On Thursday, Gov. Asa Hutchinson officially named Mike Preston as the new executive director of the Arkansas Economic Development Commission, the state agency charged with recruiting and retaining jobs. Preston comes from Enterprise Florida, that state’s economic development arm.

Preston appeared on this week’s edition of Talk Business & Politics for an interview with host Roby Brock a few hours after the announcement.

Preston, 32, spent six years with Enterprise Florida and also worked for a State Representative and State Senator in the Florida Legislature.

“The state Senator is where I really started to cut my teeth in economic development. He represented a large, rural area in Florida – a lot of times people don’t think Florida and think rural – but we were in north central Florida, a very rural part of the state,” Preston said.

The new jobs chief said his first priority when he starts on April 6 will be to have his ear to the ground.

“First and foremost, I’ve got to listen. I’ve got to understand what’s going on around the state, get my arms around the issues and challenges and make sure we’re doing the right things to overcome them. (And) meeting with business leadership,” he said.

With his rural background, Preston said he hopes to help revive rural Arkansas communities that are struggling. He’ll begin with an assessment of strengths and weaknesses, which may mirror a study he helped push to advance rural Florida economic activity.

“What can we build upon in those regions of the state?” he said. “Each and every one of them has something to offer.”

Enterprise Florida is a public-private partnership where business entities and the state share financial resources to aid with job recruiting and marketing. Preston said Arkansas – in order to compete with other states – may also advance its public and private economic development efforts.

“We’ve got a great foundation, a great commission right now, but if we can move and kind of take that to the next level, propel it a little bit further along into that public-private partnership model – that’s where a lot of economic development organizations are going,” he said. “In Florida recently we were able, through donations, to put together a $1 million campaign to work on telling the business story of Florida.”

Since Preston’s announcement and interview, a raging controversy surrounding HB 1228, the Religious Freedom Restoration Act, has heightened. On Friday, Apple CEO Tim Cook and others called on Gov. Hutchinson to veto the bill claiming it will result in discrimination against gays and lesbians.

Hutchinson said on Saturday, “As I previously stated, I will sign this bill as amended. This bill is designed to protect the religious freedoms of all Arkansans. It’s no different than legislation that has passed in 20 other states, from Illinois to Connecticut. Arkansas is open for business, and we recognize and respect the diversity of our culture and economy.”

Preston, who had not read the bill at the time of the TB&P interview, delivered a statement from his spokesman, Scott Hardin, on Saturday asking how he or the agency would respond to Cook and other business leader statements regarding the measure.

“AEDC continues to monitor this bill as it may be amended and changed through the legislative process. We will continue to aggressively promote the many reasons to locate or expand operations in Arkansas,” said Scott Hardin, AEDC spokesman.

The likely last week of this year’s regular legislative session starts Monday with lawmakers facing a boatload of issues and negotiations involving the state’s budget and national pressure over a bill impacting religion.

The budget will be unveiled at 9 a.m. Monday, Joint Budget Committee co-chair Rep. Lane Jean, R-Magnolia, told lawmakers Friday, but early versions have been floated. The state budget, which is a blueprint for state government spending, will fund state government from July 1, 2015 until June 30, 2016. By week’s end lawmakers will review and are expected to pass a balanced budget and the accompanying Revenue Stabilization Act (RSA) that will set spending priorities for the next biennium.

The $5.186 billion RSA proposal has $5.069 billion earmarked for Category A spending. Another $99.19 million is staggered in Category B with $7.629 million in Category B1 and $10 million in Category C. Category A outlines top spending priorities and Category C is the last spending priority silo.

AEDC: A NEW DIRECTOR, NEW BUDGET
New Arkansas Economic Development Commission executive director Mike Preston is a guest on this week’s edition of Talk Business & Politics, but he offers little insight on the controversial HB 1228, the Religious Freedom Restoration Act.

The measure would prevent state, county and local governments from doing anything that would violate someone’s religious beliefs unless there is a “compelling state interest and is the least restrictive means of furthering that compelling governmental interest.” All weekend his boss, Gov. Asa Hutchinson, has reiterated his support for the bill that has stirred national fervor among gay rights activists and high-profile CEOs. Indiana passed a similar law last week and it has created a firestorm. The bill will be debated in the House Judiciary Committee on Monday.

The budget for the Arkansas Economic Development Commission will also be in the hands of the Senate Monday. The proposed budget will include a $200 million appropriation for so-called super projects, $50 million for the Quick Action Closing Fund and $30 million to support technology acceleration programs around the state.

PRESIDENTIAL PRIMARY, REGIONAL JAILS
The House State Agencies and Governmental Affairs committee is expected to take up a bill that would change the state’s presidential primary date next year.

The Senate approved Senate Bill 389 by a 20-5 margin on Friday. The bill, sponsored by Sen. Gary Stubblefield, R-Branch, would set a March 1, 2016 presidential primary for the Republican and Democratic nominees for the White House. Supporters have said the primary would be held, along with several other states in the region as part of a so-called “SEC Primary” on Super Tuesday.

A bill to create regional correction facilities in Arkansas is expected to be on the House floor Monday. Sen. David Sanders, R-Little Rock, sponsored Senate Bill 618 earlier in the session. According to the bill, the Arkansas Department of Correction would be allowed to contract with counties and private contractors to keep minimum security inmates. The idea is used in several other states in the region, including Mississippi.

TEN COMMANDMENTS, CAPITAL GAINS
A bill that would support a plan to build a monument in honor of the Ten Commandments will also be heard Monday in the House. The House State Agencies and Governmental Affairs committee approved Senate Bill 939, sponsored by Sen. Jason Rapert, R-Conway, during a meeting Friday.

Under the bill, the monument would be built, using private money, somewhere on the grounds of the capitol. Supporters have said the bill would honor the moral and ethical heritage of the state, while opponents have argued it violates the principle of separation of church and state.

A Senate committee is expected this week to take up a capital gains tax exemption rate bill. The bill, House Bill 1402, is sponsored by Rep. Matthew Shepherd, R-El Dorado.

Under the bill, lawmakers would attempt to move the exemption rate back to 50%. The rate was set in the 2013 session, but was reduced to 40% as part of an amendment to an overall tax cut approved by lawmakers earlier in the session. The bill would move the 40% rate to 45%, effective Feb. 1, 2015 and move the 45% rate to 50% on July 1, 2016.

A $10 million exemption threshold would remain in the bill. The bill is expected to have a $6 million impact on the FY 2016 budget and an $11.8 million impact for FY 2017, officials with the Arkansas Department of Finance and Administration have said.

Whether online or in-store, 82% of U.S. consumers say they expect a retailer’s prices to be the same when they are shopping, according to a survey of shoppers and 32 top retailers by marketing group Accenture.

"Our findings highlight a clear gap between the cohesion consumers expect from their shopping experience and what they seem to be getting," Dave Richards, global managing director of Accenture's retail practice, noted in the release.

This report may be a wake-up call to retailers who still view omni-channel business as two operations, according to industry experts. In fact, a benchmark analysis by the marketing firm found that just one-third of U.S. retailers have consistent pricing for more than 80% of the items assessed.

Wal-Mart Stores is among the retailers who changed its policy last year to include online price matching from its own site as well as from a list of major e-commerce competitors. The retail giant outlines its policy on its website: “We’re committed to providing low prices every day, on everything. So if you find a current lower price from an online retailer on an identical, in-stock product, tell us and we’ll match it.”

There are a few exceptions which are listed on the website. Wal-Mart also notes that the final discretion on the price match rests with the store manager.

Bill Gerads, retail expert with #OnShelf in Bentonville, told The City Wire he expects more retailers will figure out a way to offer like-pricing to appease consumer demand.

“Some are already working on ways to ensure that the online price is the same as the stores. Consumers have all the information they need in their smart phones or at home on the computer. I have seen consumers looking at items in the store and pull the same item online to validate the price or walk over to the electronics department and use a computer in the store to look up pricing,” Gerads said. “I have done the same and most of the time the store will match the price online at the register. It does require due diligence to ensure you are receiving the same price.”

Frank Riso, principal with Riso & Associates, said retailers will have to learn that they cannot manage inventory with two different price models using their stores as pick-up and return centers.

“It has taken at least 10 years for retailers to realize that the consumer only knows the brand and not the channel. Wal-Mart is learning and others will too that consumers don’t see the difference between online and in-store,” he said. 

Carol Spieckerman, CEO of Bentonville-based newmarketbuilders, told The City Wire that “online-to-offline price comparisons have the potential to escalate into consumer-alienating standoffs but they certainty don’t have to.”

Instead of instituting prohibitive rules and restrictions, Spieckerman said retailers should create programs that manage exceptions efficiently and from a customer-centric perspective. 

“Wal-Mart has successfully taken this approach with its price matching and Savings Catcher solutions. Why not extend this concept into managing omni-channel pricing strategies? At the very least, store associates should be empowered to address customers who care about, and call out, price discrepancies, with the burden of proof on the customer like presenting a screen shot or live online like-for-like price challenge when in the store,” she said.

Speickerman said the difference could be refunded on a gift card, ensuring that Wal-Mart captures a future sale regardless and one that likely will exceed the value of the gift card.

The Accenture survey also asked respondents what they expect from their in-store experiences. Surprisingly, the respondents ranked physical stores as the No. 1 shopping experience in need of an upgrade. The cited the need for easy ordering of out-of-stock merchandise and free Wi-Fi as the most necessary improvements.

