By a nearly two-to-one margin, Arkansas voters believe in the state’s so-called Religious Freedom Restoration Act (RFRA), which was passed by state lawmakers after a contentious and controversial national and state debate.

In the latest poll commissioned by Talk Business & Politics, Hendrix College and Impact Management Group, 1,183 likely Arkansas voters weighed in on this issue and public opinion of a host of state and national elected officials.

Voters were asked: If a business provides wedding services, such as catering or flowers, should it be allowed to refuse those services to same-sex couples for religious reasons, or be required to provide those services as it would to all other customers?
54% Allowed to refuse services
29% Required to provide services
18% Don’t know

Dr. Jay Barth, professor of political science at Hendrix College, who helped construct and analyze the poll offered this analysis:
“We were curious to know how much Arkansas voters differed on the issue of whether private businesses should be able to discriminate against same-sex couples in the providing of wedding services ‘such as catering or flowers.’ Following the dust-up over religious freedom restoration acts in Indiana and Arkansas in April, in which business groups became deeply involved on the side of promoting equality, national surveys indicated a shift in the direction of having civil rights protections trump religious liberty.

“A CNN/ORC International poll in mid-April, for instance, indicated that a healthy majority (57%) of Americans believe that businesses should be required to provide such services to same-sex couples while 41% believe businesses should be allowed to deny services for religious reasons. We employed the same wording to survey an Arkansas sample and, unsurprisingly, we found Arkansas voters decidedly more conservative on the topic. Specifically, 54% of Arkansas voters sided with businesses citing religiously-grounded objections to providing such services.

“The crosstabs, however, show several interesting patterns as Arkansans vary significantly by age, party, and race. Unsurprisingly, younger Arkansans are significantly more likely to side with the notion that all businesses should offer their services to same-sex couples with a plurality of those under 30 (46%-33%) saying so; nearly six in ten of Arkansans 65 and over believe that religious objections should trump open access to public accommodations.

“While about half of Democrats veer towards requiring companies to offer services, Republicans break towards religious objections by a resounding 83%-9% margin; independents split two-to-one in favor of allowing religious objections (54%-27%).

"Finally, while white voters steer decidedly towards allowing religious objections (57%-29%), African-American voters are interestingly cross-pressured on the issue. The plurality of African-Americans — quite religious but also deeply concerned about discriminatory actions — answer “don’t know” when asked the question; those who do respond split 35%-24% towards allowing religious objections.

“With the U.S. Supreme Court’s ruling on marriage equality imminent, the issue of religious freedom issues — dominant in Arkansas in the closing days of the most recent regular legislative session — will only continue to percolate in the months to come.”

Clint Reed, partner with Impact Management Group and who also helped construct and analyze the poll, said:
“These numbers are not surprising given Arkansas’ conservative electorate and the intensity of the gay-marriage debate in Arkansas.

“This data is similar to the 2014 exit survey that showed 69% of Arkansas voters do not support legally recognizing same-sex marriage. For context, in 2004, 75% of Arkansas voters (over 750,000 in raw numbers) defined marriage as being being between one man and one woman.

“While there is undoubtedly a push for ‘equality’ in Arkansas and across the nation, the Arkansas electorate [older, white, and rural] is reluctant – except for those under the age of 30 (46% support requiring services).”

There may no longer be a direct flight from the Northwest Arkansas Regional Airport to Washington D.C. but there is a direct link between the two cities as the latter could be viewed as a training ground for some Wal-Mart corporate jobs in Bentonville.

Wal-Mart’s corporate communications team and its corporate affairs divisions managed by executive vice president Dan Bartlett has amassed a long list of experience in Washington circles as well as state governments.

Bartlett, who joined Wal-Mart in June 2013, came to Bentonville via Washington D.C. where he served as CEO of the U.S. arm of Hill+Knowlton Strategies, a global business advisory firm serving corporations, non-profits and associations in 52 countries. Prior to that Bartlett worked as counselor to the President in George W. Bush’s administration and managed the White House press office of the Offices of Communication.

He replaced Leslie Dach, also a Washington D.C. veteran known as a Democratic strategist for the U.S. Senate. In fact, Dach never moved to Bentonville during the seven years he lead the retailer’s corporate affairs division.

Greg Hitt, Wal-Mart’s new vice president of corporate communications, also hails from Washington, D.C., having spent more than two decades covering political news for Dow Jones and the Wall Street Journal before entering public relations work in 2010. Hitt also joined Wal-Mart from Hill+Knowlton Strategies where we worked with Bartlett.

Like Dach, Hitt will maintain an office in Bentonville, but his permanent residency will remain near Washington where his wife also works. 

Aside from management, more an a dozen of Bartlett and Hitt’s direct reports also have government experience in Washington, federal and state agencies, according to their Linked-In resumes. Experience among corporate media spokesmen and spokeswomen and corporate affairs professionals include:
• Federal Emergency Management Agency (FEMA)
• The U.S. Chamber of Commerce, political affairs
• Communication’s office for the Louisiana Governor’s Office
• Deputy Campaign Manager and chief of staff for U.S. Sen. Elizabeth Dole
• National Republican Senatorial Committee communications
• National Press Secretary for U.S. Sen. John McCain
• U.S. Department of Treasury
• Policy Advisor to the Michigan House of Representatives
• Legislative Aid to the Ohio Senate
• Special Assistant to Republican National Committee
• Lobbyist in the Michigan statehouse
* Legislative Aid in Pennsylvania
* Chief of Staff for the San Jose Mayor

“The DC connection is interesting especially given that 20 years ago Wal-Mart had little to do with Washington. That is obviously changing,” said Alan Ellstrand, corporate governance expert and professor at the University of Arkansas.

Ellstrand said the leadership that Dach provided Wal-Mart during his 7-year tenure was a huge benefit to the retailer as it navigated a challenging environment. He said Dach was one of the first Washington insiders to break into the top level of management.

“Having an experienced, well-tested media team is valuable to Wal-Mart at all times. Government experience and the high velocity pace with politics is likely valued at Wal-Mart because they are constantly in the news,” Ellstrand said.

He said the connections made while serving in government-related posts may also prove helpful for a company like Wal-Mart that has so many initiatives underway. For instance he said, recruiting a spokesperson from FEMA makes sense when you consider all the stores and national disaster aid the retailer gives annually. He said relationships matter in every business and given Wal-Mart’s expansion in many states, having contacts down to the city level could add up when trying to get a new store approved.

On the flip side of the equation, Ellstrand said experience working at Wal-Mart is valuable if the professionals want to move on.

“I would say a few years in corporate communications or government relations at Wal-Mart is much like earning a graduate degree. It’s a strong addition to the resume,” he said.

The Walmart Foundation also recruited Sylvia Burwell out of Washington in 2011 who lead the retailer’s nonprofit arm for less than two years before President Barack Obama came calling. Burwell served as Director of the White House Office of Management and Budget from 2013 to June 2014, when she was confirmed as Secretary of Health and Human Services.

A growing demand for logistics employees in the area pushed by growth at Fort Smith-based ArcBest and Van Buren-based USA Truck has prompted one local college to create a new degree program and another college to ramp up training in the field.

Arkansas Tech University-Ozark Campus will offer an associate of applied science degree in logistics management for the 2015/2016 school year and the University of Arkansas at Fort Smith will offer several courses in supply management related fields. 

The long-term job demand for logisticians in the state will increase to 30.2% by 2020, which exceeds the average national job growth in logistics of 22%, according to labor market information from the Arkansas Department of Workforce Services.

Logistics managers, or logisticians, analyze and coordinate an organization’s supply chain, the system that moves a product from supplier to consumer. The process involves not just moving goods from one point to another, but includes data analysis, efficiency, procurement, global supply chains, communication, transportation, computer skills and warehousing. The state median wage for a logistician was $34,750 in May 2012.

With divisions of 12 Fortune 500 manufacturers in the River Valley area and prime transportation avenues, including the Arkansas River, Interstates 40 and 49, and railways, the area has a high demand for skilled employees in the logistics field.

SERVING A GROWTH INDUSTRY
Bruce Sykes, ATU-Ozark Chancellor, said the new degree program was created after studying the state and national data and discussing the growth potential with local manufacturing and transportation employers. A community survey was also conducted and interest in the program was favorable.

“Our research into logistics started about two years ago,” he said. “We had specific conversations with local companies and it became apparent this was a growth industry. Local employers confirmed that.”

The associate of applied science degree was approved by the Board of Trustees in May 2015 and will go before the Department of Higher Education in July. Once the process is completed, the university will implement the curriculum they have created and plan to have new courses on the agenda by January 2016. Courses in supply chain management and similar fields that already exist will be available for students in the Fall semester and can be applied to the new degree.

Kerrie Taber, assistant professor and interim department head for the UAFS College of Applied Science and Technology, said many of their course offerings teach elements needed in logistics or logistics support.

“We are constantly looking at our offerings to make sure the students get a great education and can be better employees for area employers,” she said. “Students learn project management, leadership, planning and scheduling, shipping efficiency, methods and demands as well as many other skills.”

RECRUITING LOGISTICS GRADS
Graduates from an existing supply chain management four year degree program at the University of Arkansas are highly recruited, said Burton Weis, vice president of human resources for USA Truck.

“UA students in the logistics program are normally already hired before they graduate. It’s a competitive market,” he said.

The need for logistics experience and backgrounds is not likely to end soon. Operating income in USA Truck’s growing Strategic Capacity Solutions – a logistics and brokerage business – was $2.976 million in the quarter. That was down from $5.077 million in a 2014 first quarter that saw unusual winter weather change the shipping dynamic. However, the logistics and brokerage business is a sizable portion of USA Truck’s overall revenue. The SCS revenue was 29.1% of total company revenue in the first quarter, down slightly from 29.7% in all of 2014, but well ahead of the 24.6% in 2013.

