A bill that would help firefighters diagnosed with cancer due to their work sailed through a House committee, while several bills landed on the desks of the House and Senate clerks Wednesday.

Also, a Senate panel approved a measure that would eliminate the death penalty although the bill is unlikely to pass the full Senate, which has a supermajority of Republican lawmakers.

The House State Agencies and Governmental Affairs approved House Bill 1274, which would amend the payment of claims for firefighters who have been diagnosed with cancer as a result of their job. Under current law, a beneficiary, surviving spouse or surviving children under the age of 22 of public employees can receive a $150,000 death benefit. The bill would expand the benefit to firefighters.

“(A) firefighter killed in the line of duty after July 1, 1987 including death from leukemia, lymphoma, mesothelioma, and multiple myeloma and cancer of the brain, digestive tract, urinary tract, liver, skin, breast, cervical, thyroid, prostate, testicle or a cancer that has been found by research and statistics to show higher instances of occurrence in firefighters than in the general population,” the bill read.

In order to receive the benefit, the firefighter must also be under 68 years old and have been employed for 10 or more years as a firefighter on active suppression duty.
Rep. Greg Leding, D-Fayetteville, who sponsored the bill, said recent studies have shown an increase in the kinds of cancers that firefighters are subjected to, including mesothelioma and thyroid cancer. Rep. Kelley Linck, R-Flippin, said while he was supportive of helping firefighters, he was concerned over the funding source with nearly two dozen agencies and groups having access to the funding.

The bill now heads to the House floor.

DEATH PENALTY REPEAL GOES TO SENATE
A bill that would abolish the state’s death penalty was approved by a key committee Wednesday, content partner KATV reported. The Senate Judiciary Committee approved Senate Bill 298, sponsored by Sen. David Burnett, D-Osceola, during a hearing at the Capitol.

Burnett, who was a circuit judge in Northeast Arkansas before winning a senate seat in 2010, told the committee he does not believe the death penalty stops criminals from committing heinous crimes. The death penalty, which is done by lethal injection, is only available in capital murder cases in Arkansas. No inmate has been executed under the death penalty law since 2005 as legal challenges and a shortage of the drugs used for lethal injection have stalled executions.

Under Burnett’s bill, a person convicted of capital murder would face life in prison or life in prison without the possibility of parole. Also, a juvenile convicted of capital murder could face life in prison without parole or life in prison with a possibility of parole after serving a minimum of 28 years in prison.

The bill now heads to the Senate.

In other Senate Judiciary action, members approved SB 472, which contains many of the elements of Gov. Asa Hutchinson’s criminal justice reform program. Hutchinson discussed the plan in detail on this past week’s edition of Talk Business & Politics.
www.thecitywire.com/node/36553

HB1228 – ‘RELIGIOUS FREEDOM’ BILL

The Senate Judiciary Committee was deadlocked Wednesday on a bill that supporters say would protect religious liberty while opponents say it is discriminatory. The committee were tied 3-3, with one senator voting present, Wednesday on House Bill 1228, content partner KUAR reported.

The state House voted 72-20 on Feb. 13 to approve the bill. During the debate, Rep. Bob Ballinger, R-Hindsville, said his bill would build a higher bar before the state could infringe on religious freedom.

“A state action shall not burden a person’s rights to exercise freedom of religion, even if the burden results from a rule of general applicability unless it is demonstrated by clear and convincing evidence that applying the burden to the person’s exercise of religion in this particular instance, is essential to further a compelling governmental interest and is the least restrictive means of furthering that compelling governmental interest,” the bill noted.

However, in recent days, the bill has received some opposition from businesses such as Walmart, whose spokesman said the bill sends “the wrong message,” KUAR reported.

U.S.-CUBA TRADE
A plan to help restore trade relations between the United States and Cuba also drew support from a legislator Tuesday. Rep. David Hillman, D-Almyra, filed House Concurrent Resolution 1006. The resolution asks legislators to encourage President Barack Obama, Congress and the state’s congressional delegation to build the Caribbean nation as a trading partner of the United States.

Hillman cited the state’s agricultural exports and travel to the nation as reasons the policy should be overturned. The United States has had a trade embargo against the communist nation since the early 1960s.

Supporters of loosening or ending the embargo have said trade would open up the nation, while opponents have said trading with Cuba would only benefit the county’s leader, Raul Castro, and his brother, Fidel Castro.

ABORTION BILL FILED
A bill filed Tuesday would seek to stop certain funding opportunities for those who perform abortions. Senate Bill 569, sponsored by Sen. Gary Stubblefield, R-Branch, uses Amendment 68 of the Arkansas Constitution as reasoning behind the bill. The amendment says “No public funds will be used to pay for any abortion, except to save the mother’s life,” Stubblefield said in the bill.

Under the bill, “an agency or instrumentality of the state shall not award a grant to pay the direct or indirect costs of performing, inducing, referring or counseling in favor of abortions including without limitation – administrative costs and expenses, overhead costs, employee salaries, rent and mortgage payments and telephone and other utility payments.”

The bill would also stop the granting, appropriating or distribution of a grant to a group that “performs abortions, induces abortions, provides abortion referrals or counsels in favor of elective abortions” or an affiliate of a person or entity that does the same. However, the bill would not affect state Medicaid funding or the funding of a hospital, medical center or university.

The bill was referred Wednesday to the Senate Public Health, Welfare and Labor committee.

‘GOOD TIME’ CREDITS BILL
Rep. Donnie Copeland, R-Little Rock, filed House Bill 1450, which would provide “meritorious good time credits” to state inmates. The bill would allow the director of the Arkansas Department of Correction to award 90-to-360-day credits for prisoners that complete certain good behavior requirements.

They include state-sponsored general education programs, a vocational program in which certification is awarded, drug or alcohol treatment at a corrections facility or a pre-release or rehab program sponsored by the state board of corrections.

Under the bill, the director could also give “good time” for an inmate in the following:
• 180 days for completing a general education program or a vocational program;
• 90 days for not abusing infirmary privileges by pretending to be ill to avoid a job assignment, set by the director, for a 150-day period;
• 90 days for remaining free from being written up for a disciplinary violation in a 180-day period;
• 365 days for saving the life of a corrections employee or another inmate; and
• Up to 90 days for completing a job training program or assignment.

However, a prisoner could lose meritorious good time if they escape, possess illegal drugs or contraband, smuggle or trade contraband or be involved in a sexual-related disciplinary violation.

When the Federal Communications Commission meets Thursday (Feb. 26) to vote on proposed net neutrality regulations, the federal regulatory panel’s controversial rules on an “independent, fair and open” Internet are expected to overshadow another important issue on the same agenda.

The five-member panel also plans to take up the Obama administration’s proposal to halt regulations in several states that prevent local communities from building their own broadband networks, a ruling that supporters say could narrow the broadband gap between rural and urban areas in Arkansas.

According to the FCC’s agenda for Thursday, the commission will address whether two municipalities in North Carolina and Tennessee can preempt provisions of state laws that restrict the ability of local communities to provide their own broadband service.

Christopher Mitchell, spokesman for the Washington, D.C.-based Institute for Local Self-Reliance (ILSR), said the FCC ruling is expected to eliminate barriers to setting up municipal networks that allow communities to reap all the benefits of high-quality Internet connections at lower costs.

“In the short-term, it will only affect those communities in North Carolina and Tennessee,” said Mitchell, director of ILSR’s Community Broadband Networks Initiative. “But in the future, it will open the door for communities in Arkansas who want to offer broadband to petition the FCC to do so.”

NO LIKELY IMPACT ON ARKANSAS
According to the FCC, Arkansas is one of 21 states that have limitations or restrictions on the expansion of municipal broadband networks. The Obama administration and FCC Commissioner Michael O’Reilly have signaled that they have enough votes to pass the ruling on Thursday.

Conway and Paragould are the only Arkansas communities among the 150 municipalities nationwide that offer broadband service. In 2012, Siloam Springs voters defeated an $8.3 million measure to run fiber optic cable directly to homes and businesses and add cable, Internet and phone services to its city-owned utilities. Siloam Springs is served by Cox Communications and CenturyLink for cable, telephone and Internet access.

A year before, lawmakers passed new legislation in the 2011 regular session that amended the state Telecommunications Regulatory Reform Act restricting government entities’ ability to create their own networks, except for specific purposes. Before 2011, state law prohibited any government entity from offering, directly or indirectly, basic exchange services. Under those rules, an Arkansas town couldn’t create its own telephone company that offered the traditional concept of telephone service.

Provisions in Act 1050 of 2011 expanded the prohibition to data, broadband, video and wireless. With the exception of those owning municipal electric utilities or cable television systems, Arkansas towns are now prohibited from offering broadband services to nonpublic entities. Mitchell said the amended Arkansas law opens up the uses of those networks created for electric system or television signal distribution system use. The new language adds permission, directly and indirectly, to use those capacities to provide, voice, data, broadband, video and wireless.

There is also an entire new subsection in the Arkansas that allows government entities to purchase voice, data, broadband, video, or wireless telecommunications services from a private carrier – even if the local government is operating a network that could serve them.

The new 2011 exception creates an environment that expressly allows municipal electric and cable television systems to provide a number of telecommunications services, Mitchell said, “including broadband.”

“But the law is also more clear in preempting local authority for communities that do not own electric or cable television systems,” he said.

Still, John Bethel, executive director of the Arkansas Public Service Commission, said he doesn’t believe the FCC ruling will have a major impact in the state.

“There are no significant limitations on the provision of broadband in Arkansas,” Bethel said. “So, I do not think that the FCC action … will be significant in Arkansas.”

THE NET NEUTRALITY VOTE
In addition to the vote on municipal broadband expansion, lawmakers in the nation’s capital are also bracing for a big fight on Thursday’s highly-anticipated vote on net neutrality.

On Wednesday, a House Energy and Commerce subcommittee held a hearing called “The Uncertain Future of the Internet” as a precursor to the FCC’s meeting. According to news reporters, subcommittee Chairman Rep. Greg Walden, R-Ore., invited FCC Chairman Tom Wheeler, but the Obama appointee refused to attend.

As part of President Obama’s technology agenda, the FCC is scheduling a vote on its 324-page set of new guidelines to regulate the Internet like utility services because the agency’s 2010 rules were tossed out by a federal court last year. Republican critics have lambasted the president’s proposal, siding with traditional cable and Internet providers who oppose the new regulations. In a recent statement concerning net neutrality, the National Cable and Telecommunications Association said nearly $11 billion will be added to consumers’ bills as a result of the FCC’s alterations.

“The Internet works for Americans because government has wisely chosen to let the web grow and thrive without burdensome regulation and onerous red tape that can increase consumer bills, choke progress and smother innovation,” the NCTA said. “But instead of continuing this path of tremendous success, some want to radically change course and are urging the government to force a heavy-handed regulatory model on the Internet – called Title II – and to run it like a public utility.”

The Arkansas Cable and Telecommunications Association is affiliated with the NCTA.

Tough talk from Arkansas tourism officials during a presentation with U.S. Sen. Tom Cotton and encouragement on how to not sample 375 wine varieties in one night are part of this week’s The Video Wire.

Anchor Dawson Meadows also has the surprising story of a University of Arkansas at Fort Smith vice chancellor being the second UAFS officer to attempt to scale the iconic Bell Tower on the university campus. It has yet to be confirmed, but Meadows' initial reporting suggested that former NBC News Anchor Brian Williams was the first UAFS officer to scale the tower.

The Video Wire is a collaboration between The City Wire and Things to Do in Fort Smith.

U.S. Supreme Court Justice Antonin Scalia said Thursday (Feb. 26) that seeking cultural diversity among the nine members of the nation’s highest court is not a “good idea.” The quick and blunt response to a question from a junior high school student drew a smattering of laughter and applause from the more than 2,000 who gathered in Fort Smith for Scalia’s speech.