The report found that two-thirds of U.S. retailers let sales staff order out-of-stock items for shoppers and less than half have free Wi-Fi in stores.

Almost half of U.S. respondents said they would like to receive real-time promotions on their phones while they're in a store, but only 28% of retailers are able to deliver that service, according to the report.

In addition, just 42% of shoppers found it easy to complete a purchase using a mobile device, while 53% of retailers benchmarked had optimized their websites for tablets.

When it comes to delivery options it looks as if retailers and consumers are not on the same page. The survey found that 59% of global shoppers said they would pay a fee for same-day delivery, compared with 36% who said they would pay a fee for next-day delivery.  This compared to retailers who more than half already offer next-day delivery, but just 15% offer same-day service.

The discovery of a human bone and continued erosion at a mound in Fort Smith built by Native Americans has caused The Archaeological Conservancy to expedite its plans to stabilize and preserve the structure.

The mound, located behind the New Liberty Baptist Church in south Fort Smith, is believed to have been constructed by Native Americans (possibly Caddo Indian ancestors) between AD 1100 and 1300. It is believed the Caddo Indians built the mound in several phases. The mound was originally about 200 feet long at the base of each of the four sides and about 40 feet tall.

A human bone was recently discovered near the mound, but it’s not likely from a Native American, according to Jessica Crawford and Tim Mulvihill. The bone is likely from a family that lived near the mound in the late 1800s and used it to bury family members.

Crawford is the southeast regional director for The Archaeological Conservancy, the private, non-profit organization that purchased the “Cavanaugh Mound” in 2006 to prevent its further destruction. The Archaeological Conservancy was formed in 1980 for the purpose of acquiring and preserving important archaeological sites. Mulvihill is an archeologist with the University of Arkansas system and with the Arkansas Archeological Survey.

MOUND HISTORY
Researcher Gregory Vogel documented the history and structure of the mound in this 2006 research report. The mound top includes a burial plot when the land was owned by the Henry Stappleman family. Vogel’s research suggests 12 members of the family were buried on the mound top between 1890 and 1900. No grave markers are now present.

Vogel, who visited the site between 2002-2004, also noted: “The size, shape, and stratigraphy of the mound all indicate that it was constructed and used in a manner similar to other Caddoan era platform mounds in the Arkansas River valley. The mound appears to be alone on the landscape, not connected of a group of surrounding mounds and not located within or near a contemporaneous settlement. It overlooks the Poteau/Arkansas River bottoms to the west and was probably visible from both the Spiro and Skidgel sites in prehistoric times.”

The Spiro Mounds were built as part of a culture that thrived between A.D. 900 to 1300. The Caddoan culture is part of the American Late Prehistoric period (AD 700-1700).

MOUND FUTURE
Crawford and Mulvihill met Friday (March 27) in Fort Smith to inspect the mound and begin to work on a game plan to save the structure. Crawford said the mound is important to the Albuquerque, N.M.-based Conservancy, but issues related to property ownership, access and costs have been difficult to resolve. However, the appearance of a bone and recent years of erosion have resulted in the mound being a priority. She hopes to get the mound stabilized within six months.

“It’s not good to have human remains coming out of the side of the mound,” Crawford told The City Wire during a Monday interview. “We are definitely going to try to come up with some sort of a plan to stabilize it.”

Stabilizing the mound will require fill dirt. Crawford is working to figure out how to get the right type of fill dirt, and will also need access to the site for large vehicles. She is also open to anyone who wants to donate fill dirt.

“If anyone has fill they want to donate, we would appreciate it and it would be tax deductible because we are a non-profit,” she said.

Crawford also said the mound is private property and discouraged anyone from digging on the mound or being on the property.

“It is private property and we will prosecute trespassers,” she said.

Crawford and Mulvihill said the mound was not likely used by Native Americans for burial, which would mean ancient artifacts are not buried within the mound. Mulvihill said the structure appears to be a “platform mound” on which a structure might have been built. An attempt to use radar to peer into the mound was attempted in March 2011, but the ground was too dry for usable data.

Mulvihill also mentioned the possibility of getting the city of Fort Smith involved in helping maintain and possibly manage the area.

“I think this goes along with the history of Fort Smith. ... It’s the pre-history of Fort Smith and I think it goes along with the city’s theme that they have established,” Mulvihill said.

Crawford said the Conservancy would “welcome” a site “with interpretive signs as part of a city park,” but said the first priority is to stabilize the mound.

“First we have to get the mound stabilized. That’s the first thing,” she said.

The man who stole more than $272,000 from Southside High School band students and their parents and caused the cancellation of a 2012 band trip to Hawaii was sentenced Monday (March 30) to more than five years in prison and ordered to pay restitution.

Southside Band Director Sean Carrier said Monday’s sentencing by U.S. District Court Judge P.K. Holmes III “is at least the beginning of the end” of what he said is a “tragic” and “gut wrenching” episode for all involved.

Calliope “Ope” Rocky Saaga, 40, of Eagle Mountain, Utah, was sentenced to 63 months in prison and three years of supervised release on his conviction of wire fraud. The sentence will run concurrent with a sentence in the Western District Court of Missouri for a similar charge. Saaga was also ordered to pay restitution in the amount of $272,235.89.

In August 2011, Saaga contracted with the Southside High School Band in Fort Smith to provide travel arrangements for a 2012 trip to Hawaii. The Southside High School Band wired him three payments between September 2011 and February 2012. Instead of arranging the trip, Saaga converted the money for his personal use, and the band trip to Hawaii was canceled due to a lack of funds. The scheme resulted in defrauding the Fort Smith Southside Band, students, and parents of over $272,000.00. Saaga pleaded guilty to the wire fraud charge on Oct. 16, 2014, noted a statement from the office of Conner Eldridge, U.S. Prosecuting Attorney for the Western District of Arkansas.

In a separate case, Saaga was indicted on May 7, 2014 and charged with 12 counts of wire fraud and three counts of money laundering by a federal grand jury in Springfield, Missouri for stealing $360,000.00 from the Willard High School Band Boosters, which forced the cancellation of a trip to Hawaii for more than 300 students and chaperones.  Saaga was sentenced on March 12, 2015 to five years in federal prison and ordered to pay $780,000.00 in restitution in that case.

“Justice has now been served on behalf of the students, and our office remains committed to aggressively prosecuting this type of fraudulent activity in Fort Smith and throughout all of the Western District of Arkansas,” Eldridge noted in the statement.

“Saaga is a thief who stole from hardworking citizens and their children,” stated Special Agent in Charge David Resch with the Little Rock office of the Federal Bureau of Investigation. “The sentencing today serves as a reminder that our partners at the United States Attorney’s Office and the IRS will continue to work together to identify these predators and their victims.”

Carrier is not optimistic all the restitution money will be paid, and if it is, it could take years.

“Judge Holmes was skeptical that it will be fully repaid,” said Carrier, who spoke at Monday’s sentencing. “They will garnish his wages for the rest of his life, but that could be $100 a month.”

An $18,000 deposit sitting in escrow and held by Sheraton Hotels will be returned to be distributed equally among those who paid for the trip that never happened. It won’t be much, Carrier said, “but it’s a start.”

Eldridge told The City Wire that full restitution will be tough to achieve, but his office will pursue every penny.

“Our job is to continue to track this guy and look for any assets he has or may gain in the future,” Eldridge said.

And while the sentencing “does put some closure” on the saga, Carrier said the event is still sad for all sides. Carrier said he and the school worked with Saaga for several years prior to 2012.

“We were more than just business partners, we were friends. But because of a gambling habit,” Carrier said, leaving the sentence open. “I think about he and his family. I do feel for them, but at the same time you can’t look past what has been done. ... You can’t repay the damage done and confidence lost and the agony that the families and their friends went through.”

Following is the statement Carrier prepared for his comments during Monday’s sentencing of Saaga.

Your Honor, I thank you and the court for your time today. In thinking about the events leading up today's sentencing, the one overriding thing that comes over and over to my mind is: I wish the events of 2012 had never happened. I wish that the trip the Southside band was supposed to take had gone as well as the ones we took in 2006 and 2009. I wish that a man I considered a friend was planning our trip for 2015. All of this, your Honor, should and could have happened if it were not for a criminal betrayal.

I first met Ope Saaga in 2005 when the Southside band was planning our first Hawaii trip in 2006. He was key in the logistics of the 2006 trip. He was "the man" in making the 2009 trip happen. In 2011 he purchased tickets for the band on a dinner/dance cruise in Chicago. In 2008 or 2010 (I can't remember) Ope visited Fort Smith for the Ark Bandmasters Convention. He ate with us in Steve Kesner's home. I knew him and I knew his family. I considered him a friend and recommended him to many other music educators who were looking for travel help. Many of our parents and students got to know him. Our school principal knew him. My wife knew him.

This all changed in April of 2012. My youngest daughter, Abby, was born on April 18. On the 19th, Ope sent an email admitting guilt. Personally, instead of rejoicing in the birth of my new daughter, I was talking to lawyers and reporters and school officials. For many others the betrayal was just as bad. Students and families had saved up for months and years for this amazing trip. They had worked hard and sacrificed. Like all of us - they believed. The sense of disappointment and anger was impossible to stop or heal. Our sense of trust and innocence was lost forever.