Weis said recruiting employees to the area can be difficult. It’s a small population area and many are unfamiliar with all that is offered.

“It is a wonderful place to raise families and a great region. We just need more pull and more students to pull from.”

Weis said USA Truck fills many entry level positions in logistics each year. He actively recruits and interacts with logistics and supply chain management students in the state several times a year as well as out of state locations.

“With this many transportation and logistics opportunities here, we need to hone in on building more opportunities,” he said. “Having another educational option in our area for logistics is a huge opportunity.”

By having the degree program at ATU-Ozark, the potential to retain students to this area is more likely since the college attracts enrollment mostly from the local area and graduates will have existing ties to the region. It is also an attraction for those adult students returning to college for re-training or a second degree. Taber said the logistics-related courses at UAFS also draw many adult students.

CURRICULUM DEVELOPMENT
Weis worked with Sykes and Michael Murders, chief academic officer at ATU-Ozark, when curriculum was being created for the AAS logistics degree. He, along with leaders from Cloyes Gears, Pernod Ricard USA and other local firms will serve on an advisory board for the LGM AAS degree program. Sykes said the interaction with local organizations was crucial to getting the program approved.

“They validated the numbers, the wage potential, the skill sets and ultimately, what we asked them to do is validate the curriculum.”

He gives credit to Murders and other faculty for spearheading the talks with industry and fine-tuning the curriculum offerings.

“When you talk about logistics, it’s a broad field but there is also a lot of specialization there,” said Murders. “We are building a good foundation to create knowledgable entry level employees that meet the industry needs.”

Taber said supply chain management and logistics skills learned at UAFS can compute to a number of other business fields, making the training an even bigger value for graduates and employers.

“Students can apply the skills they learn in our courses to any manufacturing plant around the Fort Smith area, whether it is fitting into the logistics field or another business position,” she said.

Sykes agreed about ATU-Ozark’s offering, saying, “We are certain that our curriculum will give our graduates skill sets for the logistics industry. But, we also feel it is a program that will serve even a broader range than just logistics.”

Expectations are to enroll 80 students in the logistics management degree program the first three years, graduating more than 20 after year three. Enrollment for ATU-Ozark in Fall 2014 was 2178 students. UAFS enrolls 300 students in their BS Organizational Leadership program and 130 in their BSA program.

A year-over-year gain of more than 46,000 jobs kept Arkansas’ jobless rate at 5.7% during May. The month marked the 11th consecutive month the rate has been at or below 6%, and set a new record for nonfarm employment.

The state’s jobless rate of 5.7% in May was unchanged compared to April and better than the 6.2% in May 2014. According to the figures released Friday (June 19) by the U.S. Bureau of Labor Statistics, the state’s economy added an estimated 46,156 jobs between May 2014 and May 2015.

The size of the workforce – 1.336 million – was up 3.23% compared to May 2014, and was up 0.12% over the 1.334 million in April. The peak for Arkansas’ labor force was 1.376 million in August 2008.

The number of employed in Arkansas during May was 1.259 million, up 972 jobs over April and up 3.8% compared to May 2014. The number of unemployed was an estimated 76,835 during May, above the 76,162 in April, but below the 79,787 in May 2014.

The closely watched nonfarm payroll number was 1,209,900 million in May, better than the 1,208,600 million in April and up over the 1,187,000 million in May 2014. If the May number stands, will will mark a new high. Prior to May, nonfarm jobs reached a high in Arkansas of 1,209,800 in April 2008.

The nonfarm number topped the 1.2 million mark in December, the first time since September 2008. The nonfarm category does not include farm workers, private household employees, non-profit employees and “general government” employees. Investopedia estimates that the nonfarm category represents about 80% of the total workforce that contributes to national GDP.

Arkansas’ average jobless rate for 2014 was 6.1%, down 1.3% percentage points from the 7.4% average in 2013. It is the first time the annual average dropped below 7% since 2008.

ARKANSAS SECTOR NUMBERS
In the Trade, Transportation and Utilities sector — Arkansas’ largest job sector — employment during May was an estimated 248,200, above the 248,000 in April and ahead of the 244,300 during May 2014. Employment in the sector hit a high of 251,800 in March 2007.

Manufacturing jobs in Arkansas during May totaled 154,400, below the 154,900 in April and above the 153,800 in May 2014. Employment in the manufacturing sector fell in 2014 to levels not seen since early 1968. Peak employment in the sector was 247,300 in February 1995.

Government job employment during May was 213,400, down from 213,500 in April and down from the 213,700 during May 2014.

The state’s Education and Health Services sector during May had 177,100 jobs, up from 176,100 in April and up from 172,100 during May 2014. Employment in the sector is up 21.5% compared to May 2005. May also marked a new record for employment in the sector.

The construction sector employed an estimated 48,200 in May, down from 48,400 in April and above the 45,400 in May 2014. The sector is off the employment high of 57,600 reached in March 2007.

Arkansas’ tourism sector (leisure & hospitality) employed 113,900 during May, up from 113,300 during April, and above the 107,500 during May 2014. The sector hit a record high in February with employment of 114,800.

NATIONAL, REGIONAL DATA
The BLS report also noted that 45 states had unemployment rate decreases from a year earlier, and five states had increases. The national jobless rate during May was 5.5%, down from 6.3% in May 2014.

West Virginia had the highest unemployment rate among the states in May at 7.2%. Nebraska had the lowest jobless rate at 2.6%.

The May jobless rate in Oklahoma was 4.3%, up from 4.1% in April and down from 4.6% in May 2014.

Missouri’s jobless rate during May was 5.8%, up compared to 5.7% in April and down from 6.1% in May 2014.

New survey data shows Republican Mike Huckabee would beat Democrat Hillary Clinton in Arkansas if both were their party’s respective nominees, and former Democratic Arkansas Gov. Mike Beebe would lead incumbent GOP Sen. John Boozman under a hypothetical head-to-head match-up.

In the latest poll commissioned by Talk Business & Politics, Hendrix College and Impact Management Group, more than 1,000 Arkansas voters expressed their opinions on a variety of subjects, including the Presidential and Senate races.

The survey was conducted from June 8-11, 2015 among 1,183 likely Arkansas voters. Respondents were surveyed by automated phone calls (80%) and online polling (20%). The poll has a margin of error of 1.84%.

Voters were asked:
What are your feelings toward Hillary Clinton?
Very Positive 22%
Somewhat Positive 16% (38% Positive)
Neutral 8%
Somewhat Negative 9%
Very Negative 44% (53% Negative)
Don’t Know 1%

What are your feelings toward Mike Huckabee?
Very Positive 26%
Somewhat Positive 21% (47% Positive)
Neutral 16%
Somewhat Negative 12%
Very Negative 23% (35% Negative)
Don’t Know 3%

If the 2016 general election were held today and Hillary Clinton was the Democratic presidential nominee, would you be more likely to vote for Hillary Clinton, the Republican nominee, or are you unsure?
Hillary Clinton 33%
The Republican nominee 50%
Don’t Know 17%

If the 2016 general election were held today and Mike Huckabee was the Republican presidential nominee and Hillary Clinton was the Democratic presidential nominee, would you be more likely to vote for Huckabee, Clinton, or are you unsure?
Mike Huckabee 51%
Hillary Clinton 37%
Don’t Know 12%

“While the nation is far from decided over who the nominees for President will be in 2016, these two candidates with strong ties to Arkansas could find themselves in a head-to-head match-up in Arkansas. If that were to happen, today you have to say advantage Huckabee,” said TB&P Editor-in-chief Roby Brock.

SENATE RACE
The poll also tested a Senate head-to-head contest that would pit the potentially strongest Democrat in Arkansas – former Gov. Mike Beebe – against incumbent GOP U.S. Sen. John Boozman.

Boozman, completing his first term in the U.S. Senate after a decade in the U.S. House, is up for re-election in 2016. While no Democrats have mentioned interest in the race and former Gov. Beebe has repeatedly said he won’t run for office again, Boozman remains a lesser-known political brand in the state.

In polling conducted for this survey, Boozman has a 42-21% positive job approval rating, yet 37% have no opinion on the state’s senior senator.

Voters were asked: If the 2016 general election were held today and Senator John Boozman was the Republican nominee for the U.S. Senate and former Governor Mike Beebe was the Democratic nominee, would you be more likely to vote for Boozman, Beebe, or are you unsure?
Senator John Boozman 37%
Mike Beebe 45%
Don’t Know 18%

ANALYSIS
Dr. Jay Barth, professor of political science at Hendrix College, who helped construct and analyze the poll, offered this analysis:
“Two individuals with Arkansas connections — former Arkansas Governor Mike Huckabee and former Arkansas First Lady Hillary Clinton — have announced their candidacies for President in 2016. Republican Huckabee is viewed favorably by Arkansans with 47% viewing him either “very” or “somewhat” positively; 35% are negative towards the former Governor. This does mark some downward shift since our last survey of Huckabee’s favorability just under a year ago; last July, voters split 57%-26% in his favor.

“The expected patterns in the views of Huckabee’s image are shown in the survey’s crosstabs. While he is evaluated poorly by Democrats and younger voters, he performs ably with other groups of Arkansas voters. It is notable that, for a Republican, his image is solid with the state’s African-American voters who split 36%-31% on the former governor.

“Clinton also has seen Arkansas voters become slightly more negative since last July, but she started in a much less positive place than did Huckabee. In July, voters split on Clinton 40%-49.5%; in this survey, the electorate breaks 38% “very” or “somewhat” positive as opposed to 53% “very” or “somewhat” negative towards Clinton.

