A review and preview of business and politics in Arkansas. | 2011

2010 The Year in Review A Look Ahead to 2011

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One to Watch: A Big To-Do List: 10 NanoMech 40 2011 Legislative Preview It’s company motto is Which issues will dominate “ThinkSmall” but this tech the 88th General Assembly’s firm’s leaders are thinking agenda? global. By Talk Business Staff By Steve Brawner Hot Seat: Arkansas The Year In Review: 50 Insurance Commissioner 14 Business & Politics Jay Bradford 50 2010 was full of surprise, Health care reform’s state shock and splendor. enforcer gears up for a By Talk Business Staff volatile year. By Suzi Parker Q&A: A Blueprint For a 26 Reddening State Delta Dawning: Gov. Mike Beebe discusses 54 A Workforce In Progress state politics, session goals, Eastern Arkansas undergoes 6 YoungGuns and his ultimate legacy. an education and economic By John Brummett transformation. 10 OneToWatch By Michael Tilley 50 HotSeat 64 SixthSense

COVER PHOTO: DIXIE KNIGHT

2 011 | TB&P www.talkbusiness.net 3 TB&PTB&T P| 20112011 www.talkbusiness.netwww.talkbusiness.net FromTheEditor 2011 SO WHAT KIND OF YEAR WILL 2011 BE? We start the new decade in a precarious situation as the recovery from the recession Talk Business & Politics is owned by River Rock of 2008-2009 is still far from complete. Political crosswinds have voters sending Communications and is published annually. pendulum-swinging signals every other cycle. For additonal copies, to be included on our mailing list, or for information about Nothing seems notably stable except for an uncertain future. advertising, please contact Stephanie Brock Unfortunately, I don’t see tremendous economic clarity revealing itself in 2011. Mid- at [email protected]. size and larger businesses seem to be surviving. Their customer bases have stabilized, even improved, and they are considering how to spend rising profits. Many public companies are buying back stock, paying healthy dividends and eyeing safe 2011 acquisitions. We’ve seen a big one in our own state with the $4.2 billion buyout of Baldor Electric. EDITOR-IN-CHIEF But smaller business owners are sending mixed signals. Some had their best year ever in Roby Brock 2010, while a larger number I’ve spoken to – all anecdotal evidence – are still searching for [email protected] a magic elixir for a rebound. One successful gentleman in particular shared with me that he has reduced his business ART DIRECTOR Bryan Pistole planning from five-year and one-year plans to monthly planning. That seems harsh, but he DesignMatters LLC contends it’s the only way he can manage his multiple business interests. [email protected] Politically, our newly elected officials, who campaigned on smaller government, organizing our finances, and creating jobs, havea tough challenge at every level. Even if ASSOCIATE EDITOR every policy decision from Congress to the Statehouse to City Hall were made to perfection Stephanie Brock to create a climate of economic certainty and improvement, it would take a year or more [email protected] for the results to be seen in a way to report them.

TBQ STAFF WRITERS And it may take even longer for the optimism to sink into the public’s psyche. Michael Tilley Lest you think I’m just trying to bring you down with sour thoughts, hold on. [email protected] While I don’t see a go-go rebound in the near future, I also don’t see further Wes Brown deterioration – barring an unforeseen disaster. [email protected] In my adult life, I’ve seen the meltdown of the real estate market drag the economy in the tank. It improved in the ‘90’s thanks to technological innovation and the growth of the CONTRIBUTING WRITERS Larry Brannan Internet. The tech bubble burst and was supplanted by the housing market boom that led Steve Brawner to our latest bust. John Brummett Funny how history repeats itself. Jordan Foster It would appear that we will pull ourselves out of this economic quagmire in a manner Rex Nelson that current generations of grown-ups hardly have the patience for. It will take consistent, Suzi Parker steady dedication to the basics of business: providing services and products to customers

PHOTOGRAPHERS with a need in a profitable manner. Dixie Knight What will ultimately transform our next decade? When we look back 10 years from [email protected] now, we might not point to any single transformational moment, product or trend. Bob Ocken It may just be old-fashioned, sleeves-rolled-up, hard work and perseverance. A little luck [email protected] will help, too, but that doesn’t mean you can build your business model on the hope of buying a winning lottery ticket. PRINTER John Parke Best wishes for a busy and productive 2011. Democrat Printing & Litho [email protected] Sincerely,Sincerely,