Your Honor, I appreciate the efforts of this court and its agents that have lead to today. I humbly ask you to think about what was suffered and lost to the students, families, directors, and indeed the whole community of Fort Smith. That which this man took away can never fully be restored. I feel for his family and my thoughts and prayers are with them. I personally have forgiven Mr. Saaga for his actions toward me. I do wish that the actions of Ope Saaga had not wounded our organization and community. More than 250 young people who participate in SHS Band, not just those who planned to take the trip, have learned a little about bitterness. It is hard to avoid, and only serves to feed the anger experienced in the U.S. today.

Your Honor, we ask for the strongest sentence within your power for Ope Saaga, not as a solution to this bitterness, but as a model for how one begins to make restitution, even when total restitution is seemingly impossible. Justice, in my humble opinion, requires not only the ceasing and desisting of injustice but also requires either punishment or reparation for injuries and damages inflicted for prior wrongdoing. The essence of justice is the redistribution of gains earned through the perpetration of injustice. If restitution is not made and reparations not instituted to compensate for prior injustices, those injustices are in effect rewarded.

Amendments to a bill that would prevent state actions that “substantially burden a person’s right to exercise of religion” passed the House Judiciary Committee Monday despite a heavy presence of opponents at the Capitol.

House Bill 1228 by Rep. Bob Ballinger, R-Hindsville, now goes to the full House. It had already passed both the House and the Senate, but was returned to the Judiciary Committee to concur three minor amendments passed in the Senate. Gov. Asa Hutchinson has said he will sign the bill.

Ballinger stoically left the committee meeting with a security escort as a crowd of protestors outside the room shouted in unison, “Shame on you!” The pro-gay rights Human Rights Campaign held a protest on the Capitol steps afterwards and then lined both sides of the stairs leading to the House chamber prior to the House convening at 1:30 p.m. Most representatives took a different path.

HB 1228 states that, “A state action shall not substantially burden a person’s right to exercise of religion, even if the substantial burden results from a rule of general applicability, unless it is demonstrated that applying the substantial 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 amendments passed, 11-5, with three committee members not voting.

Afterward, Ballinger told reporters, “No one wants to have people mad and upset at them, so I don’t like that part. The idea of people coming up here and showing up to let their opinion be known about their government, I love it.”

The bill passed the House, 72-20, on Feb. 13 and the Senate, 24-7, on March 27. But it became the subject of national attention along with a similar law passed in Indiana. The Human Rights Campaign ran a full-page ad in the San Jose Mercury News, a Silicon Valley newspaper, criticizing the bill in an effort to discourage companies from doing business in Arkansas. Apple CEO Tim Cook called on Hutchinson to veto the legislation.

Ballinger argued that President Clinton signed a federal version of the law, the Religious Freedom Restoration Act, in 1993. After the Supreme Court ruled in 1997 that the federal law did not apply to states, 19 states then passed similar laws, according to Politifact. President Obama voted for an Illinois version of the law as a state senator.

Ballinger said Arkansas has “a reduced level of protection for people’s religious liberties” compared to the federal government, other states and what existed previously. He said the bill only applies to state actions.

“When people realize what the bill really is, most people are supportive of it, but it’s become a symbol for something else, and I understand that,” he told reporters. He later added, “I don’t hate anybody. You know, that’s a part of who I am. I care about everybody and love everyone, and I hate the fact that this is coming up this way, but I can’t back down because people are using this as kind of a tool.”

The amendments concurred on Monday said that complying with civil rights law is a compelling governmental interest, that the legislative intent is to protect religious liberty consistent with federal law, and that the intent of the bill is to apply only to state actions.

Ballinger said the law would allow Arkansas to have the same laws as other states and is consistent with federal law. Rep. Camille Bennett, D-Lonoke, disputed that assertion. She said the bill did not define religion, so actions could be defined by a “religion of one.” She said people with “odd beliefs” would be able to use the law to bring suit.

“Right now as I read this bill, Tony Alamo would be allowed to have his cult in Arkansas,” she said.

When Rep. Eddie Armstrong, D-North Little Rock, asked if the bill could lead to a “slippery slope” creating a new form of discrimination, Ballinger said it would not, resulting in derisive laughter from some in the crowded committee room. Armstrong said similar laws in the name of religion in the past had been used to discriminate against African-Americans.

“Our state continues to get this dark cloud cascaded over it sometimes because of efforts such as this,” Armstrong said.

Asked by Rep. David Whitaker, D-Fayetteville, if the bill could include a “non-discrimination disclaimer,” Ballinger said it would be hard to define that term, and that such a provision should be included in a different bill.

The committee also passed two concurring amendments to House Bill 1676 by Rep. David Meeks, R-Conway, which prohibits the practice of “rehoming” an adopted child.

The practice came to light after an Arkansas Times report revealed that Rep. Justin Harris, R-West Fork, had sent two adopted daughters to live with a former employee of his day care, who then sexually abused one of them. The measure now goes to the House.

Arkansas lawmakers and Gov. Asa Hutchinson are on track – as were their counterparts in Indiana – to go against concerns of large employers and influential businesses like Wal-Mart Stores, Apple and Acxiom and approve legislation the businesses believe discriminatory. Only time will tell the extent of real corporate reaction when their concerns don’t sway legislative votes or fail to garner a veto.

A bill that supporters say will protect religious freedom and opponents say will allow for discrimination easily passed the Arkansas Senate on March 27. The 35-member body passed House Bill 1228 by a 24-7 margin. The House approved the bill Feb. 13 with a 72-20 vote. The measure prevents state and local governments from taking actions that would violate a person’s religious beliefs unless a “compelling” interest can be shown. In theory, a caterer could invoke the law to not do business with a gay couple if it was against the business owner’s religious practices.

Sen. Uvalde Lindsey, D-Fayetteville, was the only Senator from the Northwest Arkansas and Fort Smith areas who voted against HB 1228. The only Republican in the Senate to vote against the bill was Sen. Jeremy Hutchinson of Benton. He is the nephew of Gov. Asa Hutchinson.

On Monday (March 30) minor amendments placed on the legislation in the Senate were approved 11-5 by an Arkansas House committee. The bill now goes to the House for another vote to approve the legislation with the amendments.

Gov. Hutchinson supports the bill, stating that it is “important that we balance religious freedom privileges” but adding that workplaces have to be “free from discrimination.”

Officials with many businesses and organizations – including Apple, Salesforce, Yelp, the National Football League, and the NCAA – have condemned a similar bill recently signed into law in Indiana and the Arkansas law that may soon find its way to Hutchinson’s desk. The businesses and organizations say such laws open the door to discrimination against lesbians, gays, bisexuals and transgendered.

ARKANSAS CORPORATE INPUT
Wal-Mart Stores has asked legislators and the Governor to reject HB 1228. When asked by The City Wire how they might respond if the bill does become law, Wal-Mart provided this statement: “Every day, in our stores, we see firsthand the benefits diversity and inclusion have on our associates, customers and communities we serve.  It all starts with the core basic belief of respect for the individual. And that means understanding and respecting differences and being inclusive of all people. While HB1228 will not change how we treat our associates and operate our business, we feel this legislation is counter to this core basic belief and sends the wrong message about Arkansas, as well as the diverse environment which exists in the state.”

On Monday (March 30), Acxiom CEO Scott Howe and Chief Legal Officer Jerry Jones issued a request for Gov. Hutchinson to veto HB 1228. The Little Rock-based company employs about 2,000 in Arkansas.

“We are not alone in the belief that the bill is a deliberate vehicle for enabling discrimination against the LGBT community and should not become law, as it effectively re-establishes that shameful period before Civil Right, when some used religious beliefs as a thinly-veiled justification for discrimination against our fellow citizens,” they wrote.

“Simply stated, this bill inflicts pain on some of our citizens and disgrace upon us all,” they added.

Howe and Jones said the legislation is “not wise” from a business perspective as they have already seen a “backlash in the business community of our country and is certain to bring ridicule and derision, if it becomes law.” They concluded, “This bill is at direct odds with your position that ‘Arkansas is open for business.'”

WEIGHING THE ‘STICKY ISSUE’
Alan Ellstrand, corporate expert and professor at the University of Arkansas, says he was surprised at the strong response from corporations like Wal-Mart, Apple and others.

"There are pros and cons for companies speaking out against the bill, I suspect there are more pros than cons in this sticky issue and companies like Wal-Mart no doubt weighed their options," he said.

He said the bill has been promoted as a religious freedom bill and companies for the most part don't like to come out on religious stances, but they are more likely to speak out against gay and lesbian discrimination.

Ellstrand said this new form of corporate activism is consistent with other policies that Wal-Mart adopted in prior years with respect to its inclusion policy. Unlike corporate threats to halt or reduce business in Indiana, Ellstrand does not see Wal-Mart altering its investments in Arkansas if the legislation becomes law. The issue will likely be in recruiting top talent to the home office in Bentonville.

"There have been comments from Eli Lilly about how this issue could impact future recruiting in Indiana and we know with the wide net that Wal-Mart casts for talent recruitment to its home office, this is perhaps a concern from the retailer as well," Ellstrand said.

He said the downside for companies speaking out is the alienation of some conservative customers, but they could also gain support from liberal groups that might not otherwise support the retailer.