“Majorities of Democrats (81%) and African-Americans (58%) and a plurality of those under 30 years of age (49%) view Clinton favorably. She is viewed negatively by all other groups of voters in the state.

“As expected, based on these favorability numbers, Huckabee bests Clinton in a prospective 2016 head-to-head presidential matchup in the state. While partisan voters polarize as expected, independents go for Huckabee 50%-35%. Clinton’s only base of geographical strength in the state is the Second Congressional District, where she shows a 47%-43% advantage.

“While Clinton does slightly better with female than male voters in the state, the gender gap is modest and Huckabee leads with both groups. Clinton does lead resoundingly with the youngest group of voters (those under 30 favor Clinton over Huckabee 54%-32%) and with African-Americans (who prefer Clinton 69%-20%).

“Interestingly, Clinton does run slightly better against Huckabee than against a “generic” Republican opponent in the state. No matter, these early polling numbers suggest that Arkansas will, once again, not be a competitive state in the 2016 presidential contest.

“A U.S. Senate race will also be on the ballot in Arkansas in 2016. No Democrat has announced plans to challenge incumbent U.S. Senator John Boozman. We did test the state’s most popular Democratic political figure former Governor Mike Beebe — against Boozman; Beebe has consistently said he will not seek elective office in the future.

"Our survey suggests, however, that Beebe would be a formidable opponent if he were to challenge Boozman. Beebe leads a hypothetical contest 45% to 37%, with the remainder of the electorate undecided. Beebe’s strength among traditional Democratic groups is buttressed by a strong showing among groups with whom Arkansas Democrats have had particular challenges in recent years: independents (which Beebe leads 41%-35%); middle-aged voters (Beebe has a plurality lead among those between 30 and 64); and white voters (Beebe leads 43%-41%).”

Clint Reed, partner with Impact Management Group who helped construct and analyze the poll, also offered his thoughts:
“Hillary Clinton’s ties to Arkansas do nothing to help her political fortunes. In a hypothetical match-up with Mike Huckabee, he clears 50% of the vote, and she draws only 37% of the vote. She again loses when pitted against the generic “Republican nominee” – getting only 33% of the vote. In short, Hillary Clinton does not put Arkansas in play as a ‘target state’ in the 2016 election cycle.

“Forty-four percent (44%) of Arkansans view her very negatively. While 9% view her somewhat negatively. The negative intensity (53% total negative) toward her is just too much to overcome. Nearly 60% of independent voters view her negatively.

“On the other hand, Mike Huckabee is viewed favorably by 47% of Arkansans, while roughly only 1 out of 3 view him negatively.

“Arkansas Democrats need a miracle – it’s not Hillary Clinton, but it could be Mike Beebe.

“In a hypothetical matchup versus Senator John Boozman for the Senate, Beebe leads by 8 points. This is not improbable. In 2010, Beebe won all 75 counties in his re-election bid and has historically competed well among independent voters. In the hypothetical match-up, Beebe bests Boozman among independent voters by a 41-35% margin.

“While it is highly unlikely that Beebe will challenge Boozman, these numbers highlight the type of candidate the Democratic Party needs to compete in southern states like Arkansas. Mike Beebe competes well; Hillary Clinton does not.”

DEMOGRAPHICS/METHODOLOGY

The survey was conducted from June 8-11, 2015 among 1,183 likely Arkansas voters. Respondents were surveyed by automated phone calls (80%) and online polling (20%).
The poll has a margin of error of 1.84%. It was weighted for gender, age, and ethnicity according to 2014 exit data. The survey was weighted by Congressional District evenly.

Gender
Female – 52%
Male – 48%

Age
Under 30 – 12%
30 to 44 – 24%
45 to 64 – 39%
65+ – 24%
Refused 1%

Political Party
Democrat – 32%
Republican – 35%
Independent – 28%
Don’t Know – 5%

Ethnicity
African-American – 12%
Caucasian – 83%
Other – 3%
Don’t Know – 2%

Congressional District
CD1 – 25%
CD2 – 25%
CD3 – 25%
CD4 – 25%

Diverting offenders with mental illness into treatment instead of incarcerating them could save Arkansas $140 million a year, according to a rough estimate in a new report issued Thursday by the Arkansas Public Policy Panel.

The report, which was presented Thursday to the Arkansas Behavioral Health Treatment Access Legislative Task Force, said the state would spend about $10 million for treatment as opposed to $150 million for incarceration, with part of that money paid by the federal government.

The report was prepared by James Metzger, economist and president of Little Rock-based HISTECON Associates.

The report acknowledges its own limitations. Kyle Leyenberger, Arkansas Public Policy Panel communications coordinator, said its purpose is to inspire further study.

“Really what we’re calling for with this report is a more detailed report by the state,” he said. “We wanted to invest a little bit and take a look at other states and see if this is something that might work in Arkansas. And what we found was, it looks like it is something, but there is still a lot more research that needs to go into this, like a detailed cost analysis, and that’s what we’re calling for in this report.”

The study came to its $150 million figure by calculating the cost of trying and incarcerating a prisoner at $30,000 per year. It multiplied that figure by an estimate of 5,000 inmates with a mental illness in state, local and juvenile facilities, based on various studies. The Department of Correction’s budget was more than $324 million to house an average of 16,900 prisoners in 2014, the report said.

The study came to the $10 million figure by multiplying the 5,000 inmates by $2,000, which it said would be the initial cost of treatment per patient. However, it says the 5,000 figure could be conservative, as a Department of Justice study found that more than half of all inmates have a mental health problem, with treatment provided to only a third of prison inmates and one in six jail inmates.

It said diverting mentally ill persons into treatment would have long-term positive results, including helping the mentally ill and allowing law enforcement to focus on higher-risk prisoners.

The report analyzed efforts in San Antonio, Oklahoma, Georgia, New Mexico and Oregon.

Bentonville-based Wal-Mart Stores says a report generated by union groups regarding the retailer’s use of tax havens to shield U.S. taxes is “flawed.”

Wal-Mart spokesman Randy Hargrove called the report incomplete and "designed to mislead" by its union authors. He said the company has "processes in place to comply with applicable SEC and IRS rules, as well as the tax laws of each country where we operate."

The “Walmart Web” report was produced by the United Food & Commercial Workers International Union and recently published by Americans for Tax Fairness. It claims Wal-Mart owns somewhere around $76 billion in assets abroad. Those assets are shielded by tax havens in Luxembourg and the Netherlands, two countries that are often used by U.S. companies seeking to avoid federal income taxes.

Key findings in the report include:
• Wal-Mart Stores has 22 shell companies in Luxembourg – 20 established since 2009 and five in 2015 alone – but does not have one store there;

• Wal-Mart has transferred ownership of more than $45 billion in assets to Luxembourg subsidiaries since 2011, and reported paying less than 1% in tax to Luxembourg on $1.3 billion in profits from 2010 through 2013;

• Walmart’s use of inter-company debt permits it to avoid taxes overseas. It strips earnings out of higher-tax countries by taking out inter-company loans and pays interest to itself in tax havens where the interest income is taxed lightly or not at all; and

• All told it has 78 subsidiaries and branches in 15 offshore tax havens, none of them publicly reported before.

WAL-MART RESPONSE
Wal-Mart spoke up against the claims it says include erroneous data designed to mislead the public. First, the $76 billion of assets noted in the report is wrong, according to Hargrove. He said when calculating that number there were erroneous assumptions made.

“This calculation incorrectly includes inter-company assets, primarily investment in our wholly-owned subsidiaries and inter-company loans which are both eliminated on consolidation,” Hargrove told The City Wire in a phone interview. 

Wal-Mart said it did disclose its total assets within its International segment in the 10K filing with the Securities and Exchange Commission on April 1. The total international assets noted in the SEC report were $80.5 billion which included all of the retail stores sites, fixtures, inventory and the distribution centers serving those stores.

The retailer also said it discloses “significant subsidiaries” as defined by the Securities and Exchange Commission, something the report suggests otherwise.

As for stashing cash abroad Wal-Mart reports total cash of $9 billion, with $6.3 billion held across all retail operations outside the U.S., according to recent financial filings with federal regulators.

U.S. tax law allows companies to legally keep money in other countries, and they don’t have to pay U.S. taxes on that money unless it comes back. Wal-Mart, Apple and Amazon all use the so called “tax havens,” as do Wall Street banks and technology giants Google and Microsoft. In 2013, Citizens for Tax Justice took aim at Nike, Microsoft and Apple for the same issues recently raised against Wal-Mart.

Wal-Mart claims it pays its fair share of income tax annually. The retailer also said it paid $6.2 billion in federal corporate income tax last year, which was nearly 2% of all corporate income tax collected by the U.S. Treasury. As the nation’s largest employer Wal-Mart pays more than $10 billion annually in payroll taxes. Wal-Mart also last year paid $3.3 billion in property tax, state income tax, franchise tax and other state taxes. 

Hargrove also told The City Wire that Wal-Mart maintains “transparency with the IRS via real-time disclosure of our business transactions and corporate structure.”

The retail giant’s corporate tax rate over the past three years is 32.03%, this compares to a three-year average of 24.928% for companies in the Fortune 500.

REPORT FEEDBACK
A primary criticism of Wal-Mart in the Americans for Tax Fairness report is the company's alleged lack of transparency to shareholders because of its consolidated reporting. International tax expert Stephen Shay, who formerly worked for the Obama Treasury Department, told the Washington Post that the report is “continuing evidence” that many companies are “engaging in cross-border tax avoidance.”

