Amendment 51 that leave uncertain a legal path for whether Crane's actions were carried out accurately and what options Rutledge may have.

The Arkansas amendment states that the permanent registrar – Crane, in this instance – has the duty to cancel the registration of voters under certain circumstances. They include voters who have changed their residence to an address outside the county or who are not lawfully qualified or registered electors of this state, or of the county.

Crane contends his research suggested this was the case in Rutledge's cancelled voter registration.

However, the amendment also states that the permanent registrar "shall, thirty (30) days before cancellation, notify all persons whose registration records are to be cancelled" in accordance with the amendment. "The notice may be either by publication or by first class mail," the amendment states.

That provision is embedded in a section that speaks to voters who have not voted in several cycles. The law allows them to be "purged" from voter rolls. Another section in the cancellation provisions says that the permanent registrar "may" send a cancellation notice by first-class mail "within ten (10) days" for cancellations other than dormant voters.

RUTLEDGE RESPONDS
Rutledge's campaign sent out an email Wednesday calling her removal “unbelievable.” Rutledge told Channel 7 News that her removal from the ballot is a political stunt and that she only received word of her cancellation when it also hit the newspaper. 

“They did contact me late afternoon, this was after the decision had been made. They never notified me that there might be a problem. That's the concerning part. You have Larry Crane, a Democrat clerk who is a contributor to Nate Steel's campaign, my opponent's campaign, arbitrarily throwing me off the rolls without any sort of notification,” Rutledge said. 

Crane did donate $100 to Democrat Nate Steel's campaign earlier this year. 

Rutledge said she has been unnecessarily targeted by the news media. Reporters have obtained her emails from her time at the Department of Human Services.  

“I knew it would be difficult to be the first Republican elected attorney general, I had no idea how hard it would be to be the first woman elected attorney general,” Rutledge said. 

She says she believes she is being treated differently than other candidates. 

“Absolutely. I don't think we've seen these sort of personal attacks in races on a candidate just from these quiet underground tones and media lashing out and reporting false stories before getting the evidence,” Rutledge said. 

Crane said the removal of Rutledge isn't political.

“Once I step in these doors, then I become totally neutral and everyone that walks into this office gets treated with respect and dignity,” Crane said.

Rutledge said she thought she took the proper measures to register to vote upon moving back to Arkansas. 

“I had gone down in person and asked the clerk's office and said I need to register, here's my form, they said no you don't need to fill that out, here's a change of address,” Rutledge said.

Crane said Rutledge did fill out a change of address form, but should have re-registered as a voter from another state. Crane provided Rutledge's change of address form. The new form posted on the clerk's website clearly states that a person moving from out of state must re-register with the clerk on the change of address form, but the old form, the one Rutledge filled out, does not say that. 

ELIGIBILITY, LEGAL ACTION
Democrats are hoping that the complications of Rutledge's voter registration will disqualify her from the November ballot. Republicans are prepared to defend Rutledge and are seeking more information from Crane's office.

State law requires a candidate be a registered voter of the state at the time of the candidate's affidavit to run for office, which was last March during filing period. 

“Whenever a candidate's eligibility is questioned, that's a matter for the courts,” said Secretary of State spokeswoman Laura Labay.

A legal determination may be required to clear up Rutledge's candidacy eligibility.

One argument is that her registration removal means in 2014 she has not been a "qualified elector" - a requirement to be a candidate for office. However, technically Rutledge was just declared a "non-qualified elector" and one can argue that when she filed for office, Pulaski County and the state of Arkansas recognized her as qualified.

Monday, Oct. 6, is also the last day to register to vote for the Nov. 4 general election. There are differing schools of thought as to whether Rutledge re-registering, now that she's been removed by Crane, could rectify the confusion.

Drew Pritt, who says he is a former Democratic primary candidate for state offices and writes a political blog, told Channel 7 News he filed a complaint against Rutledge's voter registration in regard to her candidacy Wednesday evening with the county election commission and plans to pursue getting Rutledge kicked off the ballot. 

The Republican Party of Arkansas said Crane violated state and federal law. The GOP is asking for election monitors in Pulaski County and has FOI-ed documents from Crane's office.

"It is shamefully obvious that the old Democrat machine will stop at nothing to keep a well qualified Republican candidate from becoming the next Attorney General of the State of Arkansas,” said Arkansas GOP Chairman Doyle Webb. “Mr. Crane’s actions were clearly unprecedented and in violation of State and Federal law."

Democratic Party of Arkansas chairman Vince Insalaco said Crane was "just doing his job." He questioned if Rutledge was fit to hold the state's top legal post.

“When D.C. lobbyist and Virginia voter Asa Hutchinson moved back to Arkansas, he knew to re-register, so it continues to be confusing as to why Rutledge did not do the same,” said Insalaco. “As someone running to be Arkansas’s top lawyer, it’s disturbing that Rutledge’s own record with the law has been so haphazard.”

Nasty winter weather throughout large parts of the U.S. in the first quarter of 2014 resulted in a swift kick to the bottom line of many companies. Wal-Mart Stores reported weather-related losses of almost $100 million. Fort Smith-based ArcBest said the bad weather shaved $10.5 million off its topline.

Planalytics estimated that businesses nationwide during January suffered $5 billion in weather-related losses. Retailers, airlines and logistics firms led the pack. By April that figure swelled to $15 billion.

Retailers have long understood the relationship that weather plays on their net profits from tracking dangerous storms like Hurricane Sandy and the run on grocery staples and generators to more umbrella sales during spring showers and Gatorade sales spikes during the dog days of August.

With the Farmer’s Almanac forecasting a frigid winter throughout most of the country, retailers have opted to embrace Mother Nature all year long in a more proactive manner. Wal-Mart has worked with Weather FX for almost two years to try and get a handle on optimizing sales based on weather patterns – favorable and otherwise.

WEATHER TRIGGERS
Weather FX is a division of The Weather Company, which is also parent company of The Weather Channel. Sara Livingston, director of market solutions for Weather FX, said she works closely with Wal-Mart and a host of other retailers large and small who want to be proactive about merchandising around the weather all year long.

Wal-Mart’s chief merchandising officer Duncan Mac Naughton first referenced the partnership with Weather FX in March during a speech at the ISI Retail Summit. 

“We work with Weather FX to identify emerging weather patterns and then trigger advertising direct to customer. So for instance in Atlanta, you wake up maybe it is 55 degrees out this morning, 30% humidity by this afternoon it is 70 and 90% humidity. That would trigger, for instance, Gatorade ads or bottled water ads. It would go directly to the store's Facebook page to mobile applications and to our in-store network,” Mac Naughton said.

He said the same thing is done when pollen count rises, “we would immediately start to feature over-the-counter medication as well as all the other things folks are looking for.”