Ellstrand doubts Wal-Mart and other businesses will pull future financial contributions to supporters of this proposed legislation, saying this is just one issue of many watched by business leaders. He expects corporate eyes to closely monitor this issue in Indiana with respect to business impact, noting that perhaps there will be a compromise.

A nearly $5.2 billion proposed state budget was unveiled Monday morning as lawmakers and state officials begin the arduous task for negotiations this week.

The Joint Budget Committee turned in the budget during a 9 a.m. meeting at the Capitol. The budget, part of the Revenue Stabilization Act, sets funding levels for the Fiscal Year 2016, which starts July 1 and goes through June 30, 2016. Of the $5,186,094,453 set aside in the document, the vast majority of it ($5,069,274,507) covers so-called “A” or top priority items.

Typically, the budget is set up using “A”, “B”, “B1” and “C” priorities with “A” projects and funding getting first attention. Overall, nearly $100 million is set aside for Category B, $7.6 million in B1 and $10 million in Category C.

The state’s general fund is expected to have $597.8 million, with slight increases across the board. A large increase was in the reimbursement to county jails for holding state inmates. The amount went from around $16 million to $27.8 million.

Overall, the Public School Fund will include $2.1 billion, while the Human Services Fund will have around $1.3 billion.

The state’s colleges and universities will receive a combined $630 million, with the vast majority ($518.1 million) going to four-year colleges in the state.

The Department of Correction will receive $336.6 million, while the Arkansas Economic Development Commission will have $10.6 million at its disposal, under the proposal.

The proposal did draw some flack. The Arkansas chapter of the group, Americans for Prosperity, criticized the nearly $40 million set aside for General Improvement Funds, calling the money “earmarks.”

“Arkansans deserve better than $40 million of their hard-earned tax dollars being spent on earmark projects,” AFP-Arkansas State Director David Ray said in a statement. “When voters sent their elected leaders to Little Rock last November, they sent them there to exercise fiscal responsibility, not to continue business as usual.”

In the statement, Ray cited media reports over the weekend about the money – divided equally among legislators and Gov. Asa Hutchinson.

“In January, Talk Business’ Roby Brock reported that Governor Asa Hutchinson said there would be no GIF money in this year’s budget because of greater overall budget priorities. Those comments were consistent with previous campaign statements Hutchinson had made opposing GIF spending,” Ray said in the statement. “AFP-Arkansas will continue to oppose unaccountable GIF earmark spending, and will continue educating the public and working with elected officials to ensure that taxpayer dollars are properly spent.”

In a statement Monday, Hutchinson said the budget meets priorities as well as cuts spending.

“I released my balanced budget proposal in January. It reflected my priorities, including increased funding for K-12 education, Corrections and Medicaid, and stable funding for Higher Education. In addition, I proposed 1 percent cuts to most state agency budgets,” Hutchinson said. “The changes made in the Revenue Stabilization bill since my budget are necessary in order to balance other policy changes from the session, including increased funding for pre-K. I worked with legislative leadership to determine which changes would be made in the final budget.”

The Video Wire anchor Dawson Meadows offers a less than factual take on Fort Smith area news and events including info on a “grown up prom” with “tons of roses.” He does deliver a good note on why you should attend the upcoming Compass Conference.

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

State revenues fell below projections in the March report, a dip caused by sales tax and individual income tax collections that did not meet expectations due to wintry weather that shut down Arkansas for several days in February, the state’s fiscal office reported Tuesday.

The state’s net available general revenue last month totaled $365.2 million, $21.3 million or -5.5 % below last year and $13.2 million or -3.5 % below forecast. However, year-to-date net available general revenues total $3.7 billion, $105.9 million or 2.9 % above year ago levels. After nine months into the fiscal year, net available revenue is above forecast by $81.4 million or 2.2 %.

“The one thing that I have been watching over the last several months is the sales and use tax collections came in below forecast and are growing slower than expected,” said Michael Pakko, chief economist at the University of Arkansas at Little Rock’s Institute for Economic Advancement.

However, Pakko said the significant thing about the March report is it is a snapshot of February, the shortest month of the year where Arkansas businesses and state government were also shut down for several days because of icy weather. March’s report reflects sales tax revenues collected in February.

“It is pretty clear that the weather put a damper on sales during the month, so it is likely a one-time occurrence,” said the UALR economist. “But, overall, I don’t see any underlying weakness in the Arkansas (economy).”

MARCH INCOME TAX COLLECTIONS DOWN, REFUNDS UP
Overall for March, individual income tax collections totaled $229.4 million, down 7% or $17.2 million compared to last year. That is also 7.2% or $17.7 million below forecast. State officials said individual withholdings fell 5% compared to the same period a year ago, reflecting shifts in payroll withholding rates.

However, individual income tax refunds for Arkansas taxpayers jumped 8.6% to $115.5 million, $8.6 million above year ago levels and $2.2 million above forecast. March sales and use tax collections, however, fell by $3.3 million or 1.8% to $179.8 million, and $5 million or 2.7% below forecast.

Corporate income tax collections in March rose to $75.4 million, an increase of $9.6 million from year ago, and $9.2 million or 13.9%. Tax refunds for Arkansas businesses totaled $3 million, up $1.6 million above year ago levels.

March tobacco tax collections, a smaller component of general revenue in annual terms, topped $17 million.

Year-to-date, Arkansas’ gross collections came in just below $4.6 billion, up by 2.6% or $115.4 million. Gross general revenues are above forecast by $56.8 million or 1.3 %.
Individual income tax collections for the year were up 2.1% to nearly $2.2 billion, or $45.8 million above last year’s collections, and $4.9 million or 0.2 % above forecast.

Collections for individual withholding are up 2.5 % from year ago levels.

CORPORATE TAX COLLECTIONS UP 10% FOR THE YEAR
For the year, Arkansas taxpayers have received nearly $350.1 million in tax refunds, up $9.2 million or 2.7% compared to last year and $7.8 million or -2.2% below forecast. Refund amounts below forecast add additional dollars to the state’s bottom line and net available fund for other budget matters.

At the same time, sales and use tax collections rose by 1.9 % or $30.3 million to nearly $1.65 billion year over year. That total is $13 million or 0.8% above forecast.

The bellwether corporate income tax collections totaled $337.6 million, an increase of $31.8 million or 10.4% for the year. Corporate income is above forecast by $35 million or 11.6%. Year-to-date corporate income tax refunds total $35.4 million, a decrease of $14.0 million compared to the same year-to-date period last year.

Pakko noted that the decline in individual income tax revenue versus forecast and year ago levels was partly due to the state’s first income tax rate change in decades, which also caused the shift in the payroll withholding rate from updates to the state withholding tax tables.

“We are still doing pretty good year over year, and I think once the tax season is done, we will be able to look back and get a better picture of what is taking place now,” Pakko said, noting that the still has a $81.4 million “buffer” of net available revenue above forecast.

Retailers are not the only companies pulling out all the stops to appease changing consumer demands. Several food companies that supply retail grocers are also busy shifting their businesses away from what may have historically been their core products.

Whether it’s soup, chicken or candy, some of the nation’s largest food suppliers are aggressively shifting resources into areas they believe consumers prefer.

Springdale-based Tyson Foods ponied up more than $8.5 billion last year to buy Hillshire Brands in order to gain bigger market share in branded meats and a leg up in the breakfast protein category, which is one of the fastest growing food segments.

“By investing in Hillshire Brands and its collection of leading brands, we have a unique opportunity to transform an important segment of our business, and position Tyson Foods to meet American consumers' growing demand for protein at breakfast and throughout the day,” Donnie Smith, president and CEO of Tyson Foods, said following the merger. 

Smith previously noted that Tyson was attracted to Hillshire in part because of the strength the merger would bring in the growing breakfast category, where the Springdale meat giant has been trying to capture market share with its own DayStarts products, a line that has since been discontinued.

The combined companies jumped over ConAgra taking the No. 2 market share ($3.3 billion) in the frozen value-added category, according to the meat companies. In terms of individual brands, Tyson has the No. 3 spot with $2.4 billion, and Hillshire ranks eighth at $1.3 billion.

Tyson Foods recently added production lines in three facilities to allow for more tray pack fresh chicken that Smith said is high demand by consumers. Smith expects chicken production to be up 3% in fiscal 2015, which began Oct. 1 for Tyson Foods. He said there are key changes in consumer behavior, including a move to more fresh chicken in the retail case and uptick in fully-cooked frozen sales.

“We see more people eating out with the relief they are getting in gas prices, which should benefit food service customers,” Smith said. “We also see a structural demographic change in demand as more Millennials enter the workforce they index higher toward chicken than previous demographics. We expect to see food service customers begin to offer more chicken promotion in the coming months as supplies come back up.”

SOUP WOES
In January, the Campbell Soup Co. and Hershey Co. made announcements they were shifting resources away from their core product portfolios into ventures they view as having clear paths to growth and better aligned with consumer preferences.

Soup is a category that has struggled in recent years amid more competition in convenience categories. A wider variety of flavors and more health conscious products did not improve the company’s sagging soup sales.

“Soup makers have been introducing new varieties and supporting them with marketing efforts,” according to Euromonitor, a data marketing firm. 

But the marketing has not always helped. Euromonitor noted that marketing campaigns featuring Millennials using microwavable pouches in 2012 did not resonate with American consumers.