The expert retail consensus captured by Retail Wire is that Wal-Mart will not be hurt by the report. Most say it’s a non-issue to customers and until Congress passes legislation changing the tax law, Wal-Mart won’t be the only retailer looking for ways to pay less taxes.

“It seems unlikely that anyone will take the Americans for Tax Fairness very seriously when this report is really just another union supported attack on Walmart,” said Jan Kniffen, CEO of J Rogers Kniffen Worldwide.

He said the bigger question should be “is Walmart doing something wrong regarding taxes.” As a former senior vice president of finance and treasurer of an S&P 500 retailer, Kniffen said he doesn’t believe Wal-Mart is breaking any tax or reporting laws.

School board elections have for decades been held on the third Tuesday of September but for almost as long some Arkansans have complained that the annual elections need to move to November to generate more interest. That could be changing because of a new state law but election officials say that is easier said then done.

The annual election season for board members is underway for the annual election on Sept. 15. Prospective board members can file as candidates between June 30 and July 7, by getting 20 signatures of qualified voters on a petition. Petitions are now available at the county clerk’s office or at the school district administration office. Prospective candidates could begin circulating their petitions on June 7.

SCHOOL ELECTION OPTIONS
The General Assembly during its regular session this year adopted a Senate bill that has become Act 1281 stating that school elections can be held in September or on the “first Tuesday after the first Monday in November of each year.”

“It’s an option,” said Sen. Jane English, R-North Little Rock, the bill’s author.

School boards may decide if they want to hold their election in September or November, starting in 2016. But not so fast, said Jennifer Price, the Washington County Election Commission coordinator, who along with other county election officials from western Arkansas met to discuss issues of mutual concern, including Act 1281.

The reasoning behind the act, English said, has been the lack of interest in school elections when so much state money is spent on education.

“It has bothered me immensely,” English said in a recent telephone interview.

Sen. Uvalde Lindsey, D-Fayetteville, said, “I understand the argument. Low turnout, older folks don’t vote unless there is a question to raise the millage. I have always believed school board elections should be held in September because the boundaries are distinctly different.”

POLITICAL BOUNDARY PROBLEMS
School districts, by state law, are separate political subdivisions which don’t follow the same boundary lines as cities and counties in Arkansas. In Washington County, for example, the southern boundary of the Springdale School District is within the Fayetteville city limits. A portion of eastern Farmington is within the boundaries of the Fayetteville School District. Similar situations exist across the state.

There are instances where school district boundaries cross county lines, especially in rural areas of the state, Price said.

Those two issues and others set up logistical problems if school elections were moved to November to coincide with statewide general elections. Two immediate issues are:
• The Arkansas Constitution and state laws prohibit any other issues other than school election issues to be on the school ballots.
• State law requires each polling site or a school district’s annual school election is to be located within the school district.

State law requires voters must approve the school millage rate annually. The millage question is on the school ballot every year. The only time the law allows an election other than in September is to hold a special election to vote on a millage increase. The law allows only one millage question in a 12-month period so a special millage election in May would cancel the vote in September.

“There are other parts of the law that are called into question,” Price said. One of those questions is that the new law doesn’t specify what entity can change the election, although presumably that falls within the purview of the individual school board.

Another is that school elections are to be held every year while statewide general elections are held every two years.

“There needs to be consistency,” Price said.

ENGAGING VOTERS
School officials agree September elections should continue because the candidates for school board seats and the voters who cast ballots are generally informed about school issues. School elections could get lost in the shuffle if moved to November. Such a move also could give rise to more partisan politics on school boards.

“November elections do bring out more people,” said Travis Riggs, president of the Bentonville School Board who is in his 12th year of board service.

But, he added, in September, some voters “are informed and make an effort to be informed.” There would be more uninformed decisions made in November, Riggs said.

The business community in Fort Smith typically doesn’t get involved in school elections, rather taking its message to all school board members, said Sam Sicard, president of the First National Bank of For Smith.

“We need students in high school or college to have the ability to work, to know how to identify problems and find solutions collaboratively,” Sicard said. “Skills are sometimes lacking because we don’t have a work like environment in our schools. It’s important to try to replicate a working environment so students are working on problems in a collaborative way.”

That’s a message for individuals running for school board seats as well as those already serving on school boards, Sicard said.

“That’s our goal,” he added.

Fort Smith School Superintendent Benny Gooden said September is “the perfect time” for school elections.

“There’s a level of interest, of engagement from voters who care about schools. Schools have just started,” Gooden said. “The chances of breaking through and getting your name out there in November is pretty remote.”

School board elections are traditionally nonpartisan, Gooden said.

“We shouldn’t mess with what already works.”

Williams Companies, the Tulsa, Okla.-based natural gas pipeline and terminal operator with operations in Arkansas, turned down an unsolicited buyout offer valued at 64 cents per share or $48 billion, the company announced on Sunday.

Williams did not name the bidder who made a play for the interstate pipeline operator, but said the proposal was contingent on the “termination of Williams’ pending acquisition of Williams Partners.”

“With the assistance of its outside financial and legal advisors, the Williams Board carefully considered the unsolicited proposal and determined that it significantly undervalues Williams and would not deliver value commensurate with what Williams expects to achieve on a standalone basis and through other growth initiatives, including the pending acquisition of Williams Partners,” the Tulsa pipeline operator said in a statement.

Williams owns and operates interstate gas pipeline and its gathering and processing operations that span the deepwater Gulf of Mexico to the Canadian oil sands. Through its Access Midstream business unit, which was formerly owned by Chesapeake Energy, the Tulsa-based pipeline operator owns midstream assets across Arkansas’ Arkoma basin.

In May, Williams announced a deal to acquire all of the public outstanding common units of Williams Partners that it didn’t already own for $13.8 billion. That deal would consolidate Williams and its master limited partnership (MLP), Williams Partners, under one roof with an enterprise value of nearly $84 billion.

Immediately after the unsolicited bid on Sunday evening, Williams said it has retained Barclays and Lazard “to assist in its review of strategic alternatives, which could include, among other things, a merger, a sale of Williams or continuing to pursue the company’s existing operating and growth plan.”

“Our board and management team remain committed to acting in the best interests of shareholders, and in light of the unsolicited proposal, our Board believes it is in the best interest of shareholders to conduct a thorough evaluation of strategic alternatives,” said Williams President and CEO Alan Armstrong.

“We are confident in our strategic plan and the significant value that will be created through the acquisition of (Williams Partners) and our large portfolio of growth projects. At the same time, we are open minded and committed to ensuring that Williams is maximizing value for shareholders,” Armstrong added.

The $64 per share offer represents a 33% premium over Williams’ closing price of $48.34 on Friday.

More than a decade ago, Williams sold off its 54.6% stake in another MLP called Williams Energy Partners L.P. That company later changed its name to Magellan Midstream Partners, which is planning to build a pipeline and distribution system that will bring some 75,000 barrels of refined petroleum products from Fort Smith into the Little Rock market.

Like rival Kinder Morgan, Williams is now seeking to bring all of its energy assets under one corporate umbrella and stock symbol that will increase the company’s cash flow, extend cash benefits and enable a 10% to 15% dividend growth through 2020.

Last fall, Kinder Morgan completed a deal to acquire all of the outstanding stock of its former master limited partnerships — Kinder Morgan Energy Partners, L.P. (KMP), Kinder Morgan Management, LLC (KMR) and El Paso Pipeline Partners, L.P. (EPB). Today, Kinder Morgan-owned subsidiaries will have a stake in or operate nearly 80,000 miles of pipelines and 180 terminals across the U.S.

Sixteen teenagers assembled in a small conference overlooking the Fayetteville Square on Monday (June 22) to begin a week long study of entrepreneurship and starting their own business.

The teenagers from schools in Fayetteville (including Haas Hall Academy), Greenland, Farmington and elsewhere in the Northwest Arkansas community are participating in the fourth annual Teen Entrepreneur Boot Camp, co-sponsored by the Fayetteville Chamber of Commerce and Start Up Junkie Consulting. 

The week-long camp is being held in the Start Up offices in the Pryor Center building in downtown Fayetteville, and is under the direction of Haley Cleous, an associate consultant at Start Up Junkie. Students in the camp will get hands-on experience in business development and a look at the high tech side of entrepreneurship when they tour the Wal-Mart innovation laboratory, known as the 415C Lab in Bentonville.

Instructional sessions will focus on marketing, management an operations, and financing a venture. The campers will hear presentations from local entrepreneurs who have started successful businesses. 

Josh Moody, CEO of Overwatch, knows just how hard it is to start a company from the ground up. He founded Overwatch at 17 when he was a senior at Little Rock Catholic High School. Moody continues to work full-time on his venture, which was one of the ARK Challenge winners in 2013. Overwatch is still trying to bring its video gaming hardware to market later this year.

Picosolar CEO Douglas Hutchings is also on tap to speak to the budding entrepreneurs. Hutchings’ solar startup was recently named an Edison Award finalist for its hydrogen super emitter solar cell.

Lauren and Lance Stokes of Lauren James Clothing in Fayetteville, are also slated to talk to the teen entrepreneurs this week. The Stokes’ designer clothing line began as an online store in 2013 has evolved from a wholesale business to its first corporate store located on Dickson Street in Fayetteville. Lauren Stokes began sketching dresses to pass the time when she placed on bed rest prior to the birth of her son. A nurse by trade, Stokes said she her passion for fashion and design became a reality after the birth of her son.

Working in teams, the students will develop a sixty-second elevator pitch in a competition that will be judged by entrepreneurs, advocates and local professionals. The winning team will receive $500 in seed money to start their own business and a full year’s worth of legal advise from Clark Law Firm.