The event, held at the Fort Smith Convention Center, is the first of three Winthrop Paul Rockefeller Distinguished Lecture Series that are focused on the history of the U.S. Marshals Service. Lisenne Rockefeller, wife of late Lt. Governor Winthrop Paul Rockefeller, made a grant to the Fort Smith-based U.S. Marshals Museum in mid-2014 to fund the national lecture series. The three-year series is designed to bring officials from the executive, judiciary and legislative branches of the U.S. government to Fort Smith to speak about the U.S. Marshals’ history with each branch.

In January 2007, the U.S. Marshals Service selected Fort Smith as the site for the estimated 20,000-square-foot national museum. The museum is to be built on 15.9 acres along the Arkansas River that is being donated by the Robbie Westphal family. A ceremonial groundbreaking was held in September, and museum officials hope to have the facility open by late 2017. The planned $53 million museum's construction is a three-phase project, starting first with site work before moving to building construction and finally design and installation of exhibits to be housed at the museum celebrating the United States' oldest law enforcement agency.

Appointed by President Ronald Reagan and confirmed by the U.S. Senate in 1986, Justice Scalia, 78, has served as an associate justice for the U.S. Supreme Court for more than 27 years, and is the Court’s longest serving justice. Originally from New Jersey, Justice Scalia earned his bachelor’s degree from Georgetown University and his law degree from Harvard Law School. He practiced law in Ohio before joining the faculty of the University of Virginia School of Law. 

U.S. District Judge Henry Hudson of the United States District Court for the Eastern District of Virginia introduced Justice Scalia. Judge Hudson is a former director of the U.S. Marshals Service under President George H.W. Bush. 

THE CULTURAL DIVERSITY QUESTION
Selena Ellison, a student at Ozark Junior High School, noted that the newest Supreme Court Justice, Sonia Sotomayor, was the first Latina female appointed to the court. Ellison asked Scalia what he thought of having a more culturally diverse panel.

“I don’t think it’s a good idea,” he quickly replied, adding that the court’s job is to interpret the Constitution and not be representative of the U.S. populace. “You don’t want diverse people, you want good lawyers.”

Scalia broached the topic of diversity prior to the question in his argument that the 9-member court was not formed to be a representative body. He noted that among the justices, six are Catholic and three are Jewish.

“This is really representative,” Scalia sarcastically noted.

Soon after his response to Ellison’s question, Scalia did soften his response, saying that “politically” he understood the desire for diversity.

“I shouldn’t have said that (it’s not a good idea), but it (diversity) has nothing to do with our jobs.”

ORIGINALISM
Prior to taking audience questions, Scalia reviewed his well-known position as an “originalist” when it comes to interpreting the Constitution to settle questions of law. He said many people refer to the Bill of Rights – the first 10 amendments to the U.S. Constitution – when asked about the source of American freedoms. Scalia disagrees with that common reference.

“I would ask you to reconsider that,” he said, noting that every “banana republic” and “dictator-for-life” implement a bill of rights. 

Scalia said the former Soviet Union had a broader Bill of Rights than the U.S., but the “structure” of a government is the key to protecting freedoms. He said “proper structure” through a well-crafted constitution would maintain freedoms even without a bill of rights, but that the opposite is not true. He said there are many democratic countries, but “very few countries” have a true bi-cameral legislative body, a chief executive who is independent of the legislative body, and a chief executive with a strong veto mechanism.

He said many complain that the U.S. form of government leads to gridlock, which is “how the Framers designed it.” Scalia argued that the so-called gridlock was intended “so only really good legislation can get through.”

“What I’m talking about is originalism. It (Constitution) means what it meant when the people adopted it,” Scalia said, with applause quickly following.

He criticized the judicial branch, saying it often attempts to “cram into the Constitution” rules on abortion, homosexual behavior, the death penalty and other issues. When Justin Nguyen, a student from Southside High School in Fort Smith, asked Scalia how he became an originalist, Scalia responded by suggesting the question should be why one would not be an originalist.

“We take Shakespeare to mean what he meant. Why not with the Constitution?” Scalia said, adding that the Constitution would never have been ratified if it included language saying the meaning of the Constitution could change at any moment based on the interpretation of nine judges.

“Why do you want to give it to nine lawyers to rewrite the thing?” Scalia said to another round of laughter and applause.

Earlier, Ateya Wright, a student at Kimmons Junior High School in Fort Smith, asked Scalia how he coped with the tough job of interpreting the Constitution.

“I don’t agonize at all,” the Justice quickly replied, adding that the Constitution is easy to interpret when you aren’t searching for new meanings to what the Framers adopted.

‘AVERSE TO TINKERING’
Not only did Scalia defend his focus on originalism, but he responded to an audience question about a possible national Constitutional Convention by saying he is “very averse to tinkering with the Constitution.”

Mentioning the Prohibition Amendment (in place between 1920 and 1933), Scalia argued that tinkering with the structure and process of the federal government rarely works well. He also said the 17th Amendment to the Constitution, in which the election of U.S. Senators shifted from state legislatures to a popular statewide vote, is another example of tinkering gone awry. That amendment was ratified in April 1913.

As do most Constitutional scholars, Scalia noted that election of U.S. Senators by state legislatures was a method to check the ability of the federal government to control funding to the states and interfere in the activities of state governments. Corruption in state legislative bodies – corruption often funded by the large monopolies that existed before the emergence of federal anti-trust legislation – resulted in a successful push to change the process to elect U.S. Senators through popular statewide votes.

Scalia argued during his Fort Smith speech that this “vastly different system” from what the Framers adopted means U.S. Senators “have no connection” to the states they represent, and therefore state legislatures have no recourse against Federal overreach.

“The protection was taken away because we tinkered with the Constitution,” he said.

OTHER POINTS, QUESTIONS
Scalia was asked about his most interesting case as an attorney. He replied that it was a case about a ceiling collapse at a Sears Roebuck store. The lead attorney on the case with Scalia took the time to go back to the store and physically crawl into part of the ceiling that had not yet collapsed. Through that hands-on investigation, the lawyer found a faulty building material and they were then able to win the case.

The story of the ceiling case got the attention of Braden Myers, a 9th grader at Chaffin Junior High School, who said he was impressed with the depth in which Scalia answered the questions. Myers also said he liked the story of the lawyer “who took that time to go back up into that store to investigate. I thought that was really interesting.”

Scalia was also asked to comment about political donations by corporations – a reference to the Citizens United case in which a divided Supreme Court said the government could not prohibit donations by corporations to non-profits that then use the money for political activities. The questioner at the Fort Smith event said she as an individual voter is “losing my voice” in the election process.

Justice Scalia, who concurred in the decision that corporate money could not be prohibited, called it a “total fantasy” and a “manufactured difficulty” that corporate money is swaying elections for either party. He said the big corporations give money to both sides and the money does not have an impact on election outcomes.

“Those who think that (the money will influence enough voters to sway elections), don’t trust the American people,” Scalia said.

He also argued that many states do not have limits on political spending by corporations and “Daddy Warbucks” has not taken over in those states.

REACTION
Fort Smith businessman Carl Davis did not express an opinion on the issues mentioned, but said he enjoyed Scalia.

“I like his candor. He tells it like it is ... or at least like it is from how he sees it,” Davis said.

Connor Eldridge, U.S. prosecuting attorney for the Western District of Arkansas, said it was “a big deal for Fort Smith and for all of Arkansas to have a Supreme Court Justice” come to the state because “the Constitution discussion is important for us all to have.”

Jim Dunn, president and CEO of the U.S. Marshals Museum, said the Scalia visit elevates the “recognition of the U.S. Marshals” and what the service does for the country. Dunn said the lecture series is not a fundraiser for the museum, “but on the other hand it demonstrates that we are serious” about the museum being developed “and the educational aspects a fully realized” museum will deliver.

The House on Thursday (Feb. 26)  approved a bill to create a way for people to finish their degree online through the state’s largest university, while House members sponsored bills involving judicial ethics and the death penalty.

Also, a series of bills filed Thursday could provide a bright line for judges when they dispense justice or have to step away from a case or face criminal charges.

The 93-3 vote on Senate Bill 265 capped a busy day in the legislature with committees also approving several requests. Senate Bill 265 would create a so-called “E-versity” within the University of Arkansas system. Rep. Nate Bell, R-Mena, who co-sponsored the bill, said the program’s goal would help people in his mostly rural district.

Bell said many people in the district “are 100 miles from the nearest four-year school and 85 miles from the nearest four-lane.” Those numbers have also led to lower numbers of people in his district with at least a bachelor’s degree. Bell said the bill has a special meaning for him.

“It is personal to me. I don’t have a bachelor’s degree,” Bell told the House.

Bell said he has completed between 150 and 160 credit hours but has not earned a degree.

“I’d like to have the piece of paper, but I don’t want to drive the 100 miles or so to get it,” Bell said.

Under the bill, people would be allowed to take six-week courses with a three-hour class, costing around $500. Bell told the House that the program would be funded exclusively through student tuition and private donations, noting nearly 14,000 people in the state already take some sort of online classes. Students would be able to take classes one at a time, to start with, and could be able to take more if the program is successful, Bell said.

Rep. Monte Hodges, D-Blytheville, asked Bell about a possible impact the bill would have on two-year colleges in the state. Bell reiterated the amount would be slightly more than the cost of a community college class, but lower than the amount for a class at a four-year college. Some lawmakers also asked if the creation of the “E-versity” would entirely benefit the University of Arkansas.

Bell said there would be nothing to preclude other universities, like Arkansas State University or the University of Central Arkansas, from taking advantage of the opportunity. The bill now goes to the Senate.

DEATH PENALTY, JUDICIAL ETHICS
Rep. Rebecca Petty, R-Rogers, filed House Bill 1473 Thursday afternoon. The bill would look at the methods used to carry out the state’s death penalty, which currently is by lethal injection.

Arkansas has not carried out an execution by lethal injection since 2005 due to legal challenges and difficulty acquiring the drugs needed to carry out the death sentence.

While Petty’s bill, now in shell form, does not include specific methods, Petty said the punishment would include looking at how other states conduct executions. According to the Death Penalty Information Center, those methods include lethal injection, electrocution, the gas chamber, hanging, and possibly firing squads. Firing squads are used in Utah if an inmate chooses the method if he was convicted of his crime before it was eliminated as a state option. Oklahoma is the only other state to consider firing squads if lethal injection and electrocution are found unconstitutional, according to the center’s web site.

Petty said she is consulting with the governor’s office on her measure, indicating that the Hutchinson administration’s preference is still lethal injection. She said she is willing to do a nationwide study to see what might be most effective. The bill would only cover capital murder and treason cases in the state.

Petty, whose daughter was found raped and murdered in 1999, has worked on several criminal justice-related bills this session. The man convicted of the murder, Karl D. Roberts, is on death row at Varner Supermax prison. One of the bills – Andi’s Law – is named after her daughter. The bill, which passed the legislature and was signed into law by Gov. Asa Hutchinson, would allow family members of murder victims to witness the execution of the person convicted in their family member’s case.

The bill filed Thursday was the second bill in a month involving the death penalty issue.
Sen. David Burnett, D-Osceola, filed a bill to repeal the death penalty in the state. Burnett’s bill was approved Wednesday by the Senate Judiciary Committee. The bill is likely to face opposition from the state’s prosecuting attorneys as well as the entire Senate.

Petty said her effort to explore other methods of execution was in response to the Senate Judiciary committee’s action. She said the committee’s decision was “a slap in the face after fighting for Andi’s Law.”

Rep. John Baine, D-El Dorado, filed House Bills 1456, 1457 and 1458 after speaking to attorneys, judges and the state’s judicial ethics commission about the issue of unethical behavior from the bench.

“It is regrettable in light of recent events,” Baine said of the filings of the bills.

The issue of judicial ethics has been at the forefront since former Circuit Judge Mike Maggio pleaded guilty in January to federal bribery charges. Maggio, who was running for a seat on the Arkansas Court of Appeals, was accused of accepting a campaign contribution that he told authorities influenced his decision to reduce a jury verdict in 2013, Talk Business and Politics reported in January. Baine said House Bill 1456 would amend state law by allowing for an automatic suspension for judges and justices in different circumstances.