Even a No. 1 position in the soup category has not helped Campbell’s, which is why CEO Denise Morrison created a new organizational structure that will revolve around three business units – Simple Meals and Beverages, Global Biscuits and Snacks, and Packaged Fresh. She admitted that Campbell’s future growth lies elsewhere, and said the adoption of this new enterprise structure will be an important milestone for Campbell.

“This reorganization will help unlock the value of our brands and the growth potential of our business. It will drive focused investment on our largest growth opportunities. It is the logical next step in our ongoing effort to shift our company’s center of gravity, accelerate our growth trajectory and maximize value for our shareholders,” she said.

CANDY CHALLENGES
A more health conscious consumer today is not as likely to reach for the chocolate bar at the grocery checkout. Young Millennial parents who favor organic foods, fresh produce and locally sourced products are throwing a wrench in candy sales outside of the holiday seasons.

Hershey CEO J.P. Bilbrey noted in a Jan. 29 conference call with analysts that lackluster 2014 sales were a result of changes in consumer spending patterns and a more competitive snacking environment.

“Specifically, growth in snacking alternatives and an evolving retail landscape are impacting what consumers buy and where and how they make purchases,” Bilbrey said.

With that, Hershey announced it would acquire Krave meat jerky snack brands. Now the confectionery giant will have the opportunity to expand its snack product line to include protein-based snacks along with dips and spreads.

According to Euromonitor, jerky sales accounted for close to half of the $5.9 billion in sales of what the research company calls “other sweet and savory snacks,” or snacks other than chips, pretzels, nuts, popcorn and dried fruit treats. 

“It almost warrants its own category like chips or pretzels at this point, it’s getting so big,” said Matthew Hudak, a Euromonitor analyst.

Even so, analysts in the call raised concerns that the $250 million deal to expand into meat snacks could distract Hershey management away from its confectionery product lines.

“We will always be diligent to not distract ourselves from the core business that we’re in, but we’re also in the consumer products business, and have to make sure that we’re meeting (the needs of) what consumers are always desiring,” Bilbrey said in response.

A compromise religious freedom bill received a veto-proof majority in the House Thursday with the bill being signed into law. The group leading the opposition to the original religious freedom bill said the new language still opens the door to discrimination.

The House voted 76-17, with two present on Senate Bill 975, sponsored by Sen. Jeremy Hutchinson, R-Little Rock. After passing the Senate on Wednesday, the bill was approved Thursday morning in the House Judiciary Committee, setting the stage for the debate in the House this afternoon.

According to the bill, which is modeled after the federal Religious Freedom Restoration Act, the government must show a compelling interest before a person’s religious beliefs can be infringed.

“A government shall not substantially burden a person’s exercise of religion even if the burden results from a rule of general applicability, except that a government may substantially burden a person’s exercise of religion only if it demonstrates that application of the burden to the person is in furtherance of a compelling governmental interest; and the least restrictive means of furthering that compelling governmental interest,” the bill noted. “A person whose religious exercise has been burdened in violation of this section may assert that violation as a claim or defense in a judicial proceeding and obtain appropriate relief against a government.”

Rep. Bob Ballinger, R-Hindsville, who co-sponsored the bill in the House, said the bill was an Arkansas version of the federal law. The federal law was passed in 1993 by Congress and signed into law by former President Bill Clinton. Earlier in the day, Ballinger said the bill received strong support at the time in Congress and has been expanded to other states.

OPPOSITION REMAINS
The Human Rights Campaign, which has organized rallies at the Capitol to oppose Ballinger’s original bill (HB 1228) on religious freedom, said the new law “falls short” of protecting the gay community, minority faiths “and other Arkansans at risk.”

“The federal Religious Freedom Restoration Act, while well-intentioned, has been used in recent years to justify problematic behavior that harms third parties,” Sarah Warbelow, HRC’s legal director, said in a statement. “We remain concerned that the federal RFRA and bills modeled after it may be used to undermine protections for the LGBT community and other minority groups. This new legislation, if it passes and becomes law, could be used to undermine existing and future civil rights laws in the state, and that is unacceptable.”

Views on the bill were mixed during the House debate. Rep. Camille Bennett, D-Lonoke, said she was appreciative of the work done by lawmakers since the announcement Wednesday by Gov. Asa Hutchinson.

HB 1228 RECALLED
Hutchinson asked legislators to either recall or address the bill, making it more closely aligned with the federal law. However, Rep. Josh Miller, R-Heber Springs, said he thought the bill was the wrong approach. Miller said “the decision on this should be made on the second floor (referring to the Governor’s office.)”

Hutchinson signed SB 975 into law. With its passage and the governor signing it into law, the fate of HB 1228 was all that remained. HB 1228, the original RFRA measure that stirred the controversy and created the national media attention in Arkansas late last week and all this week.

The House went back into session after the bill signing and voted to recall the measure, where it will not be acted upon and will languish. House members finished their additional calendar business hours after the Senate completed its work, thus bringing the session to adjournment for 30 days.

Legislators will recess for a month and return to sine die, or officially end the session, on May 8.

From Great Value bacon and eggs to George branded apparel and MainStay home wares, Wal-Mart is the largest private label player in the U.S., according to Walmart U.S. CEO Greg Foran. But he’s not happy with being the largest.

“We can and should do more,” he told analysts Wednesday (April 1) in New York during an update on the retail giant’s U.S. operations.

He told the group he continues to try the Great Value brand for himself having recently eaten bacon and eggs which were “quite good.” He said that’s not the case with all the items he’s tried and one particular area of concern is the lack of price separation between Wal-Mart’s private label to national brands.

With respect to private label offerings at Wal-Mart Foran said: “Our customers love it, and it delivers on our promise, but we are not fulfilling our mission of ‘save money, live better’ if we don’t provide a more competitive price offering in some private label areas. We will sensibly lean into this opportunity, but never compromise on quality.”

Private label is 28% less expensive than similar national brands, according to IRI, a consumer products marketing and strategy company. A price study conducted in March by Raymond James & Associates found Wal-Mart’s Great Value basket to be 21.7% cheaper than the basket with comparable national brands, down from 23% savings in February and a 24.2% savings in March 2014.

PRICE FIRST
Wal-Mart began testing a lower cost private label in late 2013 under the brand “Price First” to better compete with low entry price retailers like the Dollar store chains and Aldi. The Price First products include pasta, peanut butter, baking mixes, mustard and other condiments totaling about 50 items including paper and other consumables that Wal-Mart debuted nationally in more than 2,500 stores late last year.

But on Thursday (April 2) Wal-Mart told The City Wire it is still testing Price First as the retailer continues to try different things and listen to its customers. For the most part, retail experts had approved of the Price First label as Wal-Mart continues to lose some sales to consumers on the most limited budgets.

Jason Long, CEO of Shift Marketing Group, said in 2014 that he would be interested to see if promotion of the lower priced label would ultimately pressure the suppliers of Great Value and national brands. From Foran’s recent comments on price separation, it appears Great Value — which is deemed to be “brand equivalent” – may undergo price tweaking for greater price separation from national brands.

It remains to be seen if this line will be expanded or even kept if Great Value prices are adjusted downward.

KICKSTART GROWTH
A recent report from IRI notes that consumers spend about $120 billion annually on private label products that give retailers an avenue to differentiate themselves in a highly competitive marketplace.

IRI noted that after several years of stagnation in private label sales, retailers and product manufacturers have struggle to find ways to kickstart growth. Whether that’s reworking product formulations like the “Great for You” Great Value products tweaked at Wal-Mart as part of a healthier food push or the successful “Simple Truth” organic line continually growing at Kroger, IRI expects private label expansion this year.

Research indicates that the perception around private label quality continues to improve with more than 80% of consumers convinced that private label products are as good or better compared to national brands, the IRI report noted.

Grocers like Wal-Mart have long offered a spectrum of private label products with a basic, better and best tiers. For instance, Sam’s Choice is deemed a premium tier at Wal-Mart as Kirkland is at rival Costco. Experts agree that truly successful private label launches are those that consumers don’t realize are store brands, such as Target’s Archer Farms.

FRESH AND ORGANIC
One of the emerging trends in private label offerings are in fresh produce as well as organics. 

Wal-Mart corporate spokesman John Forrest Ales said the MarketSide private label sold at Wal-Mart has added more than 50 organic produce items in the past year which are grouped together in the fresh produce area for easy identification.

"Store brands have moved far beyond cheap generic knockoffs to become trusted, quality lines that can compete effectively with national brands. They usually have higher profit margins for retailers than name brands, help differentiate a retailer from competition and help build consumer loyalty," said David Sprinkle, research director for Packaged Facts. 

Researchers said natural and organic private-label brands have been around for a number of years led by Safeway's O Organics and Supervalu's Wild Harvest. Other retailers like Wal-Mart have been playing catch-up through its recent partnership with Wild Oats who is now supplying a line of organic food to Wal-Mart. The Wal-Mart-Wild Oats organic food items such as black beans and olive oil are at least 25% less expensive than the national organic brands the retailer carries. The initiative was expected to cover a broad variety of categories and be available in about half of Wal-Mart’s 4,000 U.S. stores. But so far, it has been slow going, according to Wal-Mart Chief Financial Officer Charles Holley. He said the program is still being rolled out.

Holley added 90% of Wal-Mart customers want access to affordable organic food products. He said because many of them are not willing to always pay a premium, sourcing the products customers want can be challenging. 