Gov. Asa Hutchinson has directed the Department of Education to withdraw Arkansas from the Partnership for Assessment of Readiness for College and Careers (PARCC) consortium, despite a vote June 11 by the State Board of Education to keep Arkansas in the consortium.

Hutchinson is relying on a memorandum of understanding dated Sept. 20, 2010, between Gov. Mike Beebe, former Education Commissioner Dr. Tom Kimbrell, and State Board Chairman Naccaman Williams, which states, “In the event that the governor or chief state school officer is replaced in a Consortium state, the successor in that office shall affirm in writing to the Governing Board Chair the State’s continued commitment to participation in the Consortium and to the binding commitments made by that official’s predecessor within five (5) months of taking office.”

In a letter to Johnny Key, education commissioner, Hutchinson wrote that neither he nor the education commissioner had taken action to reaffirm the state’s continued participation in the consortium since Hutchinson took office Jan. 13. Instead, Hutchinson has expressed his opposition to Arkansas remaining in the consortium, he wrote.

The PARCC test is an exam given at the end of the year that is meant to assess students against the Common Core State Standards and compare them to other states. This was the first year that Arkansas students had taken the test. At one time, 24 states were in the consortium, but that number has dwindled to nine, including Arkansas, plus the District of Columbia.

During this year’s legislative session, a bill by Rep. Mark Lowery, R-Maumelle, to withdraw Arkansas from PARCC passed the House but died in the Senate Education Committee until it was amended to limit Arkansas’ contracts to no more than one year at a time. On June 8, Hutchinson recommended Arkansas leave PARCC on the recommendation of the Governor’s Council on Common Core Review, a task force he appointed.

On June 11, the State Board of Education voted not to leave PARCC, setting up a potential battle with legislators.

Hutchinson wrote Key that the ACT and ACT Aspire tests would be the best assessment tools.

“I recognize the role of the State Board of Education in assessment selection and that certain steps are required to make a change. Please coordinate with the State Board of Education to select a new assessment provider,” he wrote.

J.R. Davis, spokesman for Gov. Hutchinson, said the governor had been aware of the memo’s existence, but was not aware of the specifics until they were brought to his attention by Key.

In a statement from his office, Key said, “I support Governor Hutchinson’s decision and will work with the State Board of Education to fulfill the governor’s goal of a high-quality assessment and long-term stability for students, parents and educators. We will notify PARCC of this decision, and the ADE team will immediately begin developing options for a new assessment to present to the State Board.”

Dr. Jay Barth, a member of the State Board of Education and a Talk Business & Politics contributor, said he had been unaware that the governor was considering this route until he had been informed a few minutes earlier by another reporter.

“I appreciate that he recognized the State Board’s authority over the ultimate selection of the test,” he said. “This basis of pulling out of PARCC is something that I’m just really trying to get my head around in terms of that MOU that it’s being based on.”

Barth said he couldn’t predict how the State Board would respond. He said the State Board had voted to extend Arkansas’ participation in PARCC “knowing that the landscape for assessments is in total flux right now and that we really don’t know at the end of the day which assessments will be viable alternatives.”

The number of consumers in Arkansas looking to make a major household purchase over the past six months rose 5 points in March as wages saw a slight increase and cheap fuel prices boosted discretionary income, according to the final installment of the 2015 Arvest Consumer Sentiment Survey released Tuesday.

At the same time, the survey also showed that Arkansans are cautiously restructuring debt and paying bills, but on the flip side there was a big uptick in the number of consumers reporting more student loan debt. Also, the state’s household savings rates fell slightly, and only 2% of Arkansans are planning to enter the housing market and purchase a new mortgage in the next six months.

“Arkansans know that this is a good time to spend,” said Kathy Deck, director of the Center for Business and Economic Research (CBER) in the Sam M. Walton College of Business at the University of Arkansas and lead economist for the survey. “Low gas prices, low interest rates and slightly higher incomes pushed the buying conditions index all the way to 131.0. Those same conditions mean that Arkansans can also pay down some existing debt or increase their personal savings rates without sacrificing too much in the short term.”

The Arvest survey is the third and final installment for Arvest’s spring survey, conducted in March, that focuses on consumers’ attitudes concerning spending, saving and debt. An earlier second survey release on June 2 show similarly that many Arkansans are looking forward to purchasing a “big ticket” household item during the second half of 2015 as many have seen their personal financial situation improve this year.

The first phase of the Arvest survey showed that consumer confidence in Arkansas had jumped more than ten points since October, mainly because of the state’s improving employment and income situation, and lower gas prices.

Overall, the number of Arkansas respondents who said they made a major household purchase in the past six months went up 5 points in March to 39% compared with the October survey results. Major household purchases include items such as furniture, televisions and refrigerators.

Missouri, including Greater Kansas City, reported an increase from 35% to 39% in those who made major purchases in the past six months, while Oklahoma was the only state that reported a drop (38% to 35%) in this category.

Nearly 24% said they intend to make a major household purchase in the next six months. Of those not planning to make a major purchase, 13% said they were waiting for the right time to buy. In Missouri, those percentages were 25% and 20%, respectively, while in Oklahoma they were 28% and 20%.

In Arkansas, 24% of survey respondents said they intend to make a major household purchase in the next six months. Of those not planning to make a major purchase, 13% said they were waiting for the right time to buy.

Arkansas respondents holding a home mortgage rose three points to 34% in March from 31% October’s survey. Additionally, only 2% of Arkansans said they plan to get a home mortgage in the next six months.

The state’s household savings rate, meanwhile, decreased from 11.9% to 11.6% during that same period. Those planning to increase their savings rate rose from 18% to 19%, while the number of those planning to maintain their rate went from 71% to 74%.

Meanwhile, Arkansans’ consumer debt also fell below that of their neighbors in Missouri in mortgage and home equity (5%). A total of 42% of Missouri respondents reported mortgage debt, and another 9% reported home equity debt. Oklahomans reported 33% and 5%, respectively.

Arkansas reported its largest jump in consumer credit in the student debt category, with 27% reporting they had current student debt. In Missouri and Oklahoma, only 12% each reported they had student debt in the March survey.

When asked if respondents anticipated difficulty in acquiring credit in the next six months only 4% expected difficulty in Arkansas, Missouri and Oklahoma. In October’s survey, those numbers were 6% in Arkansas, 4% in Missouri and 7% in Oklahoma.

The Arvest Consumer Sentiment Survey, modeled after the national consumer sentiment survey released monthly by Thomson Reuters and the University of Michigan, is conducted by the Center for Business and Economic Research (CBER) in the Sam M. Walton College of Business at the University of Arkansas. The University of Oklahoma’s Public Opinion Learning Laboratory conducted the 1,200 random phone surveys.

The survey will be conducted twice a year, with the next survey expected to be completed in September 2015.

At least two retail watchers say the change of board leadership at Wal-Mart Stores is a good move. They suggest that Greg Penner is more than just a son-in-law to former Board Chairman Rob Walton; that he has experience as a Wal-Mart employee and will not be shy about pushing management to succeed in a retail world constantly disrupted by demographics and technology.

Walton, 70, son of Wal-Mart founders Helen and Sam Walton, announced the change in Board leadership at the June 5 shareholders meeting in Fayetteville. Penner 45, became chairman effective at the end of the meeting. Penner is only the third person to lead the board in its 54-year history.

Media headlines suggested that Penner was the “safe bet” for the prestigious job given he is the son-in-law Rob Walton. Governance expert Alan Ellstrand, a professor at the University of Arkansas, said Penner’s qualifications are more than the family status.

“The board chairman at Wal-Mart also sets the culture which is at the core of how the company operates around the world. Penner is family and former associate well versed in the culture,” Ellstrand said.

While there are other board members who may have been there longer, many of them are also running their own companies, working in higher education or serving on other active boards, Ellstrand added. He said the board chairman’s role also is managing the governance process which can be cumbersome for a global company of Wal-Mart’s size. Before governance rules and regulations were expanded in 2002 with Sarbanes-Oxley Act, it was far more common for the top executive to share the role of CEO and Board Chairman.

“It’s hard to be your own boss because it limits the oversight. The CEO reports to the board chairman so finding the right person is crucial because these two positions share a strong relationship,” Ellstrand said.

THE PENNER FIT
He said Rob Walton cut his teeth in the family business, but is still viewed by some outsiders as the wealthy heir. Former Wal-Mart CEO David Glass said at the recent shareholders meeting that Walton was hired as the retailer’s first general counsel after completing law school because the company was expanding so fast that management needed legal oversight and that oversight was useful during the 23 years Walton served as board chairman.

Penner has spent nearly two decades working for Wal-Mart in a number of roles starting as a management trainee and rising to chief financial officer in the retailer’s Japanese business. He also, and possibly more important, was a senior vice president of finance and strategy for Walmart.com during its startup phase. His experience outside of Wal-Mart includes corporate finance at Goldman Sachs and then founding – with Walton Family financial support – the investment management firm Madrone Capital Partners.

Ellstrand said Penner also is a good choice because he understands Wal-Mart operations from an inside view. Equally important is his expertise in technology and younger age which positions the company for the future. He said the younger Penner and Wal-Mart CEO Doug McMillon along with board members Marissa Meyer, CEO of Yaho,o and Kevin Systrom, founder of Instagram, give the board several steps into the future.

CHEMISTRY NEEDED
Andy Wilson, a retired Wal-Mart executive officer, told The City Wire that Penner is family and that is important but no more so than ensuring the company has the right people steering its future.