OTHER FLOOR ACTION

A student may have an opportunity to learn what their financial future could hold under a bill that passed the Senate Thursday. The Senate voted 33-0, with one present, to approve Senate Bill 211 sponsored by Sen. Alan Clark, R-Lonsdale.

The bill requires the Department of Workforce Services or someone hired by the department, starting June 30, 2016, to put together an “Economic Security Report” of employment and earning outcomes for degrees and certificated earned at colleges and universities in the state.

The information, which would also be online, would break down the information based on employment, earnings, student loan debt, percentage of graduates in a field as well as degree programs in the top 25 percent of degree fields and the bottom 10 percent of degree fields.

According to the bill, students in grades 7-12 as well as their parents would receive copies of a two-page summary of the report and access to the website. The bill now heads to the House.

COMMITTEES

The House Education Committee also approved two bills Thursday, one of which involved the possession of a concealed handgun in a university, college or community college building. The bill, which failed in committee earlier in the session, was amended by its sponsor, Rep. Charlie Collins, R-Fayetteville, content partner KUAR reported.

Under the amendment from Rep. Scott Baltz, D-Pocahontas, colleges will require active shooter training for permit holders as well as prohibiting guns at day care centers on campus. The training class includes 16-hours in initial training as well as eight hours annually in training. The bill now heads to the House.

Off and on through the years analysts have said they believe Sam’s Club might perform better if Wal-Mart cut it loose. However, few believe it will happen given that the retail founder’s namesake appears to do fine in Wal-Mart’s shadow.

Sam’s Club, if it stood alone outside of Wal-Mart Stores, would be the eighth largest retailer with an annual revenue of $58.02 billion last year. That compared to $11.86 billon at J.C.Penney and $27.69 billion at Macy’s. 

Under the direction of CEO Rosalind Brewer, Sam’s Club continues to adapt to the ever-changing demands of its members. She has said the Sam's Club brand must evolve to drive needed member growth. Early last year Brewer and her team outlined what they thought it would take to bridge the generation gap and ultimately drive more sales and services in the next year amid a shifting member base. They raised fees and softened that blow with more coupon savings on big ticket items and expanded their online assortment with a club pick-up option as well. 

A year later in the retailer’s annual earnings report, it looks as if Brewer is beginning to reap some benefits from that strategy. Sam’s Club reported a 2% gain in same-store sales for its fourth quarter results which ended Jan. 31. Comp traffic rose 1.5% and average ticket rose 0.5% from the year-ago period. For the full year, same-store sales were up fractionally at 0.5%, which was down slightly from 0.7% comp reported a year ago.

"Throughout the year, we've seen meaningful acceleration culminating in comp sales," Brewer said during the recent earnings call. "Strong holiday execution, combined with our strategic investments in member value, merchandise relevance and the integration of digital and physical boosted our performance."

Net sales for Sam’s Club last year rose 2.1% to $51.6 billion, excluding fuel. Gross sales that included fuel rose 1.5% to $58.020 billion compared to a year ago. Total operating income rose 7.2% from a year ago. 

Looking ahead, Sam’s Club expects comp sales for the current quarter ending May 1 to rise between 1% and 2% from the 0.5% level of a year ago.

HOLIDAY MOMENTUM
Sam’s Club reported improved holiday sales in the fourth quarter which ended Jan. 31. Net sales grew 3.7% and Sam’s Club delivered comp sales of 2% driven by traffic growth of 1.5% and ticket of 0.5%, Brewer said. 

Although gas prices were down roughly 25% over the fourth quarter, gallons sold increased 8% year over year and fourth quarter operating income included a $41 million increase in fuel profit. Net sales including fuel increased 1.3% to approximately $14.87 billion, modestly below analysts projects of $14.93 billion. Without fuel, net sales rose 3.7% to $13.64 billion.

“The Savings member continues to drive traffic. We have lapped last year’s SNAP reductions and benefitted from favorable weather this quarter. Retail inflation across the club has moderated slightly since the previous quarter,” Brewer said.

She explained gross operating margins were down slightly in the quarter pressured by the retailer’s Plus Cash Rewards program and merchandise mix. But Brewer said expenses were also lower in part because of staff reductions that took place earlier in the year.

Brewer said her team also reduced total inventory by 3.5% last year while adding 16 new clubs, which should help gross operating margins going forward. One of the hottest categories at Sam’s Club is the fresh food business with comp sales growing in low positive digits for the recent quarter. She said produce was challenged from weather supply issues, but dry grocery, consumables and beverage also performed low single digit gains from a year ago as did home and apparel.

Health and Wellness category sales rose in the positive mid-single-digits over a year ago. Brewer said pharmacy comps as well as over-the-counter sales improved. The technology, office and entertainment categories continue to see deflationary pricing which took comp sales down roughly 5% in the quarter. 

“We need to make larger, faster strides. This year, our merchants are rebalancing the portfolio, which involves reallocating resources towards higher growth, higher excitement categories,” Brewer said.

E-COMMERCE, MEMBERSHIP GROWTH
Brewer remains excited about SamsClub.com saying that it was an “integral in supporting our in-club holiday events.”

“Dot-com delivered double-digit comps in both direct-to-home and Club Pickup, contributing approximately 40 basis points (0.40) to the segment comp,” Brewer said. 

Sam’s Club rebranded Click ‘n’ Pull to Club Pickup and attempted to improve the service appeal to Savings and Business members. Brewer said the improvements made to Sam’s mobile and desktop platforms helped to boost conversion rates.

Membership income is the bread and butter for the club format and Brewer reported a 10.3% gain for the year, which includes the 16 new clubs that came online during the year. Without the $24 million from the new real estate, membership income rose 2% driving an annual operating income of $1.9 billion.

“I am optimistic about our growth opportunities in both the digital and the physical and that’s why we plan to open 9 to 12 new and relocated clubs, and remodel between 55 and 60 clubs this year, while simultaneously investing in innovation at SamsClub.com,” Brewer said.

In step with its parent, Sam’s Club said this year its starting pay will be raised to $9.50 per hour, noting that the business model differs from Wal-Mart Stores which is raising the starting wage to $10 per hour. Brewer said the move will ensure all Sam’s Club hourly associates are paid above the federal minimum wage.

The eighth week of the Arkansas General Assembly is likely to include discussions involving agriculture, education and highways starting Monday, and the public can expect more conversation on changes to the criminal justice programs across the state.

There will even be some discussion over which proposed constitutional amendments will appear on the state’s 2016 general election ballot. The following is a rundown of expected events this week in the legislature.

MONDAY
The House State Agencies and Governmental Affairs committee will likely be busy discussing constitutional amendments all week. Committee chairman Rep. Nate Bell, R-Mena, told the committee Friday that discussions will start Monday and committee members should be ready for a busy week.

Nearly 40 proposed amendments were filed by lawmakers in time before the Feb. 12 deadline. The amendments ranged in issue from education financing to tort reform. On Monday, committee members will discuss proposed amendments on elected officials, the state’s judiciary, public notices among other issues.

Bell told the committee they are likely to meet all week to narrow the 40 or so down to about five or six each from the House and Senate. According to state law, only three constitutional amendments can be referred to voters in a general election.

TUESDAY
The House Education Committee is expected to take up a bill that would eliminate the state’s involvement in a test that is part of the Common Core program. The bill from Rep. Mark Lowery, R-Maumelle, would pull Arkansas out of the Partnership for Assessment of Readiness for College and Careers in time for a June 30 deadline.

The bill would also forbid the state Department of Education and the state Board of Education from giving any information to the U.S. Department of Education without getting permission from parents.

Lowery told TB&P while he was not opposed to Common Core, but is opposed to the test due to a lack of participation from other states.

“I take school administrators and teachers at their word when they say Common Core standards may be something that’s been developed nationally, but they have been able to use local control to develop curricula at the local level to enable them to meet the standards,” Lowery said. “That has not been the case with PARCC.”

HOUSE
There will be a meeting on Monday regarding House Bill 1346, a measure that would dedicate sales tax funding from new and used cars and car parts to roads. The transfer would apply only to money raised above $2.2 billion through sales and use tax collections.

The bill, by Rep. Dan Douglas, R-Bentonville, would steer 70% of that new sales tax revenue to state highways, 15% to counties, and 15% to cities. The funding would increase over time so that it would grow from $35 million in year one to $548 million in year 10.

Douglas said a meeting is planned for Monday with the governor’s office, state agencies, higher education officials and others.

SENATE
The Senate Agriculture, Forestry and Economic Development committee should take up a grain reform bill this week, one of its sponsors said Thursday. Sen. Ronald Caldwell, R-Wynne filed Senate Bill 555 Wednesday.

The bill would allow the Arkansas State Plant Board to mandate grain dealers to post surety bonds, get a license and rescind the license on a temporary basis without a hearing.

Caldwell said the bill was in response to the Turner Grain controversy. Questions arose last year as farmers alleged they were not paid for their grain. The state’s Secretary of Agriculture, Butch Calhoun, said last October that the losses were at least $50 million.

Caldwell said the bill would have likely helped bring the Turner Grain issue to the forefront if it had been in place. Caldwell, who serves on the committee, said the bill would also give producers and farmers a method to contact plant board officials if there is ever a problem.

Eric Jackson, the longtime general manager of Oaklawn Park at Hot Springs, vividly remembers that trip across the Chesapeake Bay more than 17 years ago. It was February 1998, and it was cold. Jackson and Bobby Geiger, Oaklawn’s director of gaming and wagering, had taken a flight to Baltimore and then gotten on a small boat that was headed to an island in the bay.

“It was dark, it was sleeting and Bobby and I just had on our suits,” Jackson says as he sits in his Oaklawn office on a Monday afternoon. “We were freezing. We also knew we had a lot of work ahead of us.”

They were bound for Parsons Island, which once was described by the Baltimore Sun as a “bucolic, privately owned island covered in corn and sunflowers and with scattered wildlife.” The 100-acre retreat belonged at the time to Jim Corckran, who along with his brother owned an east Baltimore manufacturer of nails, rivets, nuts, bolts and other fasteners that had been founded in 1865. Corckran had purchased the island from McCormick & Co., the well-known spice manufacturer that had begun doing business in 1889 at Baltimore.

Jackson and Geiger weren’t headed to the island to talk about nuts, bolts or spice. They were there to talk thoroughbred racing and ways to preserve the sport in the face of increased casino competition. Two years earlier, brothers John and Jim Corckran had teamed up with Ted Mudge, the owner of a Baltimore-based insurance brokerage who was active in the thoroughbred racing industry, to purchase AmTote International, Inc. Founded in 1932 as the American Totalisator Co., the firm specialized in the equipment used to control pari-mutuel betting at horse racing and greyhound racing facilities. American Totalisator installed its first mechanical tote system at Chicago’s Arlington Park in 1933.

INSTANT RACING
Besieged by the proliferation of casinos in Mississippi and Louisiana, Oaklawn’s Jackson had come up with the concept of Instant Racing, an electronic gambling system that allows players to bet on replays of past races. Instant Racing terminals resemble slot machines.

“The 1980s had been great for Oaklawn,” Jackson says. “At the time, we didn’t fully appreciate just how great they were. In the late 1980s and early 1990s, we began to face competition from new tracks in Oklahoma and Texas [Remington Park opened at Oklahoma City in 1988 and Sam Houston Race Park opened at Houston in 1994]. “We responded by instituting simulcasting, becoming the first track to offer full cards from other tracks. But while we were looking west toward Texas and Oklahoma, the casinos were being built to the east in Mississippi and to the south in Louisiana.”

A ballot initiative that would have allowed some casinos in Arkansas – including one at Oaklawn – was tossed off the ballot just before the November 1994 election. Oaklawn made another run at it in 1996.