Meanwhile, grocers like Kroger and Aldi have developed popular private labels around the wellness focus of consumers. Kroger’s Simple Truth Organics and Aldi’s Simply Nature cross many food and beverage categories and are marketed as “natural, organic and free of artificial ingredients.” Kroger’s investment to build out its Simple Truth line in recent years resulted in $1.2 billion in sales in 2014, the grocer reported in February.

The last full day of the 90th General Assembly regular session felt like a relay race at times as lawmakers hurriedly sped a compromise religious freedom solution through committee, to the governor, and back to the House again.

Also, Speaker of the House Jeremy Gillam, R-Judsonia, confirmed he would seek a second term as speaker in the next session. The Arkansas News Bureau first reported Gillam’s announcement. Talk Business & Politics confirmed with Gillam that he would seek to serve as Speaker beyond his current term.

“I will ask for my colleagues’ support for one more term as Speaker,” Gillam told TB&P.

TESTIMONY
The House Judiciary Committee met Thursday to hear the Senate-approved SB 975, a measure that mirrored language from the federal Religious Freedom Restoration Act (RFRA). The bill was a compromise that took into account Gov. Asa Hutchinson’s request to modify a bill, HB 1228, that had reached his desk, but was the subject of backlash from the LGBT community and the state’s biggest business leaders. The controversy had also thrust Arkansas in the national spotlight like Indiana, which was grappling with a similar bill.

When the House Judiciary Committee met Thursday morning to hear SB 975, Rep. Bob Ballinger, R-Hindsville, said his earlier bill, House Bill 1228, faced a perception problem with people opposed to the bill as well as media coverage on the issue. Ballinger also told the committee SB 975 was virtually the same bill that “Bill Clinton signed into law and Barack Obama voted for in the Illinois state Senate.”

Rita Sklar, executive director for the Arkansas chapter of the ACLU, spoke against the bill. Sklar said HB 1228 gave the state a “black eye” while Senate Bill 975 “puts ice on it.” Sklar also said she believed individuals already have religious freedoms protected in the U.S. Constitution, Arkansas Constitution and state law.

However, a pianist told the committee she believed the overall issue put her talents in jeopardy. Jackie Martin, who said she is a director of music at a church, said she was afraid of being accused of discrimination if she turned down a gay couple’s request to play music at a wedding.

“I am frightened to participate in music,” Martin, who said she has played the piano since she was four years old, told the committee. Martin said she does not judge anyone but said a remedy to protect her religious beliefs was taken of the bill.

The committee approved the measure and it was considered by the full House later in the day. After its passage, it was quickly rushed to Gov. Hutchinson, who signed the bill into law amidst a bipartisan group of legislators. The House reconvened and voted by voice to recall HB 1228 from the Governor’s desk, effectively ending its run.

Rep. Donnie Copeland, R-Little Rock, spoke against recalling the bill. Copeland said he felt the process was trampled on during the debate.

“It is a very difficult thing, but Mr. Speaker said at the beginning that we should respect the process,” Copeland said.

Rep. Kim Hammer, R-Benton, who spoke in favor of the request, said Ballinger had worked hard on getting the bill approved.

“He has poured his blood, heart and soul into it …. We are the darn House. I say, ‘give it back to him,” Hammer said.

LAST MINUTE BUSINESS
The House Judiciary Committee also voted against a revised bill that will give property rights to a person for their name, voice, signature and likeness. The committee turned back Senate Bill 965, sponsored by Sen. Jon Woods, R-Springdale. Under the bill, the rights would be protected and would have set commercial and non-commercial uses of the images. The bill passed the Senate Wednesday night.

A similar bill, Senate Bill 79, was vetoed earlier this week by Gov. Asa Hutchinson. In his veto message, the governor cited constitutional concerns for the veto.

The legislature also approved three proposed constitutional amendments, sending the measures to the Nov. 2016 general election.

The House voted 80-0 in favor of Senate Joint Resolution 3, sponsored by Sen. Eddie Joe Williams, R-Cabot. The proposed amendment would allow the governor to retain certain powers and duties if they leave the state. Currently, if the governor leaves the state, the lieutenant governor immediately takes over the duties of the office.

The House also voted 70-22, with one present, in favor of Senate Joint Resolution 16. The proposed amendment would get rid of a five-percent cap on the state’s budget for general obligation bonds that are part of so-called super projects; allow the legislature to set the size of incentives given to businesses, according to an impact study done by a third party; and give cities and counties the ability to provide infrastructure and service needs for economic development projects.

The Senate also voted 33-0 to approve House Joint Resolution 1027. The proposed amendment, sponsored by Rep. Jack Ladyman, R-Jonesboro, would expand the terms of countywide elected officials from two to four years, define infamous crime in state law and allow for unopposed candidates to be elected without printing their names on the November general election ballot.

With the passage of budget bills on Wednesday and the final business involving RFRA resolved, the House and Senate both adjourned until May 8 when they will return for any clean-up business and to sine die, or formally end the 90th General Assembly regular session.

Senate President Jonathan Dismang and Speaker of the House Jeremy Gillam said they are satisfied with the outcome of the controversial Religious Freedom Restoration Act (RFRA) that nearly derailed the regular legislative session in the last full week.

Appearing jointly on this week’s edition of Talk Business & Politics, Dismang, R-Searcy, and Gillam, R-Judsonia, indicated that interim work on the issue may occur. Dismang was asked what else the state might do to send a signal to the business community and general public that the state is not discriminatory, is open for business, and wants diversity in the workforce.

“I think we look at that in the interim to see if there’s legislation that needs to be drafted or passed. And really just see where the support of the body is at this point,” said the Senate leader. “I think we took Step A, which was re-establishing what we were trying to do with RFRA and making sure we didn’t inject language that could be utilized to do something like that, and again, we’ll take a look at Step B when we’re ready.”

Gillam said the debate truly ignited after Gov. Asa Hutchinson shifted his position on the amended RFRA bill after national media scrutiny and state business interests – including Wal-Mart and Acxiom – weighed in.

“For the House, the governor signaling that he was going to have a change in direction was probably the tipping point for us,” Gillam said, although he suggested that various pressure points, including protests from the LGBT community, also had an effect.

“It’s probably going to be different for most everybody involved in the process,” he added.

The final outcome clearly satisfied a strong majority of legislators even if there remains a divide between special interest groups that rallied for and against the measure.

“I think ultimately we got the result that we should have. We have something proven, tested and inside with the federal language being injected here in Arkansas law. And I think ultimately, again, we are where we need to be and I think it worked itself out,” said Dismang.

On other topics, Speaker Gillam said he thinks one of the most significant results of the 90th General Assembly regular session will be workforce education and training reforms.

“I think it’s going to be something that a year from now people will really start to see the dynamics change on,” said Gillam.

For Dismang, prison and parole reforms may have the largest impact. He noted new funding to ease overcrowding, utilizing out-of-state facilities, and developing regional prisons as examples.

“I don’t think we’ve gotten to where we truly need to be on that,” said Dismang, “[but] I think those are steps in the right direction and probably something significant and something you’ll be able to point to in the future.”

Speaker Gillam revealed on Thursday night after the session’s recess that he will seek a second term as House leader after encouragement from members. He also said he wants Dismang to serve as Senate President in the 2017 regular session.

“I’m going to encourage him,” said Gillam.

Dismang’s response to the question when asked more than once: “That’s a conversation for a future date,” he said.

USA Truck CEO John Simone, 53, is on an indefinite leave because of a “serious medical condition,” with Tom Glaser appointed interim chief operations officer to lead the company. Company shares (NASDAQ: USAK) fell more than 9% in Monday (April 6) morning trading.

Shares of USA Truck fell to $24.95 by around 11 a.m., down more than 9%. The share price would close the day at $25.68, down $1.75, or a drop of 6.38%. During the past 52 weeks the share price has ranged from a $32.14 high to a $13.90 low.

Simone, hired by USA Truck Board Chairman Robert Peiser in early 2013, was instrumental in returning the long-haul carrier and logistics company to profitability. The company reported Feb. 11 that 2014 net income was $6.033 million, a more than $15 million swing from the $9.11 million loss in 2014. The swing ended five consecutive years of losses. Prior to 2014, the company would post five consecutive years of losses that totaled almost $48 million – wiping out the $45.76 million in net income earned between 2001 and 2008.

“The board understands that it is in John’s best interests at this time to focus on his health and recover from his illness. The Company is fortunate to have someone of Tom’s talent and experience available to provide executive support, as well as a strong management team comprised of both executives recruited by John and others fostered from the team already present when he joined USA Truck. Together, we believe this team will maintain the momentum of the Company’s turnaround while at the same time helping John regain full strength as soon as possible.”

Peiser told The City Wire that Simone may return to the job if his condition improves, and that deciding on the interim COO title for Glaser was made to “not let it look optically like we are replacing John.” Peiser stressed during the brief interview that the company is not deviating from the turnaround plan. The plan, Peiser noted, is not just Simone’s plan, but was created by the management team and Board. He also said the management team and company employees have responded well to the news.

“They are probably more motivated to prove to John that they can handle it,” Peiser said.

Glaser is a member of the USA Truck Board and served as the company’s COO from January 2013 to June 2013. He returned to the company as a Board member as part of an early 2014 agreement between USA Truck and investment firms Baker Street Capital and Stone House Capital Management. After the USA Truck Board removed a shareholders provision that capped ownership at 10%, Baker Street and Stone House combined their holdings. With their 28% of USA Truck shares, they essentially bargained for a seat at the management table. Vadim Perelman, managing partner and chief investment officer of Baker Street, was also elected to the USA Truck Board as part of the deal.