Wal-Mart spokewoman Molly Blakeman said one use this summer by the retailer involved featured ads online, mobile devices and social media sites for patio furniture and grills. She said the retailer continues to use the collected weather data paired with its sales data and merchandise across the company’s entire big box format.

Livingston said Weather FX makes thousands of data points available to retailers and other clients who get real time data in thousands of locations. That data includes temperature, precipitation, dew points, wind speeds and the combinations. She said they map sales data against weather data to try and derive optimum times to promote certain items which are communicated back the retailer in real time.

WEATHER NOW
Local companies have also joined forces to harness the power of weather-related sales. “Weather Now” from Crossmark is one example.

Corey Paquette, vice president of client service in Crossmark’s Walmart Division, said his company partnered with local tech startup Atlas Technology to offer clients weather merchandising services. They are four months into the service offering.

“At Crossmark, on the Walmart team, we have 2,200 reps covering all Walmart Stores.  This allows our reps to be in the stores two to three times per week, every week. With this coverage model we are able to go in at the beginning of the week and then again at the end to drive sales and capitalize on the weather event,” Paquette told The City Wire.

Outdoor paint sales is a prime example of where data and sales work together. The weather may be glorious all week long but if it is rainy on the weekend paint sales won’t lift. He said the timing of activity around expected weather is perhaps more important than the weather itself, Paquette said.
 
“There are companies that can send out weather models for next spring and let us know that a region will be X degrees cooler, warmer… wetter or drier than last year or average but it doesn’t allow us to capitalize on sales now. What Atlas and Crossmark are doing with Weather Now is taking an accurate, real 10-day forecast and putting resources against it,” Paquette said.

On Thursday of this week, he said Weather Now can provide retailers a 10-day forecast so they can plan for weekend sales.  From there they can deploy a rep to a store to go in at the beginning of the week, order product, secure a location by working with a store manager and then return at the end of the week to build a feature to be ready for the next weekend weather, he said.
 
Atlas Technology provides the big data crunching by gathering thousands of weather-related bits of information from multiple sources like Weather Underground and the National Oceanic and Atmospheric Administration (NOAA).

REMOVING EXCUSES
Shawn Beckwith, executive vice president of operations at Atlas, said this data has become a hot commodity for retailers and suppliers as well as third party merchandising groups. The partnership began with Crossmark because one of their customers requested the service. They needed to drive more sales of a particular item inside retail outlets.

Beckwith said the first cold snap of fall is a great time to promote weather stripping, but it has to occur on the weekend for optimum sales. He said if it’s cold on Wednesday but warms up by Friday consumers won’t take the bait. 

He said their research shows the onset of soup sales aren't necessarily related to cold weather, but more importantly the downward trend in average temperature.  For example, if a particular climate zone's average high temperature for the season is 75 degrees, a drop to 72 degrees is enough to trigger the mood.

"It's more about how you feel than the actual temperature for some categories," Beckwith said.

He said having good forecasts and reacting accordingly can help retailers and suppliers guard against losses. Beckwith said eggs are one of the items that sell out ahead of ice storms and snow blizzards, because they can be boiled ahead of time and are a protein source. But they have a short shelf life. 

The one thing that tends to happen if retailers are not plugged into weather-related demand is that the store sells out of eggs, but bad weather may prevent the truck returning the store to restock the coolers. Stuck trucks result in eggs expiring in a distribution center, which is a double hit for the retailer and the supplier, Beckwith said.

Beckwith also said the combination of data and marketing is already changing the retailer and supplier's behavior from explaining lower-than-expected sales to capitalizing on sensor driven demand, such as the weather.

The 2015 budgeting process for the city of Fort Smith is in full swing, with departments making requests for items large and small. Among the budgeting tasks for the city is determining awards of funding for non-profits doing work in Fort Smith.

According to Christy Deuster, administrative coordinator at the city's finance department, a meeting of a subcommittee to award funding was scheduled to have its first meeting Tuesday (Sept. 30) at 1 p.m. to review applications for funding from 13 different non-profits.

In all, Deuster said $162,000 is split evenly between three categories within the outside agency funding — recreational, arts and humanities, and social and community services.

Tuesday's meeting focused on social and community services, where the 13 non-profits seeking funding had requested $150,800 while only $54,000 was allocated for social and community services. Social and community services, Deuster said, emphasizes "life sustaining priorities" such as food, shelter and clothing for the needy. Examples of agencies to have applied for funding include the River Valley Regional Food Bank.

The continued funding of groups outside of Fort Smith city government comes as the city of Fort Smith faces stagnant sales tax revenues and rising costs for line items including employee health insurance and retirement contributions.

According to figures provided by city of Fort Smith Finance Director Kara Bushkuhl, the city's sales taxes (1% for streets and 1% combined for water and sewer projects and fire and parks and recreation) generated $3.27 million in revenue for the August report. The figure is 0.74% above the same month last year, but 1.66% lower than budgeted.

For the first eight months of the year, the total tax collections including the August report from the city's sales tax collections are up 1.37% from the same period last year but off budget by 1.04%.

In spite of stagnant revenues, Bushkuhl has indicated that the city is committed to providing cost of living and possible merit raises in next year's budget. It would be the first in about five years for most city staff. And even with the challenges posed by next year's budget, Dingman said there are no plans to target areas such as the outside agency funding for cuts. The outside agency line item accounts for just shy of 0.34% of the city's overall general fund budget.

"At this point, it hasn't come up as an item to cut in order to accommodate anything else, including salary adjustments," said Deputy City Administrator Jeff Dingman.

Dingman said the administration and finance department were still going through the process of reviewing departmental requests to determine where cuts are possible or necessary in order to balance the city's budget.

Deuster said while the goal is to fund the outside agencies to the full levels just as in years past, there was a possibility of cutting the funding based on budgetary needs within the general fund. Such a scenario has played out in recent years, with funding of $227,000 in requests for Fiscal Year 2009 and dropping the total by 28.63%, or about $65,000, from 2009 to Fiscal Year 2014.

She said agencies are aware that cuts to the budget may occur depending on what the city can afford and what direction the city's Board of Directors provides when budget meetings take place with city directors on Nov. 13 and Nov. 17.

But Dingman said it is entirely possible to fund pay raises and outside agency funding, but in order to do both, departments are going to have to continue working with less.

"The objective will be to try to propose a budget that will include both salary adjustments and maintain the outside agency funding. … We'll look (specifically at) new requests, requests for doing additional programs, requests for additional capital equipment, that sort of thing. Equipment replacement, we're looking at those types of things to see what types of things may be able to be deferred or stretched out or done by a lease purchase agreement or something like that where the operating costs maintain their current levels as much as possible."

