Chamber’s First Friday addresses 2019 session

FORT SMITH – In an early December address to the Fort Smith Chamber of Commerce’s First Friday breakfast, State Chamber/AIA President & CEO Randy Zook provided a preview of the 2019 Session. He said the main focus will be on four Ts—teachers, taxes, transportation and transformation. “As far as the economy goes, things are very healthy.”

“We have 3.5% unemployment statewide. … That’s the good news.” On the flip side, Arkansas’ workforce is declining with a steady number of people retiring. In order to replenish that workforce, Arkansas needs to recruit more people to the state by making it more compelling and attractive to business and workers.

“Teachers’ pay is a lay-down. It’s just something we’ve got to do. (Gov. Asa Hutchinson’s) goal is to raise the minimum starting salary for K-12 teachers in Arkansas to $36,000 a year. It’s at about ($31,000) now. It’s a pretty dramatic increase. It will give us the highest starting pay for teachers in the touch-state region. That’s a big deal. It’s expensive obviously, but it’s going to be phased in over several years,” Zook said.

Taxes are more challenging, according to Zook, who said that when the state starts to reduce taxes it can have a short-term effect of reducing revenue in an already tight budget. “His (the governor’s) goal is to reduce the highest marginal tax rate from the current 6.9% down to something with a five, hopefully, at least 5.9, but again over several years,” Zook said. “We have the highest marginal tax rate on income in the touch-state region. So we are out of step. We are not competitive.”

Zook then moved on to transportation and highway funding, noting that while no one wants to see higher taxes at the gas pumps, something has to happen in order to pay for the 16,000 miles of state highways in Arkansas. “We have one of the largest highway systems in the country. We have more state highway mileage than the State of California does. Here we are, the State of Arkansas, with only 3 million people trying to maintain and support more than 16,000 miles of state highways. It’s costly.” Zook said the highway department is expected to ask for $475 million of additional highway money in order to take care of the state’s highway needs.

The final step in the “four T’s” Zook discussed was transformation, which will be a reorganization of state government. The governor has 42 direct reports from state agencies and boards that answer to him. He wants to shrink that number to 15 direct reports. “If he were to spend just one hour a week with each one, that’s a full-time job,” Zook said. “The idea would be to carve those direct reports to the governor down to about 15 with a lot of agencies being shuffled around. There are enormous opportunities to reduce operation costs In many of these state agencies,” he said. “It’s time. It’s overdue. He’s got a great team helping him put that together. It’s going to take a lot of legislation, as you can imagine, to change.”