That agreement was renewed in February, with USA Truck agreeing to elect certain Board members requested by Baker Street and Stone House. In return, the two investment firms agreed to reduce their shares of USA Truck “in an orderly manner.”

Glaser, a former president and COO of Celadon Group, has more than 25 years of experience in the industry. His work includes president and CEO of Arnold Transportation Services (July 2008 to March 2010), and a board member of Priority Transportation (February 2008 to June 2010). Glaser graduated from the University of Michigan with a bachelor’s degree in in business administration.

"John and his team have placed USA Truck firmly on the right path to executing the Company’s strategic plan and unlocking its earnings potential,” Glaser noted in Monday’s statement. “Everyone at USA Truck is intent on continuing the many improvements that have been made over the past two years. I look forward to assisting them in those efforts and wish John a speedy recovery."

Wal-Mart is upping the ante in its bid to encourage more people to test its grocery pickup service. The world’s large retailer is now offering users up to $100 in referral e-Vouchers for sharing their referral across their social media feeds on Facebook and Twitter.

In an April 6 email to users, the Bentonville-based retailer said it will pay $10 for every referral shared through social media channels. The user who shares the link provided by Walmart Grocery will receive a $10 eVoucher and their friends also receive a $10 eVoucher when they register for the service using the provided link. The retailer states on its website that the eVoucher payments are limited to $10 per qualified referral on a minimum $50 order. Other limits include no more than 10 qualified referral payments per calendar year or 100 per lifetime.

Wal-Mart said it also reserves the right to pull the offer at its discretion in the test markets of Bentonville, Huntsville, Ala., Denver, Phoenix and San Jose, Calif. CEO Greg Foran said April 1 that the retailer will continue to test the pickup grocery format because consumers who use it have provided good feedback.

This referral program comes on the heels of a $10 discount recently offered to users who try the click and collect grocery pickup option in the test markets. The $10 discount was expanded from a $5 discount in previous weeks.

Retail experts said it’s somewhat unusual for Wal-Mart to provide blanket discounts like $10 off of a $50 grocery order, but this strategy is likely needed to help customers make the shift from in-store to online grocery shopping.

FAVORING INCENTIVE
Christina Ellwood, CEO of Moreland Associates, noted on the Retail Wire discussion board that “price incentives are one way to entice shoppers to try buying online with pickup in-store.”

Ellwood said changing consumer behavior, whether it's with a new payment system or a new shopping approach, is always a challenge. She said incentives, personal demonstrations and video/ad demos are tried and true methods. She suggests retailers use a mixture of incentives with ample time between exposures.

“Click-and-collect is known in many other countries, is very popular so it's likely the resistance to change can be overcome here, too,” Ellwood noted.

Ken Lonyai, a digital innovation strategist and co-founder, ofScreenPlay InterActive, said Wal-Mart is on the right track testing the grocery pickup in multiple formats and then enticing shoppers to try the service with subtle incentives.

“For the majority of shoppers it will take incentive — a lot of incentive — to get them regularly shopping for CPG (consumer packaged goods) items and groceries online, especially for local pick-up, which is more effort for the consumer than home delivery,” Lonyai said. 

“My guess is this will be a slow (multi-year) consumer training exercise and it will take many other brands in addition to Wal-Mart to re-educate shopper traits,” he added.

Wal-Mart told The City Wire it is continually testing new ideas with the grocery pickup format in Bentonville and in Huntsville, Ala., Phoenix, Denver and San Jose, Calif.

“Price is critical, period. Wal-Mart's involvement will only matter if they can truly make it convenient and less expensive than anything else. I would expect expansion,” said Dr. Stephen Needel, managing partner of Advanced Simulations. 

Joel Rubison, president of Rubinson Partners, said Peapod offers a similar incentive to draw traffic to its grocery service and that is fairly common when consumers have to break their habits and engage in a new shopping behavior.

Most retail experts commenting on the practice said it will take time and more incentives for Wal-Mart and other retailers to boost consumer use of the format because it is a shift in behavior.

PROFIT MODEL, OPPORTUNITIES
Paula Rosenblum, managing partner with RSR Research, said there is a market for consumers who will buy online and pickup in a store just as there are those want their orders delivered. What is lacking, according to Rosenblum, is the profit model for these services. 

“With very few exceptions, it has proven incredibly hard to make money doing the ‘pick’ for customers. I just see this as a loss leader ploy, and the company will likely recognize at some point that the problem is not driving demand, it's making money,” she added.

Adrian Weidmann, executive with StoreStream Metrics, believes the new shopping format will eventually emerge as the “new” retail. He said the obstacle now familiarity and trust. Once shoppers understand how the process works and realize the ease and convenience their behavior will change.

Gov. Asa Hutchinson signed three bills into law Monday (April 6) that he said represent a fundamental shift in the state’s workforce development efforts.

“This I see is foundational,” he said during a bill signing ceremony at the Capitol. “It is a momentum changer. It is going to set the course for success in Arkansas in terms of job skill training.”

Perhaps the most far-reaching of the three measures is Act 892 by Sen. Jane English, R-North Little Rock. The bill creates the Office of Skills Development within the Department of Career Education to award workforce training grants to public and private organizations. As part of the Department of Career Education, it establishes a Career Education and Workforce Development Board composed of representatives from various industrial sectors, along with nonvoting members from various state agencies.

The board will create a comprehensive program for career education and workforce development and will supervise all vocational, technical and occupational education programs. It and the State Board of Education together will administer state and federal adult education funds.

Senate Bill 891 by English, the Workforce Initiative Act, creates a program awarding planning and implementation grants by the Arkansas Higher Education Coordinating Board to regional organizations to create economic development strategies.

Act 907, by Sen. Jeremy Hutchinson, R-Benton, is the federally mandated Arkansas Workforce Innovation and Opportunity Act, which distributes federal funds to workforce investment boards across the state.

Gov. Hutchinson said the model created by these three acts establishes a role for business leaders to set priorities; creates a partnership between high schools, two-year schools and technical schools in workforce training; funds programs that are successful; and coordinates state agencies behind an initiative led by the Governor’s Workforce Cabinet.

Hutchinson was flanked by an array of the state’s leaders in economic development and education:
• Mike Preston, who was working his first day as director of the Arkansas Economic Development Commission;
• Education Commissioner Johnny Key;
• Dr. Brett Powell, the state’s new director of the Department of Higher Education;
• Dr. Charisse Childers, director of the Department of Career Education; and
• Daryl Bassett, director of the Department of Workforce Services.

Randy Zook, president and CEO of the Arkansas State Chamber of Commerce, also was on hand.

Sen. English helped set the tone for the legislation by insisting that the state retool its workforce development efforts as a condition for her being a deciding vote for the Medicaid private option in the 2014 fiscal session.

“My goal is that when (Preston) sits down and talks to a company both somebody outside the state, inside the state, he can say, ‘These are the things we’re doing to make a workforce available for you,’” she said after the bill signing.

The statistics are beyond alarming. At any given time, there are between 3,800-4,000 children in the care of the Arkansas Department of Human Services. And the Fort Smith area, known as Area II, is notoriously the worst offender in the state.

To address the growing problem, one organization is giving an old building new life and in the process, working to give foster children new hope and a sense of security. The Maggie House, to be located in Charleston, will serve as a long-term care facility for youth ages 6-18 in the foster care system. The shelter will occupy the former Greenhurst Nursing Home, which constructed a new facility several years ago.

The Maggie House will operate beneath the umbrella of Family Ministries, which is the outreach division of the Free Will Baptist denomination. Based in Greenville, Tenn., Family Ministries has provides services to at-risk individuals of all ages through a number of assistance programs and centers since 1939. The organization operates similar residential programs including the Florence Crittenton Home in Little Rock,

Under the direction of Executive Administrator Bob Moody, the Maggie House is designed to create a family-like environment in an effort to give children a sense of normalcy.

"The 15,000 square foot facility will be divided into four separate apartment spaces or 'cottages,' equipped with individual bedrooms, bathrooms, and a kitchenette," said Moody. "A common area will exist in the main hall, providing a space for all Maggie House residents to spend time and dine with one another."

THE NEED DEFINED
The facility will serve the entire state, but the majority of its residents will likely be from Area II, which encompasses Crawford, Franklin, Johnson, Logan, Scott, Sebastian and Yell counties.

"Area II has the most children in its care in the entire state," said Moody. "An estimated 800-900 children are collectively in the foster care system from this seven-county region at one time, making it second only in the nation to the Chicago area. "

Because no other long-term foster care facility exists in the region and because there is a massive shortage of foster care homes, DHS is forced to place many children far from their hometown.

"More than 500 kids are routinely placed outside Area II," explained Moody. "This means they have to travel back and forth for court appearances, parental visitations, and appointments, which results in long hours on the road, missed school, and other difficulties. For children who have already experienced the trauma of being taken from their home, this only adds to the stress. The system has some children placed as far away as West Memphis, on the other side of the state. It is hard for all involved, including the children and their case workers. This is why long-term care facilities, such as the Maggie House are so greatly needed."