But maintaining current levels, he said, could be nearly impossible.

"Even with that, the revenues are projected to remain relatively flat, or essentially flat. From this year's revenues to next year's revenues, I don't think we'll see an increase in revenues. And there will be increased costs, you know? Employee health insurance will have an increased cost, workers compensation insurance may have an increased cost. There's several things like that that just by nature of operating, the costs increase."

Dingman said a final budget would be available to the public for review about a week before formal budget meetings take place with city directors in November.

Overall Arkansas tax collections for the first quarter of the fiscal year were up only 0.8% compared to the same period in 2013 period, and are below budget forecasts by 0.5%, thanks to a reduction in consumer spending.

Year-to-date gross revenue (July 2014-September 2014) totaled $1.513 billion, up 12.4 million over the 2013 period but $8.1 million below what state budget forecasters predicted, according to the report issued Thursday (Oct. 2) by the Arkansas Department of Finance and Administration.

Individual income tax collections for the fiscal year totaled $713.7 million, up 3.2% from last year and just 0.7% above the budget forecast. Year-to-date sales and use tax collections were $557.4 million, down 1.7% compared to last year and 2.3% below the budget forecast. Income taxes and the sales and use tax collections are the two primary sources of state revenue.

John Shelnutt, head of the Department of Finance and Administration’s Economic (DFA) Analysis & Tax Research division, said the biggest reason for the overall decline was a drop in sales tax collections.

“September results were below forecast in all major categories of collections. Sales tax collections accounted for $8.1 million of the decline for the month against forecast. Individual Income tax collections were down 1.5 percent from year ago results and below forecast by $4.1 million, largely due to payroll timing effects in the Withholding category,” Shelnutt explained in the report.

Sales tax collections are a reflection of consumer spending and consumer confidence.

Corporate income tax collections for the first two reporting months of the fiscal year totaled $103.2 million, down 4.5% compared to last year and 8.4% below forecast.

SEPTEMBER NUMBERS
September gross revenue was $585.4 million, down 0.8% from last year and 2% below forecast.

Individual income tax collections during September totaled $183.7 million, down 1.7% compared to September 2013 and below forecast by 1.4%.

Sales and use tax collections during the month totaled $188.2 million, down 3.3% from last year and 4.2% below the forecast.

Corporate income tax collections in September totaled $77 million, up $1.7 million compared to September 2013, but 1.4% below forecast.

OTHER TAX COLLECTIONS
Alcoholic beverage
July 2014 - Sept. 2014: $14 million
July 2013 - Sept. 2013: $13.3 million

Games of skill
July 2014 - Sept. 2014: $10.5 million
July 2013 - Sept. 2013: $9.6 million

Tobacco
July 2014 - Sept. 2014: $56.3 million
July 2013 - Sept. 2013: $56.9 million

Insurance
July 2014 - Sept. 2014: $22.1 million
July 2013 - Sept. 2013: $21.5 million

COLLECTIONS HISTORY
Tax collections during fiscal year 2014 (July 2013-June 2014) totaled $6.242 billion, up 0.5% above the previous fiscal year and up just 0.2% compared to budget estimates. The year marked the fourth consecutive year of revenue increases. The fiscal year ended with a budget surplus of $78.7 million.

Tax collections during fiscal year 2013 (September 2012-September 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.

Arkansas tax collections reversed a negative two-year slide in the 2011 fiscal year, with collections up 4.5% in the September 2010-September 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.

Friday (Oct. 3) marks National Manufacturing Day and events happening across the region will mark the event in an industry that has seen significant declines both nationally and in Arkansas in the last decade.

The Fort Smith area manufacturing sector employed an estimated 18,000 in August, down from 18,200 in July, and down from 18,400 August 2013. Sector employment is down almost 37% from a decade ago when August 2004 manufacturing employment in the metro area stood at 28,400. Also, the annual average monthly employment in manufacturing has fallen from 28,900 in 2005, 19,200 in 2012, and to 18,300 in 2013.

The Northwest Arkansas manufacturing sector employed an estimated 26,200 in August, down from 26,300 July, and down from the 26,500 during August 2013. Sector employment is down 21.3% from more than a decade ago when August 2004 manufacturing employment in the metro area stood at 33,300.

Manufacturing jobs in Arkansas during August totaled 155,600, unchanged compared to July and above the 151,900 in August 2013. Employment in the manufacturing sector fell in 2013 to levels not seen since early 1968. Peak employment in the sector was 247,300 in February 1995.

In spite of the significant drops in manufacturing employment in the Fort Smith region, it is still among the area's largest employment sectors and Fort Smith Regional Chamber of Commerce President and CEO Tim Allen said that was why Manufacturing Day is being celebrated locally.

"Manufacturing is part and parcel of Fort Smith's DNA," Allen said. "The chance to recognize the importance of this national focus is exciting. Particularly when you realize Fort Smith's history and future when it comes to manufacturing."

And while the industry has seen major declines nationally and locally in the last decade, manufacturing could see an upswing should a planned investment of $250 billion by Wal-Mart in products made in the United States over the next decade pan out.

“We will continue to lead on U.S. manufacturing. ... We have drawn a deeper understanding of the challenges that stand in the way from the work already done,” Michelle Gloeckler, Walmart’s executive president of consumables and U.S. manufacturing, said in August.

To start off Friday's events, the Fort Smith chamber's monthly First Friday breakfast will take place at the University of Arkansas at Fort Smith's student center featuring former Caterpillar executive John Harrison, who is currently with the company MyVIP2. His speech will focus on "how U.S. manufacturing facilities can better compete globally and also how to be the place to work," according to a Chamber press release.

Even as manufacturing employment has shrunk both locally and nationally during the last decade, the demand for highly skilled employees in manufacturing facilities has increased.

To highlight the need for skilled laborers, KMF Metal Fabrication Vice President Christy Koprovic said her Fort Smith facility would host a tour of students Friday from Darby Junior High to show that even in spite of the loss of manufacturing jobs nationally, local companies like KMF still need the skilled workforce. She said the hope to is change negative perceptions about manufacturing.

"KMF is seeking to reverse that trend by bringing in students throughout the school year to get them interested in manufacturing, as well as encourage them to pursue and excel in math and science," she said. "Darby students will be our second group of students this year who will visit the facility."

During the tour, she said KMF staff "will be giving demonstrations" of the various work done at the facility. The tour for students begins at 9 a.m. and lasts one hour, Koprovic said.

Further highlighting the need for skilled labor, UAFS will host tours of its new robotics lab at the Baldor Technology Center on the university campus Friday at 10:30 a.m.