“Chemistry between management and board is important and I believe the management and board in place at this time is strong and suited to take Wal-Mart forward in the future. Doug (McMillon) is better positioned for leadership overall and his efforts to bring service back through investing in people is straight out of Sam Walton’s playbook.” Wilson said.

He said Penner also understands the changing dynamic of brick and mortar and e-commerce, and McMillon and Penner have the full support of the Walton Family, even if Wall Street is slow to catch on.

Wal-Mart stock has not performed well under McMillon’s tenure with shares down nearly 16% so far this year. Wal-Mart shares traded around $72.39 on Tuesday (June 23) were down just 15 cents from $72.54 on Feb. 1, 2014, when McMillon took over as CEO. During this period Wal-Mart has made significant investments in technology infrastructure and committing $1 billion toward higher wages and better training for store workers.

McMillon recently told Wall Street analysts that the board has taken a long view and the investment payoff in technology will require patience. While the investment in people is long term, McMillon said it’s already yielding small dividends.

Wilson agreed, noting that investments Wal-Mart is making in people and technology are not for this quarter or next, but to position the retailer to serve a new generation. He said Rob Walton’s stepping aside was supportive of the board’s long-term view. 

“The Wal-Mart board is a very active and hardworking group of professionals and that isn’t going to change,” Wilson said.

The traveling public pulled back in May compared to May 2014, with enplanements down at Arkansas’ three largest commercial airports. Of the three airports, only the Northwest Arkansas Regional Airport (XNA) has positive traffic in the January to May period.

Enplanements at XNA totaled 251,389 for the first five months of 2015, up 3.05% compared to the same period in 2014. XNA ended 2014 with 640,537 enplanements, up 10.15% over 2013, and more than the record of 598,886 enplanements in 2007. The 2014 gain also marked the third consecutive year of increased traffic at the airport.

XNA had 57,928 enplanements in May, down just 0.83% compared to May 2014.

The airport is served by five airlines that provide connections to 10 U.S. cities. XNA’s first full year of traffic was 1999, and the airport posted eight consecutive years of enplanement gains before seeing a decline in 2008.

Enplanements at the Fort Smith Regional Airport total 36,065 for the first five months of 2015, down 0.74% compared to the same period in 2014. Enplanements at Fort Smith totaled 92,869 in 2014, up 9.87% compared to 2013.

May enplanements at Fort Smith totaled 7,688, down 8.15% from May 2014. The airport offers flights to Atlanta and Dallas-Fort Worth through Delta and American Airlines.

The Bill & Hillary Clinton National Airport in Little Rock posted enplanements of 379,831 for the first five months of 2015, down 8.67% compared to the same period in 2015. The airport was the only one of Arkansas’ largest commercial airports to not post an enplanement increase in 2014. Enplanements in 2014 totaled 1.038 million, down 4.32% compared to 2013.

May enplanements in Little Rock totaled 90,080, down 9.81% compared to May 2014.

NATIONAL TRAFFIC, SUMMER TRAVEL ESTIMATE
Airlines for America, the trade association for most of the major airlines, predicts summer airline travel (June 1 - Aug. 31) will increase 4.6% in the U.S. compared to actual traffic in the 2014 period. According to the trade group, an estimated 2.4 million people a day will fly on U.S. carriers during the summer period. The group predicted Spring travel would rise to its highest mark in seven years, reaching 132.2 million passengers during May and April.

Official U.S. airline traffic data reported by the federal Bureau of Transportation Statistics is updated through March. The latest report, posted June 12, said U.S. enplanements were up 0.9% in March compared to February, and marked a return to pre-recession travel levels.

“March is the first post-recession month among the top 10 all-time highest months for domestic enplanements,” the federal agency reported.

And according to the U.S. Bureau of Economic Analysis, passenger air transportation activity in the U.S. during the first quarter was up 3.9% after declining 2.2% in the fourth quarter of 2014. Overall, real spending (economic output) on travel and tourism slowed in the first quarter of 2015 to a 2% pace of growth after posting a revised 4.9% rate in the fourth quarter of 2014

ENPLANEMENT HISTORY (Fort Smith Regional Airport, since 2000)
2014: 92,869
2013: 84,520
2012: 86,653
2011: 86,234
2010: 86,129
2009: 78,432
2008: 87,030
2007: 99,127
2006: 94,717
2005: 102,607
2004: 92,928
2003: 90,493
2002: 87,944
2001: 95,419
2000: 104,182

ENPLANEMENT HISTORY (Northwest Arkansas Regional Airport, since 2000)
2014: 640,537
2013: 581,487
2012: 565,045
2011: 562,747
2010: 570,625
2009: 540,918
2008: 571,845
2007: 598,886
2006: 586,320
2005: 583,940
2004: 511,714
2003: 448,228
2002: 400,063
2001: 374,122
2000: 367,157

On Wednesday, the 20-member Working Group on Highway Funding will hold its first meeting to discuss the state’s road funding options. Six years ago, the Blue Ribbon Committee on Highway Finance did the same thing.

That committee was formed by Act 374 in 2009 and brought together 24 legislators, local officials, representatives from the financial and construction industries, and others. Sen. John Paul Capps, D-Searcy, was chairman.

So far in 2015, the Arkansas Highway and Transportation Department has canceled 70 construction projects worth $280 million because of federal funding concerns. In 2010, the Arkansas Highway and Transportation Department was saying it had a $19.5 billion shortfall – an increase from 1998, when the shortfall was $10.3 billion.

The problem was the same then and now: Much of the state’s road funding is generated by a consumption-based tax at a time when consumption is decreasing. As vehicles become more fuel efficient, motorists pay less in fuel taxes. Meanwhile, construction costs are increasing. According to the Blue Ribbon Committee’s report, the gasoline tax, currently 21.8 cents per gallon, would have to be raised to 52.6 cents per gallon to have the same purchasing power that it did in 1955, when it was 6.5 cents.

For 18 months, the committee considered a variety of options. Public meetings were held in North Little Rock, Hot Springs, Fort Smith, Jonesboro and El Dorado. As many as 50 people attended each meeting, said Craig Douglass, now executive director of the Arkansas Good Roads Foundation. Douglass, who was not a member of the committee, led the meetings and helped write the final report. He is a member of the current working group.

Douglass said the general consensus in those public meetings was that highway funding had to be increased. Attendees supported a bond issue that voters later would pass in 2011 to fund the Interstate Rehabilitation Program. They also agreed with dedicating a sales tax to highways because it’s broad-based and was perceived to be equitable and fair.

“One thing that they told us, and it was a thread that ran through all five of the focus groups, was that Arkansans wanted the state to be better connected, and that thought came through in all of the focus groups,” he said.

That word – “connected” – helped lead to the naming of the Connecting Arkansas Program, which was funded by a half-cent sales tax approved by voters in 2012. The final report was presented to Gov. Mike Beebe and the Legislature on Dec. 1, 2010. In addition to the bond issue and half-cent sales tax, another recommendation, a new State Aid for Cities Program, also became a reality. The Legislature dedicated one cent per gallon of the motor fuels tax to cities, contingent upon voter passage of the Connecting Arkansas Program. That provision raises $20 million a year for city streets.

The downside for the Highway Department is that it’s a permanent reduction in funding dedicated to highways, while the offsetting half-cent sales tax funding the Connecting Arkansas Program ends after 10 years.

One other of the Blue Ribbon Committee’s recommendations attracted a lot of support, but it hasn’t passed: a 10-year phased-in transfer of taxes raised from the sale of vehicle parts and services from the general fund. In 2013, Rep. Jonathan Barnett, R-Siloam Springs, a former highway commissioner, filed a bill to do that. It attracted widespread legislative support, but it failed under opposition from Gov. Beebe and from other interests that feared a loss of funding. They called it the “highway robbery bill.”

This year, a similar bill by Rep. Dan Douglas, R-Bentonville, was defeated by the same forces – competing interests and a governor who was opposed. However, Gov. Asa Hutchinson did agree to appoint the Working Group on Highway Funding.

Other Blue Ribbon Committee recommendations that have failed to gain traction included indexing the current per-gallon tax on motor fuels to the state’s highway construction cost index, implementing a new excise tax on the wholesale price of fuel, a constitutional amendment allowing counties to levy more than the current 3-mill county road tax, and reducing the size of the state’s highway network.

The report recommended against using toll roads and public-private partnerships. It also recommended against a vehicle miles traveled tax, which assesses motorists based on the amount of miles they have driven. The report noted problems with collections, the absence of federal standards, and privacy issues. However, it said a mileage-based tax eventually will be needed as more drivers switch to vehicles that use less fuel, such as hybrids, or none at all, such as electric cars.

In a recent speech to the Arkansas Good Roads Foundation, Hutchinson pointed out that in the 20-member working group, those who are “pro-additional funding for highways … probably outnumber those that are a little bit more concerned by five to one.”

Sen. Bill Sample, R-Hot Springs, is the only member of both the Blue Ribbon Committee and the Working Group on Highway Funding. He said he would have liked to have seen more business executives in the new group. On the plus side, he said it includes two representatives from the education community: Dr. Brett Powell, director of the Department of Higher Education; and Dr. Robin Bowen, president of Arkansas Tech University.

Sample said that the task force is needed despite the Blue Ribbon Committee’s recent work.

“I think that we have got to continue to look at all of our options to do something about the health of our highway system. It’s certainly apparent that the federal government is not willing to step up and help,” he said. “And the friends that I have all across the U.S. that do a lot of transportation work, we’re all in the same boat. Every state’s in the same boat. We’re short on money, and we have highways that are deteriorating faster than we can fix them.”