THE MAGGIE HOUSE STORY

The story for how Maggie House came to be is an example of why it rarely hurts to ask the question at hand. During a March 2014 conversation between First Free Will Baptist Church of Charleston Pastor Jeff Holland and Charleston resident Fred Schaffer, Holland expressed the need for long-term care facilities for foster children and the overall system crisis.

"Fred asked me what I would do with the nursing home if he were to donate it and I told him that I would make a place for youth in foster-care," said Holland. "He lit up when I said that and the conversation went from there."

Schaffer offered to give the former nursing home to Holland's church, which sits across the street from the Greenhurst property. Holland then contacted the national Free Will Baptist organization's Family Ministries division to begin the process of making the Maggie House a reality.

"The name is honor of Fred Schaffer's mother, the original owner and administrator of Greenhurst Nursing Center," said Holland. "She was also well-respected in the community and known for her kindness and compassion to others."

With the building approved and plans in place, work on the Maggie House began, with construction in full swing.

"We originally planned to wait until half of the funds for construction were in place, but because the need is so immediate, we opted to borrow so building could get underway," said Moody.

Inspection of the building by Family Ministry proved that the property had "solid bones," and was a cost-effective route for building the Maggie House.

"The property was valued 'as is' at $250,000 and we are investing about $799,000 into renovating the facility into the four apartments," said Moody. "If we had built a new facility of this caliber, it would have cost approximately $2 million. Obviously, this was the smart choice financially and it utilizes this vacant property, which is an added bonus."

Another result of using the former Charleston nursing home is the outpouring of support the project has experienced from the community.

"The people have Charleston have absolutely embraced us," said Moody. "They have volunteered, are helping raise funds for Maggie House, and more. It is inspiring to see them rally behind this project."

The Maggie House also will work in conjunction with Charleston Public Schools to provide transportation and educational services to children housed at the facility. Organizers plan to develop mentoring and sponsorship programs, as well, in an effort to provide youth with role models during their time at Maggie House.

HOUSE STRUCTURE
The primary focus of the Maggie House will be to provide long-term residents with a safe, stable environment that mirrors a family-like atmosphere. The four family-style cottages will each be licensed for up to 12 children, with the goal of averaging eight children and youth at one time. This structure supports the environment preferred by the courts, children’s advocates and the Arkansas Division of Children & Family Services (DCFS).

The facility will employ qualified house parents who will work two weeks on and two weeks off. Moody plans to have regular sets of house parents in three of the four units, with one being set up as a shift unit, potentially aimed at older residents. Maggie House will also employ case managers, counselors, and other care-related staff to help meet the overall needs of residents.

"The question we are asking is, 'What can we do to equip these kids with the tools they need to break the cycle?’” noted Moody. "In one of the DCFS worker's office is a sign that has stuck with me. It says, 'Having a place to go is home. Having someone to love is family. Having both is a blessing.' That is what we want Maggie House to be. A home, a family, and a blessing to the kids who reside there.”

LONG TERM NEEDS, GOALS
While construction of the project is scheduled to wrap in late summer 2015, the need for funding and on-going support will continue. To assist with overall operations, organizers have applied for a contract with the Department of Family and Children Services, a division of DHS.

"For the long-term health of the ministry, we need the contract," Holland said.

Financial support will also come from grants and private contributions.

"We have already raised about $100,000 for the project," said Moody. "This has come primarily through church groups. We are moving toward a capital campaign that will include the support of individuals, other organizations, and businesses throughout the community. This will include naming opportunities for the cottages and other options."

As part of the campaign, Moody will be doing a number of "Starfish Functions." He encourages groups or individuals to host brunches, luncheons, dinners, or small get-togethers over coffee where he can come give a presentation about Maggie House. There attendees ask questions and have an opportunity to contribute to the organization. The name is derived from the inspirational story of the young boy walking along the shoreline tossing starfish back into the ocean. When told he would never be able to help them all and that it wouldn't make a difference, the boy replied, "It made a difference to that one," as he threw another one back into the water.

"The Maggie House may not be able to house every child in the system, but it will serve to make a difference in the lives of those who do come here," said Moody.

FUNDRAISING
As part of its fundraising drive, Family Ministries participated in the one-day event at ArkansasGives.org. On April 2, supporters were able to designate funds to Maggie House through the Arkansas Gives website. Each donation received will help the nonprofit qualify for additional bonus dollars from the Arkansas Community Foundation.

The ArkansasGives website showed Maggie House as receiving the most money among large nonprofits in Arkansas. The Maggie House tally was $78,611, with Ronald McDonald House Charities of Arkansas next at $74,313 and Garland County Habitat for Humanity third with $63,915.

Maggie House also has its first official fundraiser planned for May 2. The “Springfest Maggie House Hustle 5K Run and Walk" will begin at 8 a.m. at the Charleston Community Center, located at 311 Freedom Road.

"This will be a great opportunity for others in the community to show their support for the Maggie House," said Holland. "We invite individuals from all the region to take part in this inaugural event."

Upon completion of the project and repayment of the loan, Moody and ambassadors for the Maggie House hope to keep the momentum going and work toward construction of additional long-term foster care facilities throughout Area II.

"The goal is to open more homes like the Maggie House, because the need is there," said Holland. "If we were to open 16 "Maggie Houses," in this region alone, that would just meet the current need. We need more places such as this one and hope that it will serve as a great model for projects to come."

A growing global middle class will provide opportunities for American exporters, but domestic companies will need support to compete with foreign firms who receive help from their own governments, the chairman and president of the Export-Import Bank said in a speech at the Clinton School of Public Service Tuesday.

Fred Hochberg described the Export-Import Bank as “the official export credit agency of the United States.” It provides American companies with export credit insurance, meaning it will provide reimbursements if a foreign partner does not pay. It also provides working capital to American businesses and guarantees loans to foreign companies who want to buy American-manufactured goods. The bank is a government entity funded by income derived by the services it provides.

Last year, he said, the bank supported 164,000 U.S. jobs and returned $675 million to the U.S. Treasury.

Hochberg said that while the United States is the world’s second largest exporter – down from number one in 2002 – it’s only 144th in terms of exports as a percentage of its economy. At 14% – an all-time high – the United States is tied with Haiti and Rwanda.

Hochberg said the global middle class will grow by 200 million people each of the next five years, providing a market for American manufacturers. Only a small increase in export sales would have a major effect on the American economy.

“Those goods and services are going to be bought and sold and delivered, and I think we all prefer that those jobs be jobs here in our country,” he said.

UP AGAINST ‘CHINA INC.’
But to get there, American firms will need support because they are competing not only against foreign companies but foreign governments – “China, Inc.,” being one, as Hochberg described it. There are 59 entities like the Export-Import Bank worldwide, some of which, such as in Russia and China, are very aggressive in offering financing unmatched by the commercial markets. Since 1934, the Export-Import Bank has provided $600 billion in loans, guarantees and insurance. China has done more than that in two years.

“When China comes to the table to sell their goods, financing is always part of the package, and it’s a very attractive financing package that becomes integral to making their sale,” he said.

Hochberg said Arkansas exports financed by the bank have doubled since 2007, to about $707 million, including agricultural goods such as lumber and renewable energy. One example of an Arkansas-based company helped by the bank is lumber manufacturer BCH Trading in Hot Springs, which with help from a working capital guarantee has become an exporter and grown its business. The bank also has helped wind turbine blade manufacturer LM Wind Power’s Little Rock location finance exports.

“This state is very much looking outward and looking at global markets. … My sense is it’s pretty well positioned,” he said.

Earlier in the day, Hochberg visited Alexander-based laser company Power Technology and the North Little Rock Caterpillar plant. He was introduced at the Clinton School by Larry Walther, director of the Arkansas Department of Finance and Administration and a former Export-Import Bank board member alongside Hochberg.

CRITICISM OF THE BANK
Hochberg said 90% of the bank’s customers are small businesses – an assertion challenged during and after his presentation by David Ray, state director of the small government group Americans for Prosperity Arkansas. Ray said most of the money goes to large corporations such as Boeing and GE.

Ray said in an interview after the presentation, “The average American doesn’t really benefit from the Ex-Im Bank. The large beneficiaries of Ex-Im are a handful of very large corporations, many of them politically connected.”

He said the bank “puts taxpayers in a precarious position” with loans provided “at sweetheart interest rates,” some of which end up in countries “that aren’t exactly friendly to American interests.”

“Most of these companies that receive tens of billions of dollars from Ex-Im are successful American companies that will continue to be successful without the generosity of the taxpayer providing them, in essence, corporate welfare,” he said.

The bank is to be reauthorized by Congress later this year. Some in Congress oppose the reauthorization.

Asked by Ray about the percentage of dollars going to large corporations, Hochberg said during his presentation that capital goods like locomotives and airplanes are sold in a global market where companies are financed by foreign governments.

“I don’t want to send a U.S. company into a competitive situation where they are outmatched, outflanked, and having to compete, as I mentioned, with a foreign government,” he said.

In an interview after the presentation, Hochberg said almost 40% of the bank’s funding – about $10 billion out of $27 billion financed – is going to small businesses. Moreover, large corporations have many small business vendors.

“We’re about American jobs, purely about American jobs,” he said. “We’re not about playing favorites. We’re not about picking winners and losers. … I want to make sure that American workers and American companies are equipped to compete. And if we don’t give them the tools to compete, we’re going to lose those jobs overseas.”