“We got sucker punched about a month before the 1996 election,” Jackson says. “We had gone into it with the idea that the companies operating casinos in Mississippi would not oppose us since two casinos would be allowed at Hot Springs in addition to what happened here at Oaklawn. Then they came after us. The ads were brutal, and we got our teeth kicked in. Simulcasting had been Plan A. The casino initiative had been Plan B. Frankly, we didn’t have a Plan C.”

Proposed Amendment 4 in 1996 would have established a state lottery, permitted charitable bingo games and raffles by nonprofit organizations and allowed Hot Springs voters to decide whether to authorize casino gambling at Oaklawn and two other sites in the city. The initiative failed 61% to 39%.

‘THERE HAD TO BE A WAY’
It was then that Jackson began to play around with the idea of Instant Racing.

“I thought that there had to be a way to take past races and put them in a format that people would still enjoy,” Jackson says. “Our advertising agency came up with artwork of what the terminals might look like, and we invited representatives of three companies to come and hear what we had to say. Two of them thought it was a dumb idea. The third person was Ted Mudge of Amtote. He wanted to give it some additional thought.”

That was in 1997. Mudge’s interest set the stage for the February 1998 trip to Parsons Island.

“It was like a think tank out on that island,” Jackson says. “There were all kinds of people there. We worked for about 36 straight hours. It became known at the Parsons Island Project. You can still find old files around here labeled P.I.P., which stands for Parsons Island Project.”

During the 1999 legislative session, the Arkansas Legislature removed the requirement that simulcast races be shown live, opening the door for Instant Racing. The first test terminals were placed on the floor at Oaklawn and at Southland Greyhound Park in West Memphis in January 2000. There were 50 machines at each track. By 2002, the concept was taking off in Arkansas.

“For the longest, Instant Racing was just here in Arkansas,” Jackson says. “We then started to get into other states. Louis Cella has been what I call our Fuller Brush salesman. He has gone all over the country talking about Instant Racing. He’s the reason it’s in other states.”

ALL IN THE FAMILY
Louis Cella is the son of Charles Cella, who has been at the track’s helm since 1968. Charles Cella’s grandfather and great uncle, Charles and Louis Cella, were among the founders of Oaklawn and were investors in racing ventures across the country in the early 20th century. Charles Cella’s father, John Cella, led Oaklawn into the modern era and was the track’s president for many years until his unexpected death in 1968.

The fourth generation of the Cella family operating Oaklawn – Louis A. and John G. Cella – both serve on the board. Louis is a 1987 graduate of Washington and Lee University in Virginia and received his law degree from the University of Arkansas in 1990. John is a 1985 graduate of Vanderbilt University in Tennessee and is a thoroughbred owner. Both men inherited their father’s passion for the Hot Springs track. And both have confidence in Jackson, a Hot Springs native who grew up playing golf on the three-par course that once was on the Oaklawn infield. Jackson graduated from Hendrix College at Conway with degrees in business and economics and has been with Oaklawn since 1978. He was the director of operations from 1978 until he was promoted to general manager in 1987.

Jackson became the general manager following the death of the legendary W.T. “Bish” Bishop, who had taken over in July 1972 from the equally legendary J. Sweeney Grant following Grant’s death. Grant had been the general manager since 1954. In other words, Oaklawn has had just three general managers in the past 60 years.

‘GAMES OF SKILL’
Oaklawn celebrated its centennial year in 2004. A year later, Oaklawn Park and the Cella family were awarded the Eclipse Award of Merit, the most prestigious award in racing. But no longer was Instant Racing enough to keep up with casinos in Mississippi, Louisiana and Oklahoma. The track needed additional relief from the Legislature and got it when the Legislature passed an act in 2005 permitting Oaklawn and Southland to install “games of skill” such as electronic blackjack and electronic poker if approved by the city or county. Gov. Mike Huckabee allowed the bill to become law without his signature.

More than 60% of West Memphis voters approved the games at Southland. In late 2006, work began on a $40 million expansion that included a new main entrance to the dog track, a 55,000-square-foot gaming room, a 400-seat special events center, a 150-seat nightclub, a 280-seat buffet and additional restaurants. Last year, a $37.4 million expansion was announced, including dozens of new gaming machines and the addition of Sammy Hagar’s Red Rocker Bar & Grill.

In Hot Springs, meanwhile, a public referendum to allow expanded electronic games at Oaklawn passed by just 89 votes in November 2005. Litigation ensued. In September 2007, the Arkansas Supreme Court upheld the law authorizing Oaklawn to add expanded games of skill. On the day after the Arkansas Derby in April 2008, Oaklawn began construction on a 60,000-square-foot, two-level structure to house the electronic games.

Things have taken off from there:
• In August 2012, Oaklawn announced that there would be a record $20 million in purses for the 2013 race meeting. The purses, in turn, attracted a higher quality of horses. When Rebel Stakes runner-up Oxbow won the Preakness Stakes at Baltimore in May 2013, he became the 10th Triple Crown race winner to have come from Oaklawn in 10 years.

• In June 2013, Oaklawn announced plans for an expansion to its gaming area that would increase capacity by another 50 percent. The work began in early August of that year and ended just prior to the start of the 2014 race meet.

• Construction on the additional $20 million expansion resumed the day after the Arkansas Derby last April.

• In November, the new gaming area and Silks Bar & Grill opened. By the start of this January’s race meet, a high-limits area and a poker room had also opened.

“We’re going to have purses of $23 million this year,” Jackson says. “We’ve picked ourselves up off the mat. This is just as much fun as it was in the 1980s, but this time we appreciate it more. We realize that we looked into the abyss and survived. When things were at their worst in the 1990s, Charles Cella insisted that we keep the racing quality up until we could find a lifeline. He was, in essence, underwriting the purses. These days most tracks are owned by gaming companies. We consider ourselves a racetrack that happens to have gaming. We’re the only one who truly uses the gaming proceeds to vastly improve the quality of racing. Gaming now pays the light bill here, but racing is our passion. It’s in our DNA.”

MULTIPLE EXPANSIONS
David Longinotti, Oaklawn’s director of racing, is a Hot Springs native like Jackson. He began covering Oaklawn when he wrote sports for The Sentinel-Record. He later helped open Remington Park in Oklahoma City before becoming director of media relations at sister track Thistledown in Cleveland in 1991. Longinotti returned to Remington as director of communications in 1994. He later spent more than a decade handling the Oaklawn account for Little Rock advertising agency CJRW and then joined the Oaklawn staff in 2006.

“This is David’s Christmas,” Jackson likes to say of the racing season, which runs from early January until the middle of April.

Oaklawn is now among the top five tracks in the country in average daily purse distribution. Race fields were full early in this year’s meet, and there was a lack of stall space. Jackson laughs when asked about the multiple facility expansions that have occurred in recent years.

“That’s a clear indication of the poor job that management did with projections,” he says. “It would have been much cheaper if we had done it all at once.”

In 2014, Oaklawn and Southland saw combined electronic games of skill wagers of almost $3.53 billion. Oaklawn pulled in $1,359,074,501 and Southland had $2,172,451,426 in gaming wagers. The totals are expected to be even higher this year. Oaklawn had to postpone the first weekend of racing in early January due to extremely cold weather, but Jackson was philosophical. He says at such times, “There’s nothing you can do about it. It’s an outdoor sport.”

In the weeks that followed, the track was blessed with warmer-than-expected weather. The Hot Springs track continues to gain momentum at a time when a number of other tracks across the country are suffering. The Fair Grounds at New Orleans has cut purses consistently in recent years. Oaklawn, meanwhile, has been increasing its purses for more than a decade.

‘SOMETHING SPECIAL’
In an interview last year with The Times-Picayune of New Orleans, thoroughbred owner Maggi Moss of Des Moines, Iowa, said of the Fair Grounds: “Nobody cares, so why would I take the time to care? When I go to Oaklawn, I know people care. You get treated great.”

“I don’t think anyone ever expected to see our purses double in just 10 years thanks to Instant Racing, gaming and good racing,” Longinotti says.

Off-track handle picked up last year when Oaklawn’s races returned to the racing channel TVG after only being shown on competing channel HRTV in 2013. The track also has benefited from a product known as “OaklawnAnywhere,” an advance deposit wagering site that allows Arkansas residents to bet using the Internet.

At age 79, famed trainer D. Wayne Lukas is among those who spend winters at Hot Springs. The Wisconsin native has won more Triple Crown races than any other trainer with 14 (he has captured the Kentucky Derby four times, the Preakness Stakes six times and the Belmont Stakes four times). Lukas already had become a legend in the quarter-horse industry when he made the switch to thoroughbreds in 1978.

He says: “Arkansas has something special going on here. Something happens here that’s now missing at a lot of other tracks. You have real fans here.”

‘GENUINE ENTHUSIASM’
Lukas believes Oaklawn could serve as an example for tracks across the country. That’s because it’s still a place for family outings, a spot where the food and the chance to visit with friends is as much a part of the experience as the betting. He calls Hot Springs “a national treasure,” a resort town where a day at the races is a social event worth getting dressed up for. He says about the only racing towns that can compare these days are Saratoga Springs, N.Y., and Lexington, Ky.

“Racing got soft all over the country,” Lukas says. “We became too confident that people would keep coming to the track. Going to the races is still a part of the culture of this state. There’s a genuine enthusiasm for the game that’s hard to find elsewhere. Look at the average daily attendance at Oaklawn. It’s higher than most of the other tracks.”

Lukas says he likes the fact that he can walk into a Waffle House for breakfast and have people come over to talk racing. That doesn’t happen in New York, Los Angeles or Miami. Across the American landscape, thoroughbred tracks have become sad, empty places, mere adjuncts to adjoining slot facilities. Oaklawn, though it also now has an extensive gaming center, has been able to remain a bit different. The racing still matters.

In a book titled “Crown Jewels of Thoroughbred Racing,” Hot Springs native Randy Moss wrote: “No palm trees line the entrance to this racetrack, and its paddock isn’t one of those botanical gardens that make horseplayers want to fold up their Daily Racing Form and splash on suntan lotion. It doesn’t have a Phipps or a Hancock on its board of directors. Thomas Jefferson never raced there and overalls outnumber neckties by three-to-one in the grandstand. But ask well-traveled horse lovers to recite their favorite racetracks and chances are good that Oaklawn Park will pop up in the conversation. For a little country track in Hot Springs, Ark., on a two-lane road between nowhere and no place, Oaklawn has made quite an impact on the racing world.

“During the track’s rapid rise to prominence in the late 1970s and early 1980s, racing executives from throughout the country and even reporters from Sports Illustrated and The New York Times were dispatched here in hopes of determining what made this unlikely racetrack so special. They usually returned home with a hangover and a stretched-to-the-limit credit card, reporting that they couldn’t figure out the secret formula but sure enjoyed the heck out of the search. But without even knowing it, they knew it. The key to Oaklawn has always been simple. The track is one big party.”

Moss, who now works for NBC Sports, related the story of Cuban-born trainer Laz Barrera, who remarked after a race in Hot Springs that he had never been to Oklahoma. Told that he still hadn’t been to Oklahoma, Barrera replied: “Well, wherever we are, it’s a long way from California.”

NEW CHAPTER
With the glory days of the 1980s and the early 1990s over, Randy Moss wrote in 1997: “Although great horses still are flown in for the Racing Festival of the South stakes, the crowds and enthusiasm have dimmed somewhat in recent years. The Clydesdales have been replaced by a tractor, the infield critters and wagon rides are gone, riverboat casinos in Mississippi and Louisiana have taken away many of the celebrants and some fans now stay home for the convenience of watching the track’s races on simulcast screens in Shreveport, Dallas-Fort Worth, Oklahoma City and West Memphis.”

Little did Moss know in 1997 that a new chapter was about to be written at Oaklawn.

The old lady of Central Avenue has received a remarkably successful facelift since those words were written. Along came Instant Racing. Along came the other so-called games of skill. Up went the purses. Horses went on from Oaklawn to win Triple Crown races. And the national media noticed.

For Oaklawn Park at Hot Springs, maybe these are the good ol’ days.