A new certificate program in robotics was introduced at UAFS this year, with Chancellor Dr. Paul Beran noting at the time that 21 different companies in the Fort Smith region use robots of some sort in manufacturing processes in spite of the fact that there is not a single trained technician in the state. In launching the new certificate program, Beran said he was able to secure $300,000 from Gov. Mike Beebe to help launch the program, as well as receiving a donation of equipment from Baldor.

And Baldor is another Fort Smith company taking part in Manufacturing Day events, opening its doors to the public on Thursday (Oct. 2) from 10 a.m. to 3 p.m. for facility tours.

"Through this year's event we will share best practices with other local manufacturers, educate the community on the impact manufacturing has on the regional economy, and raise awareness of the career opportunities manufacturing provides,"the company said in its event listing on the National Manufacturing Day website.

Springdale-based SynergyTech is holding an open house from 11 a.m. to 4 p.m. on Oct. 23.

“SynergyTech plans to increase public awareness of manufacturer’s contributions to our economy, and the technology-driven, well-paying careers our manufacturers have to offer,” noted the Manufacturing Day website page for SynergyTech.

Link here for a list of the 21 Manufacturing Day events planned in the state of Arkansas.

Negotiations with between the city of Fort Smith, the Environmental Protection Agency and the United States Department of Justice have broken down, with the city expecting a lawsuit to be filed by the DOJ by the end of business Friday (Oct. 3) for non-compliance with the federal Clean Water Act.

According to City Administrator Ray Gosack, representatives from the city were prepared to meet with federal negotiators last week in Dallas for three days of meetings regarding the city's efforts to implement wet weather improvements to the city's sewer system.

"One working day before the meeting was to begin, the Department of Justice abruptly canceled the meeting," Gosack said in a prepared statement. "On Sept. 24, the department notified us that the federal government was ending negotiations and were considering the filing of litigation against Fort Smith in federal court."

Gosack added that while the city believes the two parties can find agreement through negotiations on next steps, litigation from the feds is expected at any time. City Attorney Jerry Canfield said while the city expected the filing in the U.S. District Court of Western Arkansas today, no such filing has yet been made. He expects the filing to be made at the court – based in Fort Smith – by the end of business Friday.

In August, The City Wiredetailed efforts made by the city of Fort Smith since 1993 when it was placed under an administrative order for violations of the Clean Water Act. Since that time, the city has invested more than $201.2 million improving the city's wet weather system. The city of Fort Smith has invested $201.2 million since 1993 on wet weather sewer improvements and another $150 million or more could be poured into improvements before the city atones for violations of the federal Clean Water Act – bringing the grand total for compliance with the law to $351.2 million.

In a special Thursday (Oct. 2) meeting of the Fort Smith Board of Directors to discuss the situation, Gosack said much of the more than $200 million in improvements has come during the last eight years.

During the meeting, Gosack told the Board that the city had "remediated more than 70% of the chronic sanitary sewer wet weather overflows, have had only (nine) wet weather overflows in the last year, and have additional work under construction or in design to address most of the remaining chronic overflow locations." He further claimed the city had reduced overflows during wet weather situations by 79% from 2007 to 2013.

As for why the feds ended negotiations and plans to file a lawsuit against the city, Gosack said he believed it stemmed from different priorities and realities between the federal government and the city.

"We think the federal government was concerned on a couple of points. One is the amount of work that was going to be done by the city of Fort Smith. And our concern was the affordability issue and the community's ability to pay."

He explained that affordability was taken into account when determining the level of work needed to be completed once the city agrees to a consent decree, which Utilities Director Steve Parke has previously described as "more of a contract format."

"We were concerned about the community's ability to pay for the amounts of work that the federal government was expecting to be accomplished," Gosack added, providing some insight into negotiations between the city and the feds. Gosack and Canfield have continued to insist that details of the negotiations are confidential by mandate of the federal government.

Asked by City Director Pam Weber how much it would cost for the city to simply comply with the demands of the federal government, Canfield said the figure was confidential.

"We may be getting into areas of the negotiations," Canfield said. "There have been extensive negotiations about what the requirements are and the cost of those. The affordability analysis. … I think in that format, it's probably a question that gets into the negotiations that we shouldn't answer."

Gosack added that the city had estimates, but declined to provide those.

But in August, Parke told The City Wire that another $150 million or more could be poured into improvements before the city would be in compliance with the Clean Water Act and out from under the thumb of the federal government. In all, that would bring the amount of money spent by the city on wet weather improvements to $351.2 million since 1993.

Gosack said the city is prepared to move forward on improvements – including projects underway at Navy Road, Jenny Lind and Zero, and Mill Creek – regardless of what action the federal government takes against the city. But it means the city is likely to impose fee hikes on its 30,607 sewer customers, he added. With the increases, Gosack said they are likely to be made incrementally over time, but could be imposed as early as 2015.

Of the more than $200 million already invested in the system, sales taxes were collected to pay off bonds financed for the projects. With the planned rate increases, Gosack said those should be made public "in a few weeks."

Even though the city is working to prevent wet weather overflows, Gosack did say a major problem now that is noted with the federal government is general overflows that occur due to tree roots growing into the sewer lines or grease or other foreign objects ending up in the line. Parke said should overflows continue happening, there is the possibility of fines totaling $32,500 per day for each violation.

Canfield said once the federal government files suit against the city of Fort Smith, the city will have 30 days to file a response.

Below is the full statement from the office of City Administrator Ray Gosack.

For the last 8-1/2 years, the City of Fort Smith has been in negotiations with the U.S. Department of Justice and the Environmental Protection Agency regarding sanitary sewer system wet weather overflows.  During periods of heavier rainfalls, stormwater enters the sewer system through defects in manholes and underground pipes and overwhelms the capacity of the sanitary sewer system.  This causes untreated sewage to overflow from the system.  The purpose of the negotiations and contemplated consent decree with the federal government has been to bring Fort Smith into compliance with the federal Clean Water Act.

We were scheduled to meet with the federal negotiators in Dallas last week for 3 days for what we believed would be the final negotiations.  One working day before the meeting was to begin, the Department of Justice abruptly cancelled the meeting.  On Sept. 24, the department notified us that the federal government was ending negotiations and were considering the filing of litigation against Fort Smith in federal court.  We continue to believe that negotiation of a consent decree could be successfully completed, and have communicated that to the Department of Justice.  Nonetheless, we expect the federal government to file its litigation at any time.

Our purpose this evening is to brief the board and community on the progress we've made over the last several years and our commitment to continue solving the problems.  We've remediated more than 70% of the chronic sanitary sewer wet weather overflows, have had only 9 wet weather overflows in the last year, and have additional work under construction or in design to address most of the remaining chronic overflow locations.  As shown on the maps, we have reduced the number of wet weather overflows by 79%.  The City of Fort Smith has spent and is committed to spend over $200 million to achieve this progress toward complying with the Clean Water Act.  The locations where much of this work has occurred are shown on the map.  Not coincidentally, the areas where overflows have been reduced are the same areas where significant work has occurred.