The used car business is good these days, but not good enough to secure cash performance-based bonuses for America’s Car-Mart’s top two executives. CEO Hank Henderson and chief financial officer Jeff Williams did each recently sign a new five-year contract which included a 3.37% annual cost-of-living raise over last year’s base salary.

Henderson earned total compensation of $501,796 last year, of which he chose to defer $229,985 under the company’s nonqualified deferred compensation plan. His base salary of $451,169, was increased to $466,400 for this year, a gain of 3.37%, according to the company’s Proxy filing with the Securities and Exchange Commission on Tuesday (June 23). 

Outside of salary, Henderson’s compensation last year included $50,627 in other benefits: 401k matching contribution: $2,146; automobile: $7,750; country club dues: $2,691; health reimbursements: $32,549; Christmas bonus: $1,020; and insurance premiums: $4,471

Under the terms of the new contract out to 2020 Henderson will be entitled to earn an annual incentive bonus that will be based upon the company reaching its projected fully diluted GAAP earnings per share for each fiscal year. Henderson’s targeted bonus potential is $60,000, $70,000, $80,000, $90,000 and $100,000 for fiscal years 2016, 2017, 2018, 2019 and 2020, respectively.

The last time Henderson earned a cash performance bonus was 2013. Henderson does earn deferred stock options and bonuses paid in stock which totaled $1.84 million as of April 30, 2015, according to the Proxy filing.

Jeff Williams as chief financial officer earned total compensation of $384,715 last year. His base salary of $355,296 was recently raised to $367,290 for this year according to the terms of his new five-year contract.

Williams’ non-salary benefits totaled $29,419 last year. The majority of that was $15,126 for reimbursement of expenses on health insurance, use of an automobile was $3,850 and club dues totaled $3,594. Matching 401k contributions added $3,594; insurance premiums totaled $4,471 and $590 was paid in the form of a Christmas bonus.

Deferred stock compensation for Williams last year totaled about $726,000 and included  option awards and stock awards through April 30, 2015.

Also in the Proxy filing, the company announced its shareholder meeting for Aug. 5 at its corporate offices in Bentonville. At that time shareholders will elect a slate of 7 directors to a one-year term. Names on the ballot are Daniel J. Englander, John David Simmons, Kenny Gunderman, Cameron Smith, Hank Henderson, Jeff Williams and Eddie Hight.

The company will also seek approve an amended stock incentive plan with new performance goals as well amend its 2007 Stock Option Plan and approve the new executive compensation plans recently signed by Henderson and Williams.

A tremor from the June 17 tragedy in Charleston, S.C., in which nine members of the Emanuel African Methodist Episcopal church were shot and killed by Dylan Roof has reached Fort Smith. The Fort Smith Public Board of Education voted Tuesday to end use of the Rebel mascot and not use “Dixie” as the school’s fight song.

Roof, 21 and white, has been arrested and his statements and past actions clearly suggest his actions were racially motivated.

The Board’s move is one of many around the country in which racially charged imagery and Confederate symbols are being removed from public spaces or removed from store shelves. Retail giant Wal-Mart Stores Inc. is among a growing number of retailers removing Confederate flag merchandise from stores and its e-commerce sites.

Southside High School was formed in 1963 and over the years there have been several challenges to the use of the Rebel mascot. One of those happened in the late 1980s when a school board committee pushed to change the mascot. The effort failed to gain support from a majority of those then on the Board.

But on Tuesday (June 23), the Board made another attempt to change the mascot and fight song.

“Giving great consideration to the continuing impact of perceived symbols of racism on the community, state and nation, the Fort Smith Public School Board convened as a Committee of the Whole tonight and passed a motion to discontinue the use of ‘Dixie as the Southside High School fight song in the 2015-2016 school year and to change the Southside mascot from the Rebel in the 2016-2017 school year,” said a statement from the District.

Continuing, the statement noted: “This motion passed with a 6-0 vote and will be presented to the Board during the regularly scheduled meeting on July 27, 2015. The Rebel and ‘Dixie’ have been used as the Southside High School mascot and fight song since the school opened more than 50 years ago. The Board understands the challenges of changing what has come to be the tradition of the Southside High School community, and will work with the student body and staff over the next year to name a new mascot and fight song for the school.”

The unanimous Board vote does not reflect unanimous consent from alum and others affiliated with the school.

A petition at Change.org was formed by Zack Gramlich shortly after the vote and by 10 p.m. had more than 500 supporters.

“The only reason I believe anyone can see changing this is because of an emotional fueled decision. Not to mention the amount of money required to change everything to a different mascot. It's not only a waste of money, but it irritates people over the entire city,” noted the statement on the petition’s page.

Brad Kohler, a Fort Smith resident and a 1994 graduate of Southside High School, said the Board decision is a “sad day for Fort Smith.”

“It saddens me to see the school board have a closed door knee jerk reaction to the tragic events in South Carolina. The school board didn't put their finger on the pulse of the community before making their decision. I have a daughter that will attend Northside this year and a daughter that will attend (Southside) in 3 years. I showed both of my girls the SHS Johnny reb logo tonight and asked them what that symbol meant. They both answered Southside. It is a tradition and heritage of this town. Today's generation doesn't see it as a negative or racist symbol,” Kohler said.

Ben Pollock, who lives in Fayetteville and is a 1976 Southside graduate, had a different take.

“I graduated from Southside in 1976 and with scholarship, work-study and loans went to Stanford. Four years earlier, Cardinal (the color) succeeded the Indians. Cardinal was Stanford's original team name, replaced by Indians about 1930. The Indian as mascot was dropped in 1972 (think of the era) as racist. Some alumni ranted at us Stanford Band members before ball games to complain about the switch. So I've been through this before,” Pollock said in a note to The City Wire. “Fort Smith Southside needs this change. Sad it didn't happen years ago, but now is pretty good, too. It's merely symbolic, yes, but what we're talking is symbols, after all: mascots, logos, slogans, cheers, fight songs. I am proud of the Fort Smith School Board for moving quickly and decisively.”

Josh Ray, director of the Southside Marching Band, said in a Facebook post that his phone “has been blowing up with the news of new mascots and fight songs.” He allowed The City Wire to use his Facebook comment for this story.

“As a graduate and band director at Southside High School, I would like to make a couple comments on today's changes. I would ask that whatever your opinion, please remember what makes Southside High School great. It's not a song or a mascot. It's not the name of the dance team or the words on the football jersey. It's the tradition of outstanding young people, incredible teachers, and unprecedented leadership. I ask that when we all attend a school event and hear a new fight song, see new jerseys, and hear a different name that we remember we are not celebrating a symbol or tune. Instead we're celebrating young people that represent their school with their effort and the talents they have been given by time and again redefining what a high school student can achieve. Remember that those students would never be there without the support and instruction of teachers and administrators who work everyday to uphold the tradition of excellence at Southside. Symbols change. Mascots change. Fight songs change. However, I believe people will quickly see that the bedrock and the source of years of greatness at SHS lies in the students, teachers, and administrators who constantly work to build upon the tradition of greatness set by those who came before us.”

At any given time Wal-Mart Stores said it has 800 or more openings for coders and information technology (IT) systems architects at its corporate offices in Bentonville. And that doesn’t include similar workforce needs at the 14 headquarters it maintains around the world.

This talent shortage is a problem as the demand for IT specialists, engineers and software developers far outpaces the supply, according to Rick Webb, senior vice president of global business processes at Wal-Mart Stores. Webb was one of the speakers to address business and education professionals and students attending the Bentonville-Bella Vista Chamber of Commerce Biz+Ed Conference held at Bentonville High School on Tuesday (June 23).

Michael Poore, superintendent of Bentonville Schools, also spoke about the upcoming IT curriculum being incorporated at the high school this fall. The curriculum, known as CAPS and more recently dubbed “Ignite,” is modeled after TATA’s work in the Kansas City school system.

Poore said Phase I of the new technology curriculum will be an IT Solutions class taught this first year. Students in this class will work with the TATA Consultancy Group on real business problems. Students are also being offered internships at Wal-Mart’s Information Systems Division in Bentonville. He said the goal of Ignite is to ready more high students to enter the workforce upon graduation. Students in Bentonville’s Ignite tech program will walk away with up to six hours of college credit and a certifiable workforce endorsement from the University of Arkansas.

Webb said Wal-Mart is constantly scouring the globe for the tech and engineering talent it needs and unfortunately is forced to outsource offshore too many projects because of lack of in-house talent. He said the internship opportunity will help because the future is moving much faster than the retail world can manage. Webb, an engineer, made a plea to the students to consider that field as well.

Webb conducted a poll of the students attending from Bentonville, Rogers, Fayetteville, Decatur and Green Forest Schools about what field of work most interested them. Hands down, the majority of students cited financial, investment banking careers, while half as many cited coding, software development or data analytics. Oddly enough no one cited robotics or systems hardware, which Webb said is perhaps one of the most fascinating fields as tech wearables and the “Internet of things” become more commonplace.

Webb said Wal-Mart is working fast on a robot that will be soon patrol the aisles of local stores as the retailer tests its ability to scan products, check for out-of-stocks and report the findings. He said this is just the tip of the iceberg for where automated technology is going in the retail world and elsewhere. Webb said Wal-Mart is working with technology group out of Pennsylvania on the robot project.

Logistics and supply chain is another area Wal-Mart is rallying the troops to find efficiencies in shipping one item at a time given the retailer’s entire history and infrastructure was built to ship cases of product.

Michael Paladino, chief technology officer for Rev Unit, told The City Wire that the growing talent shortage is precisely the reason it decided to help sponsor Monday’s event. If Wal-Mart can’t find enough tech and engineering talent that's a red flag for all sized companies.