River Rock Communications 8308 Cantrell Road RobyRoby BrockBrock Little Rock, AR 72227 Editor-in-ChiefEditiChif 501/529-1737 telephone

2 011 | TB&P www.talkbusiness.net 5 Blake Rutherford, 32 Arkansas Attorney General | Chief of Staff | Little Rock

By RobyBrock Talk Business Editor-in-Chief He really had little choice. He has always been mesmerized by movies and one day, while Growing up in a political household, Blake Rutherford was peering across the River Market, the thought dawned on him that destined to carve a niche in Arkansas politics. movies in the downtown amphitheater along the Arkansas River “I grew up in a pretty political family. For as long as I can would be a worthwhile endeavor. remember, politics was a topic of conversation at my parents’ “I made some calls, put a volunteer group together and made a deal dinner table,” says the son of Skip and Billie Rutherford. to do it if we could raise the money,” Rutherford said. Blake got the political bug at an early age – 8th grade – when he But his big caveat was he wanted the experience to be free. volunteered on the 1992 Presidential campaign of native son, Bill He tells the story of a middle-aged man with two younger kids Clinton. Rutherford trekked to the old Arkansas Gazette building who regularly attended the movies one summer while his wife was at after school to help at the headquarters. UAMS receiving long-term cancer treatment. With few resources and That led to his first paid political job four years later. He delayed the need for an outlet, they had seen a flyer for the free movies and going to college for a semester to work for Clinton-Gore ’96 in the made it a regular social stop. communications and political shops, later joining the inaugural “For a couple of hours at night, they could live in the world of committee staff. fantasy that movies provide and hopefully find a little joy, and that At the age of 18, Rutherford found himself coordinating VIP passes made it all worth it,” said Rutherford. to the Washington, D.C. gala – a task that taught him an early lesson His other claim to fame involves his now defunct blog, Blake’s in juggling the egos of the political elite. Think Tank. For 3 1/2 years, he was a progressive voice of politics “I got to learn a lot real quick on that one,” he grins now. and defender of a number of Democratic policies at the local, state After completing his degree at Middlebury College in Vermont, he and national level. returned to the state and gained a J.D. from the University of His work was picked up by The New Republic, Politico and The Arkansas School of Law. Huffington Post. Rutherford also appeared regularly as a political That led to a three-year stint at the prestigious Wright, Lindsey & commentator on local television and radio. Jennings law firm, where he focused on commercial transactions and More than anything, it was a creative outlet for the political junkie election law. He served as general counsel to the Democratic Party and it elevated his profile as a leader and newsmaker in Arkansas of Arkansas and was part of the legal team advising General Wesley politics. Clark’s 2004 Presidential bid. He humbly sums up the effort by saying, “I hope it was a More recently, Rutherford served as Director of Public meaningful contribution to a broader conversation.” Communications for advertising/PR powerhouse Stone Ward before Yes, he’s having withdrawals from blogging, but he’s still engaged landing in his current post with Arkansas Attorney General Dustin and paying attention. McDaniel. At 32, Rutherford is likely to evolve in additional political roles - “To participate in public service is a tenet of the Rutherford family, maybe. Married to news anchor Jessica Dean in October 2009, he and so when given that opportunity, I of course leapt at it,” he says of says his wife’s career is of equal importance to him, so who knows his current five-month role as chief of staff. what the future holds. Rutherford’s daily duties cast a wide net across the office. He is “My number one priority is to be as fully engaged in every day life involved in communications, scheduling, community and public as I can be, which means to have a career that is motivating and that affairs, working closely with the legal side of the staff, and advising is inspiring and that I can do well in,” he confides. the Attorney General. His best advice to up-and-comers: donate your time, talent or But Rutherford may be best known for two unpaid gigs. He was treasure to others. the driving force in creating downtown Little Rock’s Movies in the “You have to commit yourself to your community, whatever that is, Park, a free outdoor film series in the River Market. and engage fully. Don’t just talk about it.”

TB&P| 2011 6 www.talkbusiness.net “MY NUMBER ONE PRIORITY IS TO BE AS FULLY ENGAGED IN EVERY DAY LIFE AS I CAN BE.”