Sen. Jake Files, R-Fort Smith, is expected on Monday (Mar. 2) to file legislation that would reduce the tax on soft drink syrup by 37%. If passed, it would result in a reduction of $4 million in state funds to the Medicaid Trust Fund, plus the loss of unmatched federal funds, the state budget administrator said.

Files, the lead Senate sponsor and chairman of the Senate Revenue and Tax Committee, said Sunday he expects “at least 40 cosponsors” in the House and Senate. Rep. Laurie Rushing, R-Hot Springs, is the lead House sponsor.

Brandon Sharp, the state budget administrator, said the Department of Finance and Administration is opposed, “simply because it would require additional general revenues which are not contemplated in the governor’s balanced budget.” Gov. Asa Hutchinson supplied a statement to Talk Business & Politics that neither embraced nor shut the door on the possible tax cut.

“Our focus this session has been to lower our top income tax starting with the middle class. There are a number of bills that have been filed to cut additional taxes, beyond what was included in our balanced budget proposal. I look forward to working with the legislature to discuss these bills as we work to craft the final budget for next year,” Hutchinson said.

Soft drink syrup used in fountain drinks is taxed at $2 per gallon. Taxes also are levied on bottled or canned soft drink products and drinks produced by powders or base products at a rate of 21 cents per gallon of finished product. On a 24-can case of soft drinks, the tax is 47 cents, or about 2 cents per can.

Soft drink taxes raised $44 million in fiscal year 2014 and have raised more than $631 million since the beginning of fiscal year 2001, according to the Department of Finance and Administration. Files said the 37% reduction would reduce state funding by about $4 million a year. He said in some years the $4 million wasn’t necessary to meet the Medicaid program’s budget.

“It’s been something that’s been out there and been a tax that we all paid for but almost used just kind of selectively … when they needed some bump,” he said.

Sharp said a reduction of $4 million in state spending for Medicaid would result in a loss of federal matching funds, which are paid at a 70:30 match. Files said he did not expect repealing the syrup tax would reduce federal dollars coming into the state.

“Medicaid is going to be funded for whatever Medicaid needs to be funded for, so I don’t see this being something that there’s going to be a loss of services or loss of federal dollars,” he said.

At one time, the Medicaid Trust Fund had reached $400 million thanks to an infusion from the federal stimulus package, but that amount has dwindled.

“Last I looked, I think we were down to $29 million in the Medicaid Trust Fund as a whole,” Sharp said. “Medicaid spends $60 million a week, so … I wouldn’t call it a surplus. I would call it simply part of what we need to operate the state’s Medicaid program.”

The tax was created during a December 1992 special session called by Gov. Jim Guy Tucker after he was sworn into office following Bill Clinton’s election as President. Its purpose was to ensure Arkansas could continue to fund its share of a 3:1 federal Medicaid match. The tax is the largest contributor to the Medicaid Trust Fund. Voters in 1994 supported keeping the tax during a statewide referendum.

Files said further soft drink tax reductions could result from the task force that will be considering overall Medicaid reforms this year. Soft drink taxes could be reduced gradually, as was done with the grocery tax, with a proposal perhaps ready for consideration by the 2017 session. Files said the soft drink tax is applied to a particular industry that doesn’t receive benefits in return.

“This one from a tax policy standpoint was and is just a simple way to get money,” he said. “And that’s not always bad, but everybody else that pays into the trust fund has some sort of renumeration coming back to them, and they get compensated.”

The bill was proposed and backed by a coalition led by the Arkansas Beverage Association that includes the Arkansas Hospitality Association, Arkansas Grocers and Retail Merchants Association, Arkansas Oil Marketers Association, and the Arkansas Vending Council.

Dennis Farmer, the Arkansas Beverage Association’s president, said West Virginia is the only other state that levies an excise tax on soft drinks. This creates a hardship for Arkansas-based stores and restaurants participating in national promotions, he said. The coalition would like to see the entire tax go away. In the meantime, the 37% reduction would equalize the current rates for fountain drinks and other types of soft drinks. The way it’s set up, Farmer said, fountain drink consumers are taxed for the cup and the ice.

“This is an extra tax that hurts their bottom line,” Farmer said of his members. “It makes it harder to be competitive. It makes the products cost more for the consumer, and it has nothing to do with Medicaid. Everything else that goes in the Medicaid Trust Fund, there is some kind of connection.”

Files said there are a number of taxes where Arkansas is an “island,” and he would like to address those one at a time.

What about soft drink consumption contributing to the state’s obesity problem?

“I think we all are (concerned), but I think at the end of the day, that’s a personal choice as well,” Files said. “There are things that government can do, and just throwing more taxes on, I don’t know that that makes a big deterrent one way or the other on a soft drink. … I don’t think somebody’s going to go, ‘Hey, I’m going to start drinking cokes now because the syrup tax went down.’ I think they’re going to drink them regardless. I think they just may save more money and be able to do more things otherwise with that savings.”

It’s been 10 years in the making but the University of Arkansas Division of Agriculture announced plans for a new $16.3 million research center made possible by a $5 million donation from the Tyson Family and Tyson Foods. The building will be named after poultry pioneer Don Tyson who ran Tyson Foods for more nearly five decades prior to his death in January 2011.

The formal announcement was made Monday (March 2) at the site where the new 60,000-square-foot building will soon be built. The site is adjacent  the Pauline Whitaker Equine Center on Garland Avenue on the UA campus in Fayetteville. The building will feature high-tech agriculture research laboratories that will advance plant and animal studies as well as the water quality and watershed sustainability, said Mark Cochran, vice president for agriculture at the UA Division of Agriculture. The new research center will better help researchers create healthier, better and more efficient ways for growing crops, raising animals, producing food and protecting the state’s natural resources, he added.

The complex will also be the new administrative home for the Division’s Agricultural Experiment Station, which has been based in Fayetteville for more than 125 years.

The rest of the funds are to come from a decade of saving by the Division of Agriculture,  according to Mark Scott, chief communications officer for the UA System Division of Agriculture.

“Having this new Agricultural Research Center named after dad (Don Tyson) is pretty special for our family. He loved the university and Arkansas agriculture,” John Tyson, chairman of Tyson Foods, told The City Wire after the event. “Dad’s involvement and commitment to agriculture in Arkansas is legendary. It’s an honor for our family and company to partner with the UA System Division of Agriculture on this project. The research and other work that will take place in this building and on the surrounding farm will be vitally important in helping secure the future of agriculture and agri-business in our state for generations to come.”

UA System President Donald Bobbitt said the gift will solidify the UA Division’s efforts for future generation and will allow for the further enhancement of agriculture in the state.  Bobbitt said the UA System Board of Trustees approved the Division of Agriculture’s request for a new facility in September. The board hired WER Architects and Nabholz Construction for design and construction.

Former U.S. Sen. David Pryor, board trustee for the UA System, was among the board members attending Monday’s announcement. Pryor spoke about giving nature of Don Tyson and the entire Tyson family toward the University over the years. He also credited Mark Simmons and others in the room who continue to work with the University Division of Agriculture in areas like poultry genetics, feed enhancements and animal welfare issues.

“Don Tyson never forgot his roots and though he could have built his company and lived anywhere in the world, he did so here, and Springdale, Northwest Arkansas and Arkansas are all better for it,”  Pryor said.

This particular gift was to the UA System, not the University of Arkansas. But you don’t have to look far on the UA campus to see the influence of the Tyson Family. The Randall Tyson Track Center was named after Don Tyson’s brother Randall, whose widow Barbara Tyson attended Monday’s press conference. Barbara Tyson is a long-time board member at Tyson Foods.

The John W. Tyson Building dedicated in 1995 as the Center of Excellence for Poultry Sciences was named after Tyson Foods founder. Then in 2011, the Tyson Family Foundation gave $2.5 million toward the Jean Tyson Child Development Study Center on the UA campus.

“The Jean Tyson Child Development Study Center was another special and fitting way for us to give back. We know how important child development is for all future generations,” John Tyson told The City Wire following announcement presentation.

Ironically, Don Tyson never completed his degree from the University of Arkansas. He was called away from his studies at UA in 1952 during his senior year to help run the company with his dad. He was eager to jump into the business with his dad who had just added a hatchery and feed mill so he could integrate the business, which has become standard practice in the industry today.

The “Take Back the Fort 2015” effort will not meet its self-imposed goal of being on a May 12 ballot thanks to the weather and an unspecified illness, but the group leader said they are “marching on” to collect enough signatures to force an election seeking to change the form of Fort Smith’s government.

Don Paul Bales, who is leading the petition drive, told The City Wire that he does not have an update on signatures because weather cancelled a Friday meeting and made it difficult to collect petition forms. The group reported 398 “firm” signatures after the first week of the petition drive in in early February. The group first provided petition forms to volunteers on Jan. 29.

The delays also mean the group will not meet its deadline – which was March 2 – to submit signatures. The city of Fort Smith has set a May 12 election to seek voter renewal of a 1% sales tax program that funds city street improvements, and a 5% redirection of the sales tax revenue to develop and maintain a citywide trails and greenways network. Take Back the Fort sought to provide signatures in time to be placed on the ballot. A municipal election can cost $35,000.

“Although a few volunteers have been kicking butt, our overall progress has really been hampered by the weather. We are not going to hit our target number of signatures by March 2nd. But we will be ‘marching on’ over the next 6 to 8 weeks with our petition drive,” Bales said in a written interview with The City Wire, adding that he plans to have an update sometime this week.

According to Fort Smith City Clerk Sherri Gard, it requires 2,518 valid signatures to place the form of government vote on the ballot. That number comes from a requirement that a petition for a ballot action needs 15% of the number who votes in the previous mayoral election. The 2014 election saw 16,788 vote in the mayoral race in which Mayor Sandy Sanders ran unopposed.

Fort Smith’s city administrator form of government has a city administrator who is hired and fired by the seven-member elected Board of Directors. Take Back the Fort wants to change to a form of government where the mayor is responsible for city operations and hires a manager to help with those duties. The new form would also have a city council serving in the normal legislative capacity. Any effort to change the city form of government is possible once every four years, according to the city’s municipal code.

Take Back the Fort initially sought the election of a city attorney and city clerk, but appear to have moved to just focusing on a form of government in which the people elect a mayor to run the city. Bales, who is also a former Fort Smith police officer who was fired and is now suing the department to get his job back, said the group plans on soon providing more information about its effort.

“I'm working on an article with other members of TBTF to better explain what we consider the beneficial contrasts between it and our current form, plus detail the more significant ways our current form has failed us in terms of Accountability and Transparency,” he wrote.

The January revenue report for Fort Smith shows sales tax collections up more than 7%, an indication that merchants in the city had a robust holiday sales season, and a good start for a city that has struggled with weak tax revenue collections.

The city’s portion of a 1% sales tax for street improvements generated $2.023 million in the January 2015 report, up 7.31% above the same month in 2014, and up 7.94% above budget estimates. The collections were the highest for a January report since 2012 when the tally was $2.049 million. (Because the state of Arkansas has a two-month delay in reporting collections back to the cities, the city of Fort Smith — for budgeting purposes — has historically reflected the collections on a one-month delay. Which is to say, the tax collections remitted to cities in February are from taxes collected in December and transferred by merchants to the state in January.)

January’s report continues the trend from 2014. Collections during 2014 the Fort Smith’s 1% sales tax for the street program topped $20 million for the first time since 2008. The 1% tax generated $20.099 million for the January-December reporting period, up 3.24% over 2013, and was above the budget estimate by 0.78%.

Collections for the past five years have been inconsistent. Revenue from the city’s street tax was down 0.87% in 2010, up 3.9% in 2011, up 1.36% in 2012, and down 0.69%.

The city’s portion of the countywide 1% sales tax generated $1.532 million in January 2015 report, up 5.25% above January 2014, and up 5.4% above budget estimates. The countywide tax collection is critical because the revenue is a little more than 40% of the city’s general budget of roughly $42 million. A majority of the general fund budget supports fire, police and other critical city functions.