Regardless of any federal litigation, we are committed to continuing improvements to the operation of Fort Smith's sanitary sewer system.  Gathering wet weather flow data in the system to identify needed improvements and evaluate system performance, constructing capacity improvements to handle increased flows during wet weather conditions, eliminating sources of wet weather inflow and infiltration into the sewer system, and enhanced maintenance of the sewer system have been and will continue to be our priorities.  We have over $30 million in construction work underway or upcoming.  We are also planning to enhance maintenance of the sanitary sewer system to reduce the occurrence of overflows during dry weather normal operating conditions.  While we've experienced only 9 overflows due to wet weather conditions during the last year, we've experienced approximately 180 overflows due to blockages in sewer lines during dry weather periods of normal operation.  Many times, these blockages are caused by tree roots invading the sewer lines or by the build up of fats, oils and grease deposited by consumers into the sewer system.

The city must enhance its maintenance and public education efforts to alleviate overflows caused by blockages in the sanitary sewer system.  Planning for these programs is underway and will continue.  We will be discussing the specifics of this, including the impact on sewer rates, in the coming weeks.

All of the current and future efforts are affected by affordability.  Affordability takes into account the community's ability to pay, and is a factor which must be considered in determining the amount of work to be undertaken and how fast it will be accomplished.  Affordability affects the city's work programs, and is a consideration of which the city has been and will continue to be mindful.

Regardless of any pending litigation, the City of Fort Smith remains steadfast in its work to address the decades-old problems with its sanitary sewer system.  We've made substantial progress and will continue our efforts.  Our goal is to be in compliance with the federal Clean Water Act and to provide safe and environmentally responsible sanitary sewer services to our 87,000 residents and thousands of businesses.

National Manufacturing Day has been a chance to promote the sector and lobby for renewed interest in making stuff in the U.S.A., but for a group of Junior High students from Fort Smith the day included “weird angles,” math and career options.

KMF Metal Fabrication was among the companies to open its doors to the public Friday, with a group of students from Darby Junior High School's Technology Student Association taking a tour of the company's facility in north Fort Smith.

Vice President Christy Koprovic of KMF Metal Fabrication led the student tour Friday morning and told the students about the various skills needed to not only operate the machines found inside KMF, but also to be able to properly measure and make goods needed by other manufacturing facilities in the region who use the machines and items KMF produces. Among the skills needed in the trade are math and science, she said.

"They couldn't do anything without math," she told the students. "And we need people who can think. Critical thinking is extremely important."

Philip Chadwick, assistant supervisor of production at KMF, told students how operating a metal-bending machine requires him to understand measurements and geometry and properly operate the computerized machine.

"To bend it correctly, I have to take measurements because if it's too thick, it breaks (the machine). With the weird angles, that's really where the math comes in."

Koprovic alerted the students to the potential in manufacturing, explaining that often the salary and benefits within the industry are among the best in the local economy. But she said as the industry continues to change, the students must use the skills they are learning now in order to be prepared for a career that can start as soon as some students leave their high school graduation ceremony.

Keith Smith, an instructor of engineering and technology education classes at Darby, said that was part of why he encouraged students to take part in the Manufacturing Day events and to take classes as early as junior high.

"It's real important to get these kids focused early on an area and get them thinking about (a career field) so when they get to high school, they're taking the correct classes that match up to the type of career they're most interested in."

National Manufacturing Day was celebrated Friday (Oct. 3) in the Fort Smith region with events that started early in the morning.

CHAMBER NOTES
At the Fort Smith Regional Chamber of Commerce's First Friday Breakfast, Melissa Hanesworth, chairman of the Chamber's board of directors and managing director at Pernod Ricard, noted that Fort Smith was the largest manufacturing hub in the state as she introduced the morning's speaker, Jon Harrison. Harrison was previously the plant manager for Caterpillar's North Little Rock facility.

Harrison noted the decline in manufacturing within the United States and in Arkansas specifically in the last decade.

The Fort Smith area manufacturing sector employed an estimated 18,000 in August, down from 18,200 in July, and down from 18,400 August 2013. Sector employment is down almost 37% from a decade ago when August 2004 manufacturing employment in the metro area stood at 28,400. Also, the annual average monthly employment in manufacturing has fallen from 28,900 in 2005, 19,200 in 2012, and to 18,300 in 2013.

The Northwest Arkansas manufacturing sector employed an estimated 26,200 in August, down from 26,300 July, and down from the 26,500 during August 2013. Sector employment is down 21.3% from more than a decade ago when August 2004 manufacturing employment in the metro area stood at 33,300.

GERMAN LEADERSHIP
Harrison showed figures that pointed to how the U.S. was second in the world in the number of manufacturing jobs lost in recent years, but noted Germany — another nation with a large manufacturing economy — was near the bottom of the list for the number of jobs lost.

The reason, he said, was because Germany was doing things the United States had not been doing until recently.

"Germany is much more proactive in these areas," he said, noting that bureaucracy was not as large of a burden in the European nation, taxes were simpler and education and training was central to the evolving manufacturing methods in use across Germany.

Tim Allen, president and CEO of the Fort Smith Regional Chamber of Commerce, said changes are taking place locally – to include robotics and other specialized skills training – to make the economy more adaptable to changes in manufacturing. He said it is one of the reasons the Fort Smith area would be able to maintain and possibly grow the number of manufacturing jobs in the community as more companies look to locate facilities in the United States.

"The old days of a lot of the hands-on manufacturing has left the U.S. and I think that's a natural purge in the market. So we see the high-tech manufacturing skills is definitely the future and that's one of the reasons UAFS' (robotics program) and manufacturing is going to work for Fort Smith where it may not work for other communities," he said.

The robotics certificate program at the University of Arkansas at Fort Smith was announced this year and targeted at providing the market with skilled technicians to work on robotic machines in factories across the region and the state. Currently, no licensed technicians are found in Arkansas.

To highlight the program, UAFS opened Friday its robotics lab at the Baldor Center for tours. Dr. Ken Warden, associate vice chancellor for workforce development at UAFS, said it was important to open up the labs for the public to understand not only the importance of robotics in manufacturing, but the job prospects still available in the industry.

"There are really good jobs in the Fort Smith region and the manufacturing sector. Giving students, whether they're senior high, junior high, K-12 students an opportunity to see the technology and the skills it takes and the wages that are associated with these high skills - that's a really good thing. (We're enabling) these kids to see what's available and the options that are there for them to make a good living as they leave the high school arena and coupling these jobs back to the university experience."