BobOcken Photograph

2 011 | TB&P www.talkbusiness.net 7 Clint Reed, 34 The Political Firm | Managing Partner | Benton

By RobyBrock Talk Business Editor-in-Chief You wouldn’t describe Clint Reed as laid back. all the aspects of campaigns and looking for other campaigns to be a This Republican political operative likes to win and he’s willing to part of.” outwork and outhustle you to achieve that goal. Reed has worked on local, state and national campaigns ranging Maybe it stems from his middle-class upbringing in Hot Springs. from the county courthouse to the White House since. The son of a father who worked at Weyerhauser and a stay-at-home Beyond his stint at the state GOP, Reed served as the Southeast mom, Reed lived in a home that valued hard work and discipline to a Regional Political Director for the Republican National Committee, cause. working with party activists in nine southern states. He helped elect When Clint showed promise as a young basketball player at Lake Louisiana Gov. Bobby Jindal and re-elect Mississippi Gov. Haley Hamilton High School, his father gave him an option for going to Barbour in 2007. college. Following the 2008 general election, Reed managed the get- “My dad came to me early on and said, ‘You’re either going to get out-the-vote program that re-elected Senator Saxby Chambliss in a summer job or you’re going to devote yourself to getting a college Georgia. In just 3 weeks, Reed helped build a statewide grassroots scholarship.’” organization that defeated Barack Obama’s operation of over 100 Reed opted for Plan B. staff members. He was recruited to Lyon College in Batesville, where he ran the He also enjoys working with state legislative candidates and was point and was known to make a last-minute, game-winning shot. involved in a number of campaigns that swept a Republican tide over That clutch performance has served him well in his political business. Arkansas’ political landscape in 2010. Today, Reed is the managing partner for The Political Firm and a But you won’t see his name on the ballot anytime soon, if ever. managing partner with Impact Management Group. The two Little “I enjoy helping people who want to run for office,” Reed says. “I’m Rock-based firms bring a variety of political assets and public affairs better suited for behind the scenes.” and lobbying experts under the same roof. Grassroots organization, candidate messaging, political polling, Reed is a former Executive Director for the Republican Party of and voter contact tactics, such as direct mail and phone banks – these Arkansas, but his political resume is much deeper and goes back nitty-gritty, non-glamorous aspects of campaigning are what Reed much further than the start of the last decade. likes the most. As a youngster, he remembers feeling a connection to the re- He recalls Barbour’s advice on handling political adversity: election campaign of President Ronald Reagan in 1984. nothing’s ever as good or as bad as you think it is. “I can remember sitting in front of the TV watching the debates “There’s no other industry that this applies to except in politics,” and watching the commercials,” Reed says. “That’s my first Reed explains. “There are so many highs, there are so many lows. One recollection that I had a political bug I needed to chase.” day you could win a debate and the next day you have a candidate He chased it years later. In 2000, he volunteered on the Bush- that makes a flub… it’s a lot of long hours and a lot of traveling and Cheney campaign in Hot Springs, knocking on doors and making getting phone calls at 12 o’clock at night. It’s something you have to volunteer phone calls. He parlayed that experience into a position on embrace.” then-Sen. Tim Hutchinson’s U.S. Senate staff. His advice for young politicos includes being persistent and “I did everything I was asked to do and literally just absolutely disciplined. loved it,” he recalls. Later, working on the campaign trail for “So much of this is not being at the right place at the right time, it’s Hutchinson in 2002, Reed realized that of the two sides of politics – being willing to do whatever you’re asked of and doing it and doing it campaigning and governing – he liked one aspect more. well,” says Reed. “Young folks that do that – even for peanuts – will “I really realized that I liked the political side much better than the find that it pays off in the end.” official bureaucratic side,” he said. “That’s when I started exploring

TB&P| 2011 8 www.talkbusiness.net “IT’S A LOT OF LONG HOURS AND A LOT OF TRAVELING AND GETTING PHONE CALLS AT 12 O’CLOCK AT NIGHT. IT’S SOMETHING YOU HAVE TO EMBRACE.”