January’s report is also the continuation of a trend for the county tax. The city’s portion of the countywide 1% sales tax generated $15.625 million in the 2014 reporting period, up 1.77% above 2013 collections, and up 1.29% above budget estimates.

If national predictions hold for the Fort Smith metro, sales tax collections could remain positive for the remainder of the year. The National Retail Federation said Feb. 12 that retail sales should rise 4.1% in 2015, better than the 3.5% gain in 2014. Online sales are expected to increase between 7% and 10% this year, according to the trade group’s forecast.

Fort Smith’s sales tax revenue increase of 7.31% for the month also compares favorably to the overall 9.43% gain seen with the combined collections of Northwest Arkansas’ four largest cities. For the month, Bentonville revenue was down 5.83%, Fayetteville was up 9.28%, Rogers was up 14.33% and Springdale was up 17.3%.

PREVIOUS ANNUAL COLLECTION INFO
Fort Smith 2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2014: $40.198 million
2013: $38.938 million
2012: $39.210 million
2011: $38.683 million
2010: $37.229 million
2009: $37.554 million
2008: $41.226 million
2007: $37.858 million
2006: $36.840 million

Fort Smith portion of 1% countywide sales tax
2014: $15.625 million
2013: $15.353 million
2012: $15.279 million
2011: $15.15 million
2010: $14.89 million
2009: $15.04 million
2008: $16.61 million
2007: $15.15 million
2006: $14.71 million

Even with a 3% decline in tonnage shipped on the Arkansas River in 2014, the 445-mile system has been upgraded by the U.S. Corps of Engineers from a moderate use to a high-use system. River port operator Marty Shell says the upgrade should bolster the argument for more federal investment in the navigable waterway.

The upgrade was made public Monday (March 2) by the Arkansas Waterways Commission. The Commission statement said the Corps upgrades a waterway to high-use when it carries more than 10 million tons and more than $3 billion “ton-miles” of commodities in a year. The Commission said the waterway has a $1.3 billion annual economic impact on Arkansas’ economy. The river system is 445 miles long and stretches from the confluence of the Mississippi River to the Port of Catoosa near Tulsa, Okla. The controlled waterway has 18 locks and dams, with 13 in Arkansas and five in Oklahoma.

The U.S. Corps of Engineers reported in early January that 11.719 million tons floated up and down the McClellan-Kerr Arkansas River Navigation System in 2014, down from the 12.139 million in 2013 but better than the 11.687 million in 2012 and the 10.6 million in 2011.

However, three sectors often connected to economic growth saw gains. There were 3.094 million tons of sand, gravel and rock shipped on the river, up 12%; 1.659 million tons of iron and steel products, up 15%; and 461,980 tons of minerals and building materials, up 7%. The iron and steel products are inbound shipments that typically go to manufacturing operations. Iron, sand, gravel, and minerals are classified as inbound shipments. Such shipments totaled 4.676 million tons in 2014, up 11%.

Marty Shell, owner of Van Buren-based Five Rivers Distribution which operates port facilities in Van Buren and Fort Smith, said years of investments and lobbying by port operators has helped improve activity on the river. That activity, he said, helped contribute to the upgrade.

“I think it’s due to the investment and hard work from the operators up and down the system. We go to D.C. and Little Rock several times every year to let the Corps and our Legislators understand that this river is an economic tool and has an economic impact for Arkansas and the state of Oklahoma,” Shell told The City Wire.

Shell said the upgrade could have two positive outcomes.
‘
“The Corps budget is continually being reduced ... and they are under pressure to close locks or cut back operations. So for us to be a high use system, that means we have safeguarded ourselves, I would think, against some of those future cuts,” Shell said.

The other outcome is that higher use should result in higher funding priorities for projects to “keep our infrastructure at its best performance,” Shell said.

He also praised Arkansas’ Congressional delegation and local legislators for constant support, citing specifically U.S. Sen. John Boozman, R-Ark., and state Sen. Jake Files, R-Fort Smith.

Gene Higginbotham, executive director of the Arkansas Waterways Commission, said the Arkansas River system still has room for growth.

“Currently, Arkansas has the distinction of being 3rd in the nation in the number of river miles, but 32nd in tonnage transported,” Higginbotham noted in the statement. “Our state has tremendous economic development opportunities in using the MKARNS to its capacity.”

Higginbotham said the upgrade follows approval to fund the “Three Rivers Study.” That $3 million study is needed to determine how best to protect the waterway where the system connects with the Mississippi River.

"There’s an issue where the White River is trying to cut through to the lower Arkansas River," which is an area that is not navigable, Higginbotham said in this report with the University of Arkansas at Little Rock public radio. "The (U.S. Army) Corps of Engineers has basically been putting band aids on it every year and we’re looking for a permanent solution. If the White River ever manages to cut through, we would lose navigation on the Arkansas River system for probably close to a year."

Tax revenue in Arkansas remains positive through the first eight months of the fiscal year, with higher than expected sales and use tax collections and lower than expected income tax refunds pushing gross revenue up 3.2% on a year-over-year comparison.

Gross revenue between July 2014 and February was $4.034 billion, up 3.2% compared to the same period in the previous fiscal year. The amount is also 1.7% above the budget forecast, according to the report issued Tuesday (March 3) by the Arkansas Department of Finance and Administration.

However, February gross revenue of $420.7 million was down 1.5% below February 2014 and was 2.3% below the estimate. Driving the February decline was a 7.2% decline in individual income tax revenue. Collections in the category during February was $210.5 million, down $16.2 million compared to February 2014.

Individual income tax collections for the first eight months of the fiscal year totaled $1.97 billion, up 3.3% from last year and 1.2% above the budget forecast. Year-to-date sales and use tax collections were $1.48 billion, up 2.3% compared to last year and 1.2% below the budget forecast. Income taxes and the sales and use tax collections are the two primary sources of state revenue.

The February report did benefit from higher sales and use tax collections and reduced income tax refunds, according to John Shelnutt, head of the Department of Finance and Administration’s Economic (DFA) Analysis & Tax Research division. February sales and use tax collections totaled $176.5 million, up 5.7% compared to last year and up 5% over the forecast. February income tax refunds were $148.4 million, down 9.3% compared to February 2014.

“The lower tax refunds result for the month is a continuation of the timing effects from the earlier start of IRS electronic filings of tax returns than in the prior two years. This earlier start effects both year ago and forecast comparisons over the course of the income tax filing season,” Shelnutt said in the report. “The decline in February and a similar but opposite increase in January indicate timing effects of tax payments, among other factors. Corporate Income tax, a more volatile, mid-sized collection category was also below forecast in a minor collection month for that category.”

Corporate income tax collections for the first eight reporting months of the fiscal year totaled $262.2 million, up 9.2% compared to last year and 10.9% above forecast.

OTHER TAX COLLECTIONS
Alcoholic beverage
July 2014 - Feb. 2014: $34.8 million
July 2013 - Jan. 2013: $33.8 million

Games of skill
July 2014 - Feb. 2014: $28.6 million
July 2013 - Jan. 2013: $24.8 million

Tobacco
July 2014 - Feb. 2014: $145.4 million
July 2013 - Jan. 2013: $146.8 million

Insurance
July 2014 - Feb. 2014: $46.3 million
July 2013 - Jan. 2013: $45.8 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 (January 2012-January 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 January 2010-January 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.

A crowd of about 250 gathered on a cold, damp and muddy Tuesday morning (March 3) to attend a groundbreaking ceremony for $31 million Arkansas College of Osteopathic Medicine. The event morphed into a quasi-pep rally with a hint of a tent revival.

The new college, first announced in December 2013. is part of the Arkansas Colleges of Health Education to be based at Chaffee Crossing (Fort Smith).

The osteopathic school will be housed in a three story, 102,000-square-foot building valued at more than $31 million. A fully operational osteopathic college is expected to serve about 600 students, and employ around 65 (full-time equivalent jobs) with an average salary of $103,000. That impact does not include adjunct professors that will be needed for the school. The school is located on Chaffee Crossing land (200 acres) donated by the Fort Chaffee Redevelopment Authority.

Construction pads are finished on 27 acres in preparation for present and future construction, and the college has hired 13 employees, including senior staff.

Revenue from the 2009 purchase of Fort Smith-based Sparks Health System is being used to build and operate the planned college. When Naples, Fla.-based Health Management Associates (HMA) acquired Sparks in a deal valued at $138 million, part of the money was used to create the Fort Smith Regional Healthcare Foundation, which became The Degen Foundation.

MOVING THE ECONOMIC NEEDLE
John Taylor, board chairman of the Arkansas Colleges of Health Education and a former board member of Sparks Health System before it was acquired by HMA, said at the groundbreaking that the new college and its potential emerged from what was once dire financial circumstances at Sparks. He told the crowd that the hospital in 2008 and 2009 was “starting straight into the face of insolvency,” and struggling to recover in a regional economy that had suffered “devastating blows” from jobs losses in the manufacturing sector and other areas.

Indeed, the number of employed in the metro area in December (118,635) is down 10.8% compared to the high of 133,061 in June 2006 – or 14,426 fewer jobs than the peak metro employment.

Continuing, Taylor said many people gave up on Fort Smith and he admitted a resentment for those who did so – specifically citing the television stations who moved their news operations to Northwest Arkansas. Taylor’s admonition drew laughter and applause from the crowd.

But he said the Sparks board pushed through and was able to secure a deal that, while resulting in the loss of local control of a hospital, saved the hospital system, saved jobs and resulted in the $60 million pool of funds that has helped birth the osteopathic college.

As he and many others have in the previous remarks, Taylor again credited former Sparks board member Jim Walcott for challenging the board to do something big with the $60 million. Taylor reminded the crowd that Walcott did not want to “nibble around the edges,” argued that the board “move the needle.”

“And now things look a lot different than they did five-and-a-half years ago,” Taylor said, adding that the new school and future additions will “change the diversity of our economic portfolio” in the Fort Smith region.

Pressing that point, Taylor said the osteopathic college completion is not the end of the vision. With a nod in advance to his bad grammar, he said the community should know that “It ain’t done yet,” when the osteopathic college is up and open.

HELPING WITH A ‘MEDICAL CRISIS’
Kyle Parker, president and CEO of the Arkansas Colleges of Health Education, praised a long list of individuals and organizations who made the college possible. He read a quote from the Degen Foundation website: “We have all drunk from wells we did not dig; we have been warmed by fires we did not build; we have sat in the shade of trees we did not plant; we are where we are because of what someone else did.”

In his remarks after Parker spoke, Taylor continued this theme, saying the college is “the effort of many” and not just a few people or a few boards. And in citing all the things that had to happen for the college to be a reality, Taylor also claimed the hand of Providence rather than believe in coincidence.

Parker has also said new college will help alleviate the U.S. physician shortage. He said there are about 3,000 applications for every opening in U.S. medical schools. He also said the country will have to produce more doctors to push back against a possible shortage of 140,000 doctors by 2030. That number could rise to 250,000 if the federal Affordable Health Care Act if fully implemented.

“We have a medical crisis on our hands,” Parker told the crowd, adding that the 150 students who will soon graduate each year will make a “small dent” in the problem, and that he hopes to “keep them all in the state of Arkansas.”

In addition to hospitals and clinics in the Fort Smith and Northwest Arkansas areas agreeing to support the college with residency programs, Parker said Tuesday that other hospitals in Arkansas signing on include Baptist Hospital in Little Rock, St. Vincent in Little Rock, and the White River Health System based in Batesville.

Taylor also said the osteopathic college will improve the quality of life in the region. He said more than 40 years ago when he first moved to Fort Smith the region was a “medical mecca,” but has lost its leadership in the area. The new college, he said, will help rebuild the regional medical sector.

Activity in the national shipping industry was likely up almost 3% in January, according to the Cass Freight Index. A national trucking index was up 1.2% in January. Both reports indicate the shipping industry recovery seen in 2014 is continuing into 2015.