About 100 people will have a new place to call their work home Monday while others needing orthopedic care will have that care closer to home following the dedication Friday (Oct. 3) of the new Mercy Orthopedic Hospital in Fort Smith.

Mercy Fort Smith President Ryan Gehrig said planning for the hospital was seven years in the making, a part of the hospital's $192 million master plan for its Fort Smith operations. Initial estimates were that the new facility would cost $42 million.

"We've been striving to become a permeating presence in this community, to open up new clinics and better access to care for those we serve," Gehrig said.

The hospital sits at the corner of 79th Street and Phoenix Avenue in Fort Smith and boasts 69,000 square feet on two levels. The new hospital is located at the site where a group of doctors in 2008 tried to build an orthopedic hospital in May 2009. Mercy purchased the site close to two years later in February 2011. Initial planning and site design work began in August 2011 with the original plan to use the existing facility. After digging deeper into the project, Mercy officials decided to remove the steel frame that had been erected and start from scratch.

Mercy Orthopedic Hospital will be able to house 24 patients, but has space available to expand the capacity by 12 inpatient beds if needed. Dr. Keith Bolyard, medical director of Mercy Orthopedic Hospital, said the hospital was not designed to treat the sick like a traditional hospital.

"These are otherwise healthy patients with a knee, hip or shoulder that is slowing them down," he said. "Since this hospital is geared specifically to them, we've been able to design a place that will get them back on their feet faster than ever. No one wants to undergo surgery, but this will streamline the process offering them one place to go for all their needs from pre-op testing to post-op rehab."

In order to do that, the hospital is equipped with a 10,138 square foot outpatient rehabilitation clinic that can serve more than 100 patients per day. Included within the rehab clinic, Gehrig said, is a therapy pool that he said was unique to Fort Smith's orthopedic hospital.

"I was at the (Mercy Orthopedic Hospital) in Springfield, Mo., recently and their hospital didn't have a pool," he noted.

The facility also houses surgical suites as well as waiting areas for family and friends. Pre-operation screening including physicals, EKGs, X-rays and lab work can be done on site.

"This is a true health care destination for patients in need of elective total joint replacement," Gehrig said.

John Swope, president of Mercy Central Communities, said with the completion of Mercy Orthopedic Hospital, much of the $192 million master plan put in place in August 2011 was now in place.

The plan included five key areas:
1. Hire more physicians;
2. Improve technology across the Mercy Fort Smith system;
3. Upgrade current facilities;
4. Take healthcare to patients through new methods; and
5. Build new facilities.

"Our commitment to the Fort Smith community was to spend $192 million to build a healthier Fort Smith," he added.

And the commitment to a healthier Fort Smith goes beyond just being physically healthy, but also making a more economically healthy community, according to Gehrig.

"It will provide a positive economic impact on the community. In addition to the approximately 100 people that will be employed here, many more will come to the area seeking the services offered."

In addition to the orthopedic hospital, Mercy invested $10 million in its Heart and Vascular Center last year, completed $5.1 million in renovations of the Hembree Mercy Cancer Center and has opened or started construction on a variety of new clinics across Fort Smith.

The $42 million orthopedic hospital project, while not yet officially open for business, was opened to the public for tours following the dedication ceremony at noon Friday. The hospital officially opens for business Monday (Oct. 6).

Democratic candidate for governor Mike Ross recently unveiled a “Fair Pay & Equal Opportunity Plan” he said is meant to correct disparities in pay between men and women.

The plan would protect employees from retaliation for discussing wages with their co-workers and when they raise concerns about gender pay discrimination.

It would “help employers with equal pay practices” and recognize those that excel in that area. It would also work with public and private entities to train women and girls on salary negotiations and recognizing pay disparities.

An annual report on pay inequity in Arkansas would be published with recommendations for closing that disparity.

Standing before a sign proclaiming Arkansas the “land of equal opportunity,” the Democratic candidate for governor said, “I want my daughter and yours to have the same opportunities to succeed as our son.”

Arkansas employers are already subject to a state equal pay law. Ross’ campaign said more needs to be done. He cited statistics from the National Women’s Law Center ranking Arkansas 35th in terms of equal pay for equal work, with women earning 77 percent of what men earn.

At the press conference, Ross received the endorsement of Arkansas first lady Ginger Beebe, also a Democrat. Beebe cited Ross’ support of the private option Medicaid expansion – 59 percent of whose recipients are women, she and Ross said. She also cited Ross’ support for increasing the minimum wage.

She said Ross’ wife, Holly, “will be an example of what women can accomplish” as first lady. Holly Ross introduced Ross before his speech. Ross’ daughter, Sydney Ross Pack, introduced Beebe.

In other campaign developments, the website Buzzfeed reported Thursday that the campaign of Ross’ opponent, Asa Hutchinson, had plagiarized material on its website about Hutchinson’s plan to teach high school students computer coding. The writing on the site was identical or similar to a blog post by Bloomberg Beta’s Roy Bahat, comments by Sen. John Thune, and a USA Today column by Hadi Partovi.

The Hutchinson campaign told Buzzfeed that the post was written by an unpaid volunteer and that it would add attribution to its website. On Friday, the website did cite and refer to its sources.

“I’m shocked by it,” Ross said after his policy announcement. “First he gets caught up in this tax scandal, and now he’s caught up in plagiarizing issue papers within his campaign. I think it speaks to character. It speaks to trust, and I’m really troubled by it and I think the majority of the people in Arkansas will be.”

Hutchinson offered comments to Ross’ plan.

“The most recent Talk Business/Hendrix poll shows that our campaign has a lead among women and that’s because we are focused on issues like job creation, improving education and strengthening public safety,” said Hutchinson. “I fully support fair pay that is based on qualifications and ability, and there is no place for unfair treatment of employees based on sex. I hope this is something we can all agree on, especially because I have a daughter and granddaughter, and I want them to have the same opportunities as my sons and grandsons.”

Hutchinson also responded to Ross’ reaction to the BuzzFeed story.

“Mike Ross needs to elevate his campaign to talk about the issues facing middle-class Arkansans rather than drive voters away in the waning days of the campaign by constant negative attacks. These attacks discourage young people from participating in the process and they do nothing to help create one job in Arkansas,” Hutchinson said.

Wal-Mart’s goal to save people money does not end with the cost and pricing of goods sold in their stores. The retail giant continues to spread its wings in the service industry by announcing Monday (Oct. 6) plans to bring health care education and insurance enrollment specialists to its stores via a partnership with DirectHealth.com.

The program, “Healthcare Begins Here,” launch comes on the heels of a new clinic format began this summer as the retailer works to shave its insurance costs and those of its employees and customers.