“Recruiting for the high school ranks is just one option but more has to be done to ready a workforce sorely needed today,” Paladino said.

He said Ozark STEM Education is working for this cause along with the NWA Tech Council looking to bridge the talent gap.

Poore said 60% of job openings today require STEM literacy and 42% require advanced STEM knowledge. The U.S.Workforce Skills Round Table in December 2014 estimated that in the next five years employers expect to replace 1 million jobs requiring STEM literacy.

“Students today who get a STEM, or STEAM, education are never going to be unemployed,” Webb told the group.

Science, Technology, Engineering and Mathematics, the components of STEM ready an individual for intense problem solving that can lead to innovation. He said the best teams will also include members who are strong in softer skills which are associated with the Arts, such as communication, passion, empathy. Webb said a STEAM education produces very well-rounded individuals who can work in many different fields.

The Fort Smith Board of Directors didn’t shy away from considering a prepared food tax and re-instating of a business license fee to address a looming shortfall in a pension fund for Fort Smith police and fire department employees.

Board members met for more than two hours Tuesday evening (June 23) to discuss the pension funding issue and other city matters.

Fort Smith in 2004 implemented a higher 3.28 multiplier for the “LOPFI” pension plan, up from the base multiplier of 2.94. When the base multiplier was adopted, the city had an $11.863 million balance in its pension contribution fund and was adding $1.346 million annually to the plan. That was before the financial crisis of 2008, when the plan started withdrawing more money than the city was putting in, setting it up for the eventual insolvency projected for 2019.

Fort Smith City Administrator Ray Gosack said in a memo that moving the multiplier back to BP1 would save the city $447,534 in 2016 and $516,297 a year by 2026. He also said the BP 1 multiplier is used by a “vast majority” of cities participating in the pension program. The Board voted June 2 to revert back to the “BP 1” multiplier of 2.94. That change moves the plan’s insolvency date from 2019 to 2021.

“Our projections show that the city’s LOPFI Contribution Fund will be depleted in 2021. In 2015, we project that the city will spend $900,000 more than it receives in this fund. The annual deficit grows to an estimated $3.1 million by 2026,” Gosack noted in a memo to the Board.

Gosack presented the following financial plan to address the shortfall.
• Reduce general fund spending by $170,800 a year;
• Increase franchise fees on electric, telephone and gas from 4% to 4.25%, and increase franchise fee on cable from 4% to 5% to generate $554,000 a year (maximum rate state law allows);
• Raise $1.435 million from business license fee; and
• Consider pay adjustments, staffing levels and other measures to reduce costs for LOPFI payouts.

While the lengthy discussion Tuesday covered several topics, the more detailed and sometimes frank discussions focused on solutions that included a prepared food tax, general fund budget cuts of up to 3% and reinstatement of a business license fee.

PREPARED FOOD TAX
A 1/2 cent prepared food tax would raise an estimated $900,000 a year, and could be used by the Fort Smith Advertising & Promotion Commission to pay for operations of the Fort Smith Convention Center. The city now pays around $770,000 from the general fund to subsidize convention center operations.

A 1 cent prepared food tax was rejected by 62.7% of those who voted in a November 2011 special election.

City Director Tracy Pennartz said the prepared food tax is a “very feasible option to look at,” and it could be “a long-term step” toward resolving the pension problem. Director Mike Lorenz agreed, and said Fort Smith is disadvantaged compared to Fayetteville and other cities with a prepared food tax to support tourism in their cities.

But later in the meeting Director George Catsavis expressed doubts.

“i don’t think a food tax is going to fly … not after the last fiasco,” he said.

Director Keith Lau said he also doubts the city can sell a tax increase without “tangible” cuts and other budget changes. He said he is not interested in pushing another tax for a plan that doesn’t provide a “total fix” for the pension problem.

But Director André Good said there is a different political environment now than four years ago when the voters rejected the tax.

“Now it’s for police and fire,” Good said.

BUDGET CUTS, BUSINESS LICENSE
The push for budget cuts, vocalized primarily by Directors Lau and Pennartz, could include a reduction in contributions the city makes to the retirement plan for non-uniformed employees. Reducing contributions down to 6% could save up to $340,000 a year. Lorenz said such a move would be fair considering they just voted to reduce benefits for fire and police workers.

But City Finance Director Kara Bushkuhl said fire and police already get a benefit package more substantial than non-uniformed employees. She prefaced her objection to the contribution reduction idea by noting that  “no one speaks up for non-uniformed employees.”

As to a business license fee, the Board is looking at three options. The first option could generate $1.976 million. It would collect $20 per employee for businesses with employees from 1 to 500. The fee would be capped at $10,000.

The second option could raise at least $1.435 million with a plan that would charge a business $20 per employee from 26 to 500 employees with a cap at $10,000 a year. Businesses with 25 or fewer employees would not pay a fee.

The third option would charge a flat fee of $150 for all businesses and raise an estimated $761,550 a year. The cost to manage all three options is estimated to be $107,000 a year.

Pennartz said she has talked to at least a dozen business leaders and none liked the license fee, but did not object to the idea.

“I still think that’s a very viable option,” Pennartz said of the license fee.

City staff was asked to present refined options during a July 14 study session. The Board could vote on other options to address the pension shortfall at a July 21 board meeting.

The local supplier community across Northwest Arkansas is buzzing this week as insiders and consultants compare notes on recent contract amendments that Wal-Mart Stores sent out to roughly 10,000 of its suppliers of all sizes.

First off, the retail giant is asking for extended payment terms on items that don’t sell quickly. Wal-Mart also wants an additional 1% cash discount for paying early. Wal-Mart did not release details on the new terms to the media, but the retailer did tell The City Wire that being an everyday low price company isn’t easy and sometimes the retailer has found itself in the middle of the road.

“We are getting back to a place where we focused on ‘everyday low cost’  and ‘everyday low price’ in an effort to best serve our customers,” said Deisha Barnett, corporate spokeswoman for Walmart U.S.

The letters went out to suppliers beginning June 17 and Wal-Mart has asked it vendors to agree to the new terms by July 1.

One pet supplier said their new agreement asked for an additional 1% discount on what was a 20-day payment term, except Wal-Mart now wants to extend that payment window to 90 days. This scenario gives Wal-Mart 105 days between invoice submission and payment. The retailer is asking for the extension because more time is needed to sell the products through.

It’s important to note that Amazon.com already employs a similar strategy to prevent carrying inventory.

SUPPLIER CONCERNS
Three local supplier consultants told The City Wire that small to medium-size supplier clients are being asked to provide a 2% discount out to 90 days and Wal-Mart is adding additional charges via deeper price discounts for products that enter a distribution center.

Small suppliers on social media sites say they have no choice but to sign on because they don’t have joint business plans with Wal-Mart and are afraid of possible repercussions from the retailer. The recent amendments are the most debated and costly for suppliers in several years, according to local insiders.

Carol Spieckerman, CEO of NewMarketBuilders, offers another view.

“Most of the suppliers I work with consider Walmart to be their cleanest business, devoid of the games and punitive practices that plague their other retail relationships,” Spieckerman told The City Wire.

She said the recent move shouldn't change that perception. 

“These types of charges certainly aren't unprecedented in retail yet no doubt many will portray Walmart's ask as a slippery slope that runs counter to its everyday low price proposition. In reality, Walmart is cleaning up its policies and applying them more uniformly across its supplier base,” Spieckerman said.

DISTRIBUTION CENTER CHARGE
The biggest change for supplier with the amended contracts is the added 1% handling charge Wal-Mart is requiring for products that enter a distribution center. This alone is a significant dollar profit center for the retailer who handles more than one billion cases of product annually through its supply chain network.

Insiders with deep history at Wal-Mart say this change is the biggest surprise because founder Sam Walton was adamantly against slotting fees and other tack on charges related to stocking products.

“Walmart’s business model is simple – operate at everyday low costs to provide customers with everyday low prices. It was Sam Walton’s plan more than 50 years ago, and it’s the plan for our company today. Operating under this model affects all we do at Walmart, including how we negotiate with our suppliers, how we advertise and how we go to market with price,” Barnett told The City Wire.

However, suppliers see the recent amended contract terms has anything but simple. Some suppliers have said Wal-Mart offered to negotiate a low interest credit line with third party lenders who will pay the supplier early so long as the retailer get’s the 2% discount out more than 100 days.

Analysts are not surprised to see Wal-Mart go after more margin amid sluggish revenue growth over the past couple of years. Wal-Mart also is investing in its next generation supply chain by modernizing distribution centers that will allow items to be within 2-day delivery of more than 96% of the U.S. population ordering online. This investment comes at a cost of between $1.2 billion to $1.5 billion this fiscal year, according to Charles Holley, chief financial officer for Wal-Mart Stores. Last year Wal-Mart spent $1 billion on its e-commerce business. Holley said the greatest investment of capital and in operating loss for the e-commerce operations will cover over the next 18 to 24 months, and then the company would expect to see that investment start to moderate in fiscal 2018.

“We are focused on creating an endless aisle and appealing to our customers’ changing needs,” Holley explained earlier this year, “and these investments will include technology, infrastructure and other areas to support e-commerce and digital initiatives to serve customers.”

Charging suppliers for distribution center handling is just one way Wal-Mart can recoup some of that spending. The supplier groups believe the tech spending as well as the $1 billion investment in store worker wages earlier this year is the primary reason Wal-Mart is amending its contract terms.

“Honestly the increase in pay will eventually just go towards the cost of goods because suppliers will have to address the impact to their bottom line. It will be a challenge to absorb for many. Cash is king and the flow must be in sync with agreements that were already in place before this change,” said Jami Dennis, a local supplier consultant.