The Cass Freight Index reported that shipments were up 2.7% in January compared to January 2014, and freight expenditures were up 3%. However, January shipments were 4.7% below December numbers, and expenditures were down 5.7% compared to December. The index posted its highest end-of-year value in 2014 since the beginning of the recession in 2007.

Cass uses data from $22 billion in annual freight transactions to create the Index. The data comes from a Cass client base of 350 large shippers.

Rosalyn Wilson, a supply chain expert and senior business analyst with Pasadena, Calif.-based Parsons, who provides economic analysis for the Cass Freight Index, said the January numbers included fallout from the “labor and capacity woes” at West Coast ports related to what was a nine-month dispute between port operators and the International Longshore and Warehouse Union. The two sides recently reached an agreement, but the backlogs could take months to unwind, according to port officials.

Despite the port issue, Wilson is upbeat on overall economic conditions.

“The U.S. economy is on fairly solid ground – the GDP growth rate is strengthening, new job creation has been consistent, real net income and household net worth are inching up, inflation is low to moderate, and gas prices are tumbling,” Wilson wrote in her report.

TONNAGE INDEX
The American Trucking Associations’ Truck Tonnage Index was up 1.2% in January following a revised increase of 0.1% in December. The not-seasonally adjusted index, which represents the real change in tonnage hauled by the fleets, was down 3.5% compared to December.

“Truck tonnage continued to improve in January, marking the fourth straight gain totaling 3.5%. Last year was slightly better for truck tonnage than we originally thought and I am expecting that momentum to continue in 2015,” ATA Chief Economist Bob Costello noted in his report.

A recent revision saw 2014 tonnage up 3.7% compared to the initial report of 3.4%. The index was up 5.5% in 2013.

According to the ATA, trucking serves as a barometer of the U.S. economy, representing 69.1% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 9.7 billion tons of freight in 2013. Motor carriers collected $681.7 billion, or 81.2% of total revenue earned by all transport modes.

POSITIVE RATE REVENUE
Two reports from Brad Delco, a transportation industry analysis with Little Rock-based Stephens Inc., also show broad gains in the trucking sector heading into 2015. The Stephens Truckload Rate Index was up 7.5% in the fourth quarter of 2014 compared to the same period in 2013. It was the 19th consecutive quarter that the index showed a gain in what truckload operators – for example, Van Buren-based USA Truck, Tontitown-based P.A.M. Transport, and Lowell-based J.B. Hunt – companies were able to charge customers.

“The 4Q14 year-over-year increase represents the highest increase since 4Q04, and represents a continued positive trend in rates that began in 1Q’14. We believe that the factors that have driven the index higher have persisted into 1Q15, and with more regulatory constraints on the horizon (mandatory electronic logging device rule) we expect continued positive inflection in rates,” Delco noted in his report.

Delco’s report showed that the average weekly revenue per tractor in the truckload sector during the fourth quarter was $3,524, up over the $3,207 in the 2013 quarter.

“The 4Q14 increase was the highest year-over-year increase in the index in 10 years driven by constrained supply including driver shortages, West Coast port congestion and rail service issues combined with improving demand. Going forward, we expect rate increases for 2015 to be up +4% - 6% on average based on continued strong commentary that we have heard coming out of 4Q,” noted Delco’s report.

Rate revenue also looks good for less-than-truckload (LTL) carriers like ABF Freight, a principal subsidiary of Fort Smith-based ArcBest Corp.

“We believe that contractual rate renewals improved throughout 4Q ending in the +4% range as capacity in the LTL space remains tight,” Delco wrote. “We expect LTL pricing to remain strong into 2015, driven by tightening capacity, stable demand and a disciplined pricing strategy from many of the larger players. We are currently estimating core pricing increases of around +3.5% in FY15 for LTL carriers.”

CAPACITY PROBLEM
A likely downside for the national shipping industry in 2015 is having too much business and not enough capacity, according to Wilson. She noted in the Cass Index report that the ability to control rates will continue to move in favor of trucking companies and other shippers. However, the driver shortages mentioned by Delco and the ongoing issue of dealing with backlogs at West Coast ports may “exacerbate the capacity problems experienced in 2014.”

“Carriers do not currently have the necessary capacity, infrastructure and systems to efficiently move goods as freight volume rises in 2015. Bad weather; labor problems; fleet capacity issues for truck, rail and other equipment, especially container chassis; and inadequate infrastructure will combine to not only create new freight bottlenecks, but also to push up the cost to move freight,” Wilson wrote.

She said many in the shipping industry have announced “aggressive investment plans” to add capacity, but the amount of capacity needed can’t be added in the short-term.

The “Vendorville” ecosystem that has cropped up around Wal-Mart Stores Inc. continues to add jobs and positive contributions to the region and state’s economy. But, anywhere from 80 to 100 jobs remain unfilled at any given time, according to Cameron Smith, CEO of Cameron Smith & Associates of Rogers.

Corporate recruiters on Cameron Smith’s team describe the talent pool as “tight” despite consolidation of teams resulting from mergers taking place in the consumer packaged goods (CPG) sector such as Tyson Foods and Hillshire, and Heinz and 3G. 

The Tyson Foods and Hillshire merger likely had the biggest impact but General Mills had a significant restructure last year that cost between 5 to 10 local jobs, which was about 13% of their local team, according to Scott Crossett, partner and senior recruiter with Cameron Smith & Associates. He said the Heinz acquisition by 3G caused job displacement and Coca-Cola is going through a restructuring in the next couple of months. On the flip side, restructuring at Kimberly Clark brought a small team back to Northwest Arkansas.

KEEPING PACE 
The recruitment experts said these shifts in local numbers are nothing new, but overall the number of jobs in the local sector continue to increase as many of the teams are adding positions to keep up with changes at Wal-Mart.

“Some supplier teams have expanded their local organizational structures in the past year bringing shopper marketing in-house and adding small format specialists to their teams,” said Denise Natishan, senior partner at Cameron Smith & Associates. “The small format is brilliant on Wal-Mart’s part and suppliers are taking it very seriously because it affects shelf space and inventory replenishment changes.”

The recruitment experts estimate the local supplier jobs increased by 4% to 5% annually with the bulk of that being the growth in third-party service providers such as technology and data analytics firms. Atlas Technology Group for instance, expanded its staff from six to 42 employees over the past two years keeping pace with demand for analytical data and weather-related content desired by suppliers and retailers.

“This type of third party supplier growth is happening across the area and I expect it to continue throughout the next few years as real-time data collection for consumer marketing becomes more mainstream,” Smith said.

By some estimates the supplier, marketing, third-party service and packaging jobs account for as many of 15,000 jobs in Benton and Washington counties. The annual payrolls of these firms exceeds an estimated $1 billion, given the starting pay for college graduates is around $47,000 and top managers pull down a minimum six figure income, the recruiters said.

Smith said the growth in this sector prompted him to increase his staff by 5% over the past two years to 25 employees. His company revenues are also up 18% from a year ago.

CAPACITY CONSTRAINTS
Natishan said suppliers value professionals with astute Wal-Mart knowledge and there are opportunities to move up the ladder regardless of age as long as the employee brings knowledge and experience to the table. That said, Natishan said the team structures of many companies are somewhat siloed which means professionals may have to change companies if they want to move up to other roles.

For instance a small food company has a lean team of just six professionals, ranging from one director, two business managers, two customer service managers and one business analyst. 

Smith said when teams first locate to the region to do business with Wal-Mart they may only send one or two sales executives to lay the groundwork. Over time the new teams that do business with Wal-Mart will ramp up to at least six people, maybe more. The organizational chart for a typical CPG supplier of cleaning products or frozen foods is likely to have added at least one national account manager who works below the director, a supply chain manager and two shopper marketing managers in addition to the business analyst.

“There are plenty of one person teams calling on Wal-Mart. The account manager does all their own analytical work,” said Mike Whittington, senior partner at Cameron Smith & Associates. “Teams can range from one to 200 members.”

The smaller teams outsource some of their service needs to third party firms which also has helped fuel the demand for indirect suppliers.

Natishan said it’s easy to see that there are relatively few places to move up the chain within these tight organization structures, which is why there is frequent movement between suppliers for the average professional. It’s not uncommon to see recruits who locate to Northwest Arkansas with one company, jump ship two or three times to move up the ladder or sometimes just to remain in the region. Tim Marrin, associate director at Proctor & Gamble, has said getting people to relocate to Northwest Arkansas from Cincinnati used to be challenging but not nearly as hard as it was lure them back to the home office once they got acclimated to Fayetteville and the rest of Northwest Arkansas.

The medium to large teams working in the region typically have a minimum of four at the vice president level. There are an average of six senior directors ranging from insights to sales managers and sales directors. Teams also have at least two category managers and two category analysts in addition to six replenishment experts and six junior sales managers over specific geographic regions.

JOB CHURN
Crossett said there is a lot of churn in the category manager positions because because it's a growing discipline and there are less qualified candidates than other disciplines.

“There is a high burnout rate of job candidates in category managers who are wanting to get out and move into sales, Crossett said. 

He said the highest turnover position is in replenishment jobs – people who work with Wal-Mart to keep the shelves stocked. Crossett cites heightened expectations at Wal-Mart for “Must Arrive By Date” fines as the retailer is slowly rolling out its new “Global Replenishment System” program known as Retail Link 2.0. He said GRS has caused companies to become more demanding of their supply chain and replenishment employees.

Natishan said there has been more movement from Wal-Mart employees into supplier jobs in recent years, something once considered taboo. She said the larger teams are sensitive to recruiting from Wal-Mart’s talent pool but that’s usually not the case with smaller vendors. 

“The need is to hire the best for your best customer. It remains a candidate driven market. Having experience and understanding of knowledge gives a credibility that many younger candidates do not have,” Natishan said.

She said most of the candidates she places are sourced locally from the available talent pool. On occasion Natishan said she finds recruits elsewhere that have former Wal-Mart expertise, which is crucial to most every placement.

“There is some poaching by the request of the suppliers looking for talented candidates who are local,” senior recruiter Jim Mikula added.

The experts also said some companies steer away from hiring from the unemployed pool of applicants, which also keeps the talent pool tight. And that pool remains tight even with the NorthWest Arkansas Community College graduating about 50 each year through its Certified Retail Analysts program. The college said over the past 15 years it handed out 630 certificates to students who had an 87% job placement rate in the local supplier community.

UNIQUE MARKET
Smith said the local supplier community is unlike any other vender ecosystem in the world. Even though Wal-Mart does not require its suppliers to have an office in Bentonville all the major vendors do so because a significant amount of their business is with Wal-Mart.

Greg Foran CEO of Walmart U.S., told suppliers at the retailer’s Year Beginning Meetings in February that they needed to have their “best and brightest” talent calling on Wal-Mart. He said the retailer is looking to suppliers for shared innovations and insight and that will require the most talented professionals be seated at the table.

Smith said even though Wal-Mart has never demanded a local presence, the retailer’s buyers encourage it which has been enough motivation for many.

“Even though we have hundreds of teams represented in the region, we are not close to scratching the surface of Wal-Mart’s expansive global supplier network,” Smith said. 

He said suppliers tend to move to meet Wal-Mart’s latest initiative whatever it is, from selling more beer and wine to focusing on smaller formats. In 2013 when Wal-Mart made a conscious effort to sell more adult beverages, at least three liquor companies brought in local sales teams, creating more jobs in this region.

Whittington said even if no more new suppliers opt to move into Northwest Arkansas  the future for the supplier jobs market remains bright. With Wal-Mart developing more store formats, incorporating more e-commerce and digital services, revamping its replenishment system and wooing Millennials and Hispanics, the opportunities will continue to grow for suppliers and those who service the suppliers.

“It is a win-win for all of Northwest Arkansas,” he added.

A school test may be waived under a bill that passed by a House committee Tuesday, while legislators moved up their schedule in light of reports of snow, sleet and freezing rain hitting the state Wednesday.