BobOcken Photograph 2 011 | TB&P www.talkbusiness.net 9 A company with the tiniest of products has the biggest plans. NanoMech is poised to revolutionize the Arkansas and international economy. By SteveBrawner | Contributing Writer

here’s gold in the Ozark Mountains – actually, a golden-colored coating made of cubic boron nitride that may be more valuable than any precious metal. Tufftek, one of many patented products Springdale-based NanoMech is introducing to the market, is a spray-on coating - second only to diamonds in hardness - that is capable of increasing the life of manufacturing cutting tools by 300 percent and often by much more, and all at only 5 to 10 percent additional cost. That’s big, considering that just about everydurable good, particularly those made of metal, goes through a cutting process, and some of those cutting tools last only minutes. And yet the nanotechnology that produces Tufftek is very, very small. In fact, it involves working with materials the size of a nanometer – one-billionth of a meter, or one ten-thousandth the size of a red blood cell. “We don’t split atoms,” said Jim Phillips, NanoMech’s chairman and chief executive officer. “We just move them around. We rearrange them.” The company, which moved into a new 8,300-square-foot facility in Springdale in 2009 and has administrative offices in Fayetteville’s Arkansas Research and Technology Park, is poised to be a nanotechnology leader at an ideal time. Lux Research, a technology consulting firm, says the worldwide value of nanomanufactured goods will rise from $147 billion in 2007 to $3.1 trillion by 2015. According to Phillips, the nanotechnology revolution will be as important as the Industrial Revolution of the 1900s and the Information Revolution that is still going on. “We’ll be able to re-engineer virtually everything on the planet, and that’s how big this is,” he said.

TB&P| 2011 10 www.talkbusiness.net PHOTOS: FOTOLIA, ISTOCKPHOTO, CAT.COM

2 011 | TB&P www.talkbusiness.net 11 Founded in 2002, the company already has university (into the marketplace).” be doing $120 million in sales, and that’s by relationships with some of the world’s most Unsure how to go about doing that – he reaching only two percent of the potential important corporations, including General likened it to putting a small boat in an ocean market. Electric, Caterpillar, Champion, Black and and heading toward an island destination – In 2011, the company will go commercial Decker, and many others that it can’t disclose he began assembling a like-minded team of with another product, NanoGlide, an addi- in print. It has 30 employees but has dreams fellow faculty members who specialized in tive that can improve the performance of of employing thousands in the knowledge- a variety of disciplines and who hailed from lubricants by 30 to 50 percent without using based sector in Arkansas. around the world. zinc phosphorus, which is commonly used in That is why Talk Business has named it Malshe is a mechanical engineer; Dr. lubricants despite being harmful to humans. this year’s “One to Watch” award winner – Dmytro Demydov is a chemist from the An early application would be for wind the Arkansas-based company deemed most Ukraine; Dr. Alan Rae is a ceramicist from turbines, whose gear boxes are susceptible to

(left to right) Dr. Wenping Jiang, Dr. Dmytro Demydov, and Jim Phillips holding a rod cut with a TuffTek-coated tool.

poised for transformational economic growth Scotland; and Dr. Wenping Jiang is a the enormous torque caused by large blades. and leadership. Previous honorees have Chinese physicist. Jiang, who spent only a Meanwhile, NanoMech also has included Baldor Electric, Dassault Falcon few months at the university before moving government contracts with the Office of Jet, Argenta Community Development, and to NanoMech, said Malshe’s vision has been Naval Research to improve the performance Rockfish Interactive. a major factor in the company’s success. of rotors. The company is aiming for $125 NanoMech was founded by Dr. Ajay “Ajay has a lot of ‘crazy ideas’ – a lot of ideas million in sales by 2015 – again by only Malshe, a University of Arkansas professor basically already incubated at the university,” reaching two percent of its potential market. and now the company’s chief technology he said. That’s a big impact for a small product. officer. A native of India, Malshe calls himself Tufftek is NanoMech’s first product that “Think of a density of lubrication a “profeneur” – a professor and entrepreneur. is ready to make a significant impact in the equivalent to a billion ball bearings on the Speaking by phone from India, where he was commercial market. After learning how to head of a pin,” Phillips said. “That’s the arena working on a project with General Electric, make the substance adhere to surfaces – we play in.” he said, “I decided that I’m going to experi- what the influentialCutting Tools magazine Phillips, who graduated from Jacksonville ment a little. Coming to the United States called the “Holy Grail” of cutting – the High School as the son of an Air Force officer, was a big experiment for me. I decided to product was pioneered in 2009 and now is is a well-connected technology entrepreneur do another experiment … to start a small being sold to two auto manufacturers and with a resume that includes serving as a business and to take the knowledge of the to others. By 2015, the company hopes to general manager at Motorola, where his team