“Our goal is to be the number one health-care provider in the industry,” said Labeed Diab, president of health and wellness for Wal-Mart U.S. “And the more we broaden our assortment, the more we broaden our offering, the more we educate the customer Wal-Mart is a great place to create a one-stop shop.”

THE BUSINESS OF HEALTHCARE
Health and wellness is big business for Wal-Mart’s Stores, garnering roughly $30 billion in sales, which was 11% of the retailer’s total U.S. sales in fiscal 2013. Sales grew 3.8% from the prior year but the retailer is barely scratching the surface of opportunities as there are major shifts underway in this segment.

Wal-Mart’s announcement notes that at least 60% of people have difficulty understanding their health insurance plan option and nearly 40% feel they picked the wrong plan after enrollment, according a report from the Kaiser Family Foundation. The retailer said this new partnership with DirectHealth.com is designed to bring transparency and simplicity to the changing health insurance market for millions of consumers who visit its stores each week.

DirectHealth.com, an online health insurance comparison site and an independent licensed health insurance agency, will provide a resource that seeks to provide Wal-Mart customers access to health insurance information and enrollment support.

“Walmart has long been known for innovation in health and wellness, and we’ll never stop delivering new products and services to the 140 million people who visit our stores each week,” Diab said. “For years, our customers have told us that there is too much complexity when it comes to understanding their health insurance options. Healthcare Begins Here addresses that complexity by bringing clarity and increased choice to the insurance enrollment process through DirectHealth.com.”

Diab adds that Wal-Mart has hosted insurance agents from individual insurers in its stores since 2005 to help answer questions regarding changing health care laws, Medicare and Medicaid programs. He said “Healthcare Begins Here” is a deeper layer of assistance and a next step in response to customers who wanted more options to choose from.

PROGRAM DATES
The program begins Oct. 10 and will run in 2,700 of 4,311 stores through Dec. 7, closely tracking with the Medicare open-enrollment period and partially overlapping with the open enrollment period for federal health insurance exchanges. The company said it will monitor the success of the program and potentially bring it back next year. 

Wal-Mart said DirectHealth.com offers access to more than 1,700 plans from 12 leading carriers Aetna, Cigna, Humana, UnitedHealthcare and participating Blue Cross and Blue Shield companies. (Link here for more information on the program. (Link here for more information about the program.)

The retailer has opened 11 in-store clinics run by Walmart itself that offer primary care such as health screenings and management of chronic conditions like diabetes. That's different from its 100 leased health care clinics in its stores that focus on basic services like flu shots.

Wal-Mart has not been as aggressive as other retail pharmacy chains with in-store clinics and other health care ventures. According to the Convenient Care Association, there are more than 1,400 health clinics inside retail chain stores – twice the number than in 2007. 

CVS Caremark leads the pack with 650 MinuteClinics in 25 states and Washington, D.C. Although Walgreen is second to CVS with Take Care clinics in 372 stores, it anticipates expansion in the next two years with a growth strategy that includes forming accountable care organizations (ACOs) and providing diagnosis and treatment services.

Walgreen partnered in 2013 with Florida-based Diagnostic Clinic, New Jersey-based Advocare, and Texas-based Scott & White Healthcare to form ACOs in which the retailer will benefit from gain sharing when the ACOs succeed in keeping patient healthy at a low cost.

Wal-Mart execs have said the early response to their own in-store clinics has been favorable thus far, but they reiterate that this format is still in the test phase.
Analysts agree that the emphasis by retailers on healthcare is not new. But, they continue to look for ways to draw traffic into their stores with expanded service offerings.

To John McCutcheon, co-owner of Polytech Plastic Molding in Prairie Grove, the idea of contracting for a chaplaincy program for his employees is “without question worth every penny.”

Statistics indicate as many of 60% of employees have trouble focusing on their job tasks because of personal problems; and up to 90% of absenteeism is linked to personal or family problems, according to a U.S. Department of Labor Study.

The return on investment for employee assistance programs such as chaplain services is hard to quantify in exact term. In 2012 Ford and General Motors studied their internal results and found a $9 return for every $1 invested in their employee assistance programs.

UNKNOWN BENEFITS, RISKS
A January 2013 “conference draft” study by Faith Ngunjiri of Concordia College and David Miller of Princeton University suggests no definitive evidence for a cost-benefit claim to corporate chaplaincy.

“In terms of bridging theory and practice, one of the issues that these leaders made clear is that what they know about the benefits of chaplaincy and the contribution to the bottom line is more a ‘gut feeling’ and anecdotal observations, as opposed (to) knowledge from systematic evaluation of their programs,” noted the report. “Thus, a further implication of this study is that scholars need to develop and test new metrics and measures that can be applied to evaluate chaplaincy programs in order to assess just how well they are meeting the needs of organizational members and contributing to individual and organizational outcomes, while minimizing or mitigating any attendant risks.”

“Attendant risks,” according to the report, are underlying pressures to conform to the type of faith used by the chaplains and/or the business leaders who engaged the program. The report notes that “proselytizing motivation could place the chaplains in an awkward situation as they are trained to ‘share the gospel only when invited to do so,’ rather than at the urging of organizational leaders, and also place employees who are not of the particular faith tradition in the situation where they may feel coerced to adopt certain religious views or risk losing their jobs.”

SOMEONE WHO CARES
McCutcheon was first exposed to a chaplaincy program while working at Pace Industries and knew he wanted to offer the same services at Polytech. He contracts with the same service Marketplace Chaplains USA, which employs 31 chaplains in Arkansas who work with 11 companies, including three in Northwest Arkansas. Marketplace provides one male and one female chaplain for each client location.

McCutcheon said the team comes through the plant about once a week to visit with employees and see if there’s anything the employees need help with or want to talk about. The chaplains are also available to visit employees and their family members in emergency situations such as a death or illness in the family.

“They are really sensitive about everyone’s time (at the plant),” McCutcheon said. “They are really there to provide a service if you need someone to talk to. From my perspective, it’s showing that you have someone who cares when you’re in those situations.” 

What the employees talk about with the chaplains is always confidential unless it’s illegal or causing harm to someone. Polytech gets a general report every six months that shares the general topic areas that are the biggest stressors to employees. 

RATES, RULES
John Lindsey is the division director for Arkansas and Louisiana for Marketplace Chaplains. He’s been with the organization for 23 years and was a regular chaplain for 11 years. He said the company’s largest client is Pilgrim’s Pride Poultry with about 50,000 employees reached nationwide. 

Lindsey said many companies who hire Marketplace hear about their services through word-of-mouth or media coverage. The rates depends on the number of employees the company wants served with a flat rate up to a certain number, with increases for employees beyond that.