The House Education Committee voted to approve House Bill 1241 Tuesday during a meeting at the Capitol. Rep. Mark Lowery, R-Maumelle, said his bill would seek to end the state’s participation in the Partnership for Assessment of Readiness for College and Careers (PARCC), a test that is part of the Common Core program, by the end of June 2015.

“The state board may not require the use of the PARCC assessment or participate in a PARCC-related activity or event after June 30, 2015,” the bill read.

The bill would not stop the Arkansas Department of Education from completing work on the test this year, but would set definite parameters on providing data to the group.

“Beginning June 1, 2015, neither the state board or the Department of Education shall provide access of any individually identifiable student data collected at the state level to the federal Department of Education, to any of the federal Department of Education’s designated program assistance organizations or auditors if the audit is required … without the express written consent of the parent or legal guardian of the student,” the bill noted.

The program, which seeks to gather information on test scores and curriculum, has been controversial. Supporters have said the program helps teachers and administrators understand what children are learning while opponents have said the program strips away local control of schools.

Lowery said he worked for several weeks on a plan to seek a waiver from the federal Department of Education, as well as seeking a compromise on the issue. Neither were effective, Lowery told the committee. Lowery said there has been some acrimony around the country due to the test.

Locally, Robin Finley and Tonya Shelton, with the Arkansas Guidance Counselors Association, told the committee that there has been some confusion among teachers, counselors and students alike. Lowery also attributed additional costs with only nine states participating in the program as well as results from this year’s test not being ready until October at the earliest as reasons to drop the test.

Phoebe Bailey, an official with the Southwest Arkansas Co-Op in Hope, spoke against the bill. Bailey asked the committee to allow a task force set up in the aftermath of the debate to do its work. Bailey also thanked the committee for amending the bill to set the June 30 date, instead of ending the test during the school year.

The bill now goes to the House.

COMMITTEE ACTION
A bill that would study the state’s higher education system was also approved Tuesday by the House Education Committee. The committee approved House Bill 1581, sponsored by House Speaker Jeremy Gillam, R-Judsonia. The bill would create a 12-member legislative task force to look at the realignment of higher education in the state.

Gillam said the task force would also look at other states and how their higher education programs are set up. If approved and signed into law, the task force would study the issue through Nov. 1, 2016. From there, the task force would send a report to Gillam, Senate President Jonathan Dismang, R-Searcy, House Education Committee chairman Bruce Cozart, R-Hot Springs and Senate Education Committee chairman Jane English, R-North Little Rock.

The bill moves to the House.

The committee also approved a bill that would allow school districts to seek the same waivers that are given to open-enrollment charter schools. Rep. Reginald Murdock, D-Marianna, who sponsored the bill, told the committee the bill would help districts in the Delta compete against charter schools.

The bill now goes to the House.

HOUSE AND SENATE ACTION
The House voted 52-36 Tuesday to approve a resolution in support of restoring trade relations between the United States and Cuba. House Concurrent Resolution 1006, sponsored by Rep. David Hillman, D-Almyra, would encourage the President, Congress and the state’s congressional delegation to work on the issue.

Hillman said an improved trading relationship would benefit Arkansas farmers, with new trading opportunities for cotton and rice. Rep. Charlie Collins, R-Fayetteville, criticized the resolution, saying trade with the Communist nation would only benefit Cuban leaders.

The House also voted 45-38 – six votes short of a majority – against a bill to submit an application for an Article V Convention of the States. Rep. Bob Ballinger, R-Hindsville, who sponsored the bill, told House members that the convention would push federal officials to exercise fiscal constraint. The bill was approved Friday by the House State Agencies and Governmental Affairs committee.

A bill that would modify how a detached school district would be created was approved Tuesday in the Senate. Senators voted 20-6 to approve House Bill 1242, sponsored by Rep. Mark Lowery, R-Maumelle. The bill failed by a 49-25 vote in the House on Feb. 17. However, House members voted Feb. 23 to reconsider the bill.

According to the bill, the new district would have to come from an existing district with schools between 5,000 and 20,000 students and a 450-square-mile radius. The bill now heads to Gov. Asa Hutchinson’s desk for his signature.

NEW BILLS
A bill that would study the impact that regulations have on small businesses and entrepreneurs was also filed Tuesday.

Rep. Bill Gossage, R-Ozark, turned in House Bill 1582, which would require state agencies to have quarterly meetings in each of the state’s congressional districts to talk to people about the “obstacles and challenges the government agency causes for small business and entrepreneurs.”

From there, the agency would also be required to file an annual report detailing the impact of regulations.

The bill was referred Tuesday to the House Agriculture, Forestry and Economic Development Committee.

All that it took to change the direction of pump prices and tighten the gasoline market across the U.S. was an earthquake-like explosion and fire at ExxonMobil’s sprawling refinery complex in southern California, the U.S. Energy Department said in its monthly refinery outage report on Feb. 27.

The report, produced by the Energy Information Administration, noted that unplanned refinery outages have noticeable effects on the nation’s fuel market, disrupting the supplies of gasoline and other distillates like diesel fuel, heating oil, kerosene and jet fuel.

On. Feb. 18, oil and gas giant ExxonMobil Corp. reported a huge fire and blast at its 750-acre refinery in Torrance Calif., that covers some 750 acres, taking the West Coast’s third-largest refinery offline and creating a backlash on the nation’s fuel market that will likely be felt for several weeks.

“The sudden loss of production during unplanned outages can sometimes take days or weeks for markets to adjust. As a result, unplanned outages often result in a reduction in supply that causes prices to increase, sometimes dramatically,” said the EIA report. “The severity and duration of these price spikes depend on how quickly the refinery problem can be resolved and how soon supply from alternative sources can reach the affected market.”

According to Exxon Mobil, the nation’s largest oil refiner behind ConocoPhillips, the Torrance refinery processes 155,000 barrels of crude oil a day and about 117,000 gallons of gasoline per day, about 15% to 20% of the southern California supply. Once the refinery went offline, the West Coast product market reacted immediately as regular and smog-reducing, specially reformulated gasoline prices jumped nearly 40 cents in the Los Angeles area.

And although the isolated California retail gasoline price is typically 30 cents to 40 cents higher than the national retail pump prices, other markets across the U.S. have immediately reacted to the rising prices on the West Coast and siphoned off profits by raising prices nationally to $2.44 per gallon, according to AAA’s Daily Fuel Gauge.

At the same time, volatile U.S. crude oil prices have remained near or below $50 per barrel (bbl) as light sweet crude oil futures for April delivery on the New York Mercantile Exchange fell 17 cents to $29.49 per barrel in Monday’s sessions.

35-DAY STREAK
In the Gulf Coast region, which includes Arkansas and other states, pump prices for regular unleaded have risen 28 cents in the past two weeks after bottoming out at 1.98 per gallon in mid-January, according to AAA’s fuel gauge.

In, Arkansas, motorists today are paying an average of $2.26 per gallon to fill up their tank across the state, according to AAA. Pump prices in the state’s metropolitan areas range from a low of $2.20 per gallon in the Fayetteville-Springdale-Rogers area to a high of $2.30 in the Pine Bluff area.

Motorists in the Fort Smith area are seeing prices at an average of $2.26 per gallon, and travelers and residents at the Texarkana state line are paying about $2.23 per gallon. Residents in the Little Rock-North Little Rock area are paying an average of $2.28 a gallon to fill up their tanks.

Drivers choosing to fill up the tanks with a higher-grade of gasoline should expect to pay an average premium of $2.62 a gallon across the state. Big rig drivers and other diesel fuel users will see pump prices at about $2.69 a gallon, down eight cents from only a week ago.

AAA officials said average U.S. gas prices have increased 35 days in a row for a total of 39 cents per gallon, which is the longest consecutive streak of rising prices since February 2013. U.S. retail gasoline prices reached a low of $2.03 per gallon on January 26 after dropping for a record 123 consecutive days. Gas prices have increased every day since reaching that low.

“Paying $2 for gas will seem like a distant memory for most drivers in the coming weeks,” said AAA spokesman Avery Ash. “Gasoline remains much cheaper than in recent years, but drivers may not appreciate that fact given the steep increase in price over the past month.”

EIA FORECASTS CRUDE OIL TO STAY BELOW $60 A BARREL
In other energy news, the EIA forecasts that international Brent crude oil prices will average $58 per barrel in 2015 and $75 per barrel in 2016, with 2015 and 2016 annual average U.S. West Texas Intermediate (WTI) prices expected to be $3- and $4 per barrel, respectively, below Brent.

The EIA now expects U.S. regular gasoline retail prices, which averaged $3.36 per gallon in 2014, to average $2.33 per gallon in 2015. Most U.S. households are now expected to spend about $750 less for gasoline in 2015 compared with last year because of lower prices. The projected regular gasoline retail price increases to an average of $2.73 per gallon in 2016.

The Energy Department expects the Henry Hub natural gas spot price to average $3.34 per million British thermal units (MMBtu) this winter (2014-15) compared with $4.53 per MMBtu last winter (2013-14), reflecting both lower-than-expected space heating demand and higher natural gas production this winter.

The EIA forecasts Henry Hub natural gas spot price, which averaged $4.39 per MMBtu in 2014, to average $3.05 per MMBtu in 2015 and $3.47 per MMBtu in 2016.

The Fort Smith Board of Directors has set a public hearing date on the change in sewer rates for 6 p.m., March 17, at the Fort Smith Schools Service Center. The decision came by way of a unanimous vote on Tuesday night (March 3) at the Board’s regular meeting, and is the next step in fulfilling the terms of a $480 million settlement with the U.S. Environmental Protection Agency (EPA) and the Department of Justice (DOJ).

On Jan. 5, the EPA released details of the order, which directed the city of Fort Smith to make $255 million in improvements over the course of 12 years as a result of allegedly violating the Clean Water Act since at least 2004. An additional $225 million would go toward routine operation and maintenance. Together, the two charges could result in Fort Smith residents seeing their sewer rates triple by 2026.

Since 2004, Fort Smith has had more than 2,000 discharges of untreated sewage from its municipal sewage system, resulting in more than 119 million gallons of raw sewage flowing into local waterways, including the Arkansas River.

Implementation of the consent decree will reduce discharges of 3,492 pounds of total suspended solids, 3,343 pounds of biological oxygen demand, 543 pounds of nitrogen, and 78 pounds of phosphorus from the Fort Smith sewage system each year.

On Tuesday, some City Directors remained hesitant about the sewer rate increase, with Director George Catsavis asking the Board to explore a penny sales tax. This would remove part of the burden from Fort Smith residents and place some of it on visitors — mostly from surrounding areas — who frequently shop in Fort Smith.

City Administrator Ray Gosack said increasing the sales tax by a penny would generate $20.1 million in additional revenue. Over a 12-year period, such an increase would come close to paying for capital improvements, but Directors Keith Lau and Mike Lorenz noted that a sewer rate increase would remain likely, with Lorenz calling it “unavoidable.” 

The floor will be open to the public at the March 17 meeting, after which City Directors will likely defer to a study session to discuss what final action to take. However, Gosack said, a vote could be held as early as the same night following the public hearing.

As for other business, Tuesday’s meeting was largely uneventful with only two main agenda items — the public hearing date being one — and the consent agenda, all of which passed. Item two was a unanimous decision to raise disinterment fees from $600 to $1,000 at Oak Cemetery. The Board had previously decided against, but after reevaluation by Oak Cemetery staff, it was determined that the process was too labor intensive and that the increase would be consistent with other cemeteries.

According to the International Cemetery, Cremation, and Funeral Association (ICCFA), disinterment is “the removal of the casket containing human remains from a grave.” Disinterment can be ordered by “certain public officials without the consent of the grave owner or the next of kin, for example, as part of a police investigation,” notes the website, and individuals or families “may also request dis-interment, if for example they would like to have the human remains relocated to another grave in the cemetery, to a mausoleum or possibly shipped to a country of birth.”

Oak Cemetery has conducted only two disinterments total in the last two years.