TB&P| 2011 12 www.talkbusiness.net introduced cable modems to the market; coating for dental implants and orthopedic products, including Tufftek, were developed bringing to the Internet some of its most devices. The company is working on invisible at and licensed by the U of A, meaning the important photo tools such as 360-degree barcodes, as well as the nanotechnology university will receive royalties of between imaging at iPix, which he co-founded; and needed to produce organic LED screens that two and five percent. introducing the VeinViewer, which makes will make possible the next generation of As for the future, the company whose blood veins visible through the skin using flexible smart phones and screens. marketing slogan is “ThinkSmall” has very infrared light, while he was at the helm of It has been working with Springdale- big plans. Malshe’s dream is “seeing Silicon Luminetx. based Advanced Environmental Recycling Valley in Arkansas.” Phillips envisions its He also raised millions of dollars to build Technologies to produce a decking with factory taking up much of the largely bare the FedEx Institute of Technology at the nanosilver particles that resist mold and industrial park it now occupies. A public University of Memphis, an achievement that mildew. Lab work is being undertaken on a offering eventually will occur. earned him the title of “Innovator of the product that would treat 60 acres with one And it’s all happening pretty quickly Year” by Information Week magazine. pound of nanoparticles with no need for because a revolution is occurring, and He moved to northwest Arkansas this past fertilizers or pesticides, Phillips said. companies all over the world will be jostling decade to join an investment group but be- Phillips expects the company to enjoy for position to lead it. If NanoMech can build gan focusing more and more of his attention rapid growth because it adds value to on its momentum, others will have to fall in on NanoMech, first becoming chairman and, in late 2010, a full-time managing chairman NanoMech headquarters in Springdale and CEO. With many of the products ready or near ready for market, Phillips has been raising capital. During his interview with Talk Business, in fact, he took a call from an investor ponying up a million dollars. The company has gotten funding from a variety of other sources, including the Department of Energy, the National Science Foundation, National Institute of Health, Air Force, Arkansas Department of Eco- nomic Development, the Arkansas Science and Technology Authority, and the Fund for Arkansas’ Future. Phillips is beefing up a sales force that, in addition to Fayetteville, has personnel in Houston, Dallas, Buffalo, Detroit, and Chicago. “When you’re building a company existing platforms in growing economic line behind it. like this, you have to build at the speed of sectors such as those dealing with energy, If that happens, many of the products trust and you have to move very fast,” he the environment, defense, and security. “It’s consumers use in their daily lives will soon said. “You have to always believe that the just ready-made markets, easy to do, no FDA have NanoMech’s stamp on them, though it bear is two steps behind you. You’ve got to approvals,” he said. will be too small for them to notice. But even outrun him.” According to Phillips, a key to taking the if what NanoMech produces is invisible, the NanoMech is working to become a player lead in these kinds of disruptive technologies company itself is one to watch. in other areas. It has developed and already is proximity to a university, where an earned significant revenue selling an abundance of outside-the-box thinkers PREVIOUS antimicrobial spray used for body armor may exist but where the ability to transfer to protect soldiers and Marines from the technology to the real world is sometimes “ONE TO WATCH” infections caused from scratches and cuts. It lacking. According to Phillips, the UA has a AWARD WINNERS is working on ceramics technology that will good tech transfer culture, and it’s getting make that armor lighter and more durable – better with the opening of the Nanoscale Baldor Electric Co. even form-fitting. Material Science and Engineering Building Dassault Falcon Jet Other products include a type of nano- on Dickson Street. Argenta Community packaging under the trade name GuardIN Meanwhile, the University of Arkansas Development Corp. Fresh that keeps produce fresh much longer stands to enjoy significant benefits because Rockfish Interactive than conventional packaging, and a nano- of its relationship with NanoMech. Many

2 011 | TB&P www.talkbusiness.net 13