All the male chaplains must be ordained but because not all Protestant denominations ordain women, the women do not have to be ordained. All chaplains must agree to the Marketplace Chaplains’ statement of faith and agree to work in teams.

Gene Eggman, executive vice president of Human Resources and Government Affairs at Pace, said the Marketplace Chaplains program is contracted to serve all of the Pace locations in North America since 2009.

“A common theme found on our vision and values statement is a commitment to compassion, which is something we strongly believe in,” Eggman said. “So in order to provide our associates a better, more compassionate working environment and peace of mind during stressful times, we offer this service at each Pace Industries location.

“In addition to the Chaplain visits to the locations to build relationships they are available to them 24 hours a day, 365 days a year to provide counseling support, advise, encouragement and personal attention to associates and their immediate families in need of a listening ear.”

FAITH, NO FAITH
Other companies in Northwest Arkansas have their own internal chaplaincy program. Tyson Foods was contacted Sept. 4 about its internal chaplaincy program but declined to comment. This denial was received on Sept. 29 after repeated attempts to connect with Tyson.

Tyson does, however, address its chaplaincy program on its website. According to the site, about 115 chaplains serve the company’s more than 115,000 employees. The program began in 2000.

“Organized as ministers in the workplace, these fellow Team Members represent a variety of religious faith backgrounds. Each chaplain is specially equipped by training and temperament to serve the wide depth and breadth of faith traditions held by their fellow Team Members, including those Team Members who claim no faith tradition,” the website reads. 

Some chaplaincy services are sensitive to the fact that some workers may not believe in religion or a God. Gil Stricklin, founder and president of Dallas-based Marketplace Ministries, addressed that issue in an October 2013 report in HC Online, an Australian-based news service for the human relations industry. Marketplace Ministries is the parent company of Marketplace Chaplains.

“There are still a lot of skeptics in the workplace," Stricklin said in the HC Online article. “If you mention chaplains or religion or faith they say: 'How can you take religion to the workplace? We don't mix religion and work. We don't mix church and state.”

Pensions for police officers and firefighters in Fort Smith are costing the city of Fort Smith large sums of money each year. And the city fund responsible for paying into the system is projected to go broke sometime in 2019.

According Fort Smith Finance Director Kara Bushkuhl, the Arkansas LOPFI (Local Police and Fire Retirement System) Contribution Fund in the city's budget has already been drawing more than is contributed for many years. Documents Bushkuhl provided to The City Wire paint the picture when it comes to police and fire pensions. Money put into the system versus the amount of money taken out to pay into LOPFI stayed in the black on an annual basis through 2007.

The next year (2008), the city withdrew $33,771 more than it put into the fund. And the snowball continued from 2008 to the current fiscal year (2014).

Even with the city on track to withdraw $1.161 million more from the fund during the next fiscal year than it pays in, the retirement contribution fund is expected to start fiscal year 2015 with a balance of $6.514 million. But that total fund balance is expected to only be $287,792 when fiscal year 2019 begins and continue going into the negatives at growing levels for the foreseeable future, culminating in a projected negative fund balance of $10.621 million by Dec. 31, 2022.

The funding of contributions to the plan comes from a variety of city sources, Bushkuhl explained, adding that the state of Arkansas mandates all cities to contribute to retirement plans for its fire responders. Two revenue sources include millage rates of one mil each charged for the police and fire retirements, as well as funneling 10% of district court fines to the pension contribution fund. The millage rates of one mil for each retirement fund bring in about $1.378 million each, or $2.757 million combined each year. The fines contribute about $137,000 per year to the fund.

Other funding comes from a portion of the eighth-cent sales tax for the new fire station at Chaffee Crossing, with about $500,000 in sales tax proceeds contributing to retirement contributions for firefighters stationed to the new firehouse.

Police officers and firefighters are also required to contribute to their retirements. Fort Smith fire responders reviously paid 6% of their salaries to retirement funds, but that changed to 8.5% in 2011.

But one of the major issues contributing to a drain on the retirement contribution fund, Bushkuhl said, is the old retirement plan the city's first responders were under until 1990. The plan, she said, allowed employees to work for the city's fire or police departments for a total of only 20 years and retire with half their annual salary for the rest of their lives.

In order to keep up with the number of retirees collecting from the retirement plan, the state has a base amount required by the city to be contributed for employee retirements - 15.67% of a police officer's pay and 17.49% of a firefighter's pay.

On top of those figures, the state uses an amortization formula to determine the city's contribution level to cover individuals already drawing off the system. With the amortization and base contributions combined, it means the city must contribute 32.36% of police officer's salaries and 39.5% of firefighter's salaries to retirement funding annually.

"Right now, they're both underfunded," Bushkuhl said, adding that the fire contributions are underfunded to the tune of $19 million, while police are underfunded by $17 million.

And even though funding is running into deficits for the retirement contributions, Bushkuhl said the state of Arkansas does not allow municipalities to sidestep responsibilities to retirees who in some cases started drawing retirements in their 40s after putting in 20 years of service before moving onto another full-time job.

In all, there are 118 retired firefighters drawing on the system and 93 retired police officers.

"Until all of those people are gone, that old pension plan for the police and fire will continue to survive," she explained.

Current estimates by the state of Arkansas project another 16 years of the city having to contribute the additional rates on top of base contributions for employees and retirees. But even with an additional 16 years to go — and that number could change based on formulas that take into account life expectancy and the fact that the city still has six employees who will be entitled to the former retirement plan — the plan will go broke by 2020, less than six years from now.

"I think it is a critical problem … because quite frankly, we just don't have it in the general fund," Bushkuhl said.

And the problem is expected to get worse based not only on the current obligations that will be due, but on future obligations that are still mounting.

"Every year, the amount of contributions changes based on salary that we pay, overtime … it's on overtime, regular salary and longevity. So this number we have to contribute continually goes up," Bushkuhl said.

The city's general fund budget from FY 2013 to FY2014 was flat at $47.9 million and sales tax revenues so far this year continue to be flat, as well. For the first eight months of the year, the total tax collections including the August report from the city's sales tax collections are up 1.37% from the same period last year but off budget estimates by 1.04%.

So with drawing additional monies from the general fund not an option, what other options are there? Bushkuhl said additional revenue sources or tax increases are a possibility.

Asked about layoffs to balance the contribution fund, Bushkuhl said job losses in the police, fire and other city departments were not on the table.

"Not yet. That's not a direction that we're looking at for 2015."

Asked whether it was a possibility beyond 2015, Bushkuhl replied, "I don't know. I can't really answer that. I would think the first thing we would do it come up with some other revenue source. I don't know what it would be."

Bushkuhl said the hope is to have a funding mechanism in place by the time state mandates requiring detailed municipal reporting of unfunded pension liabilities goes into affect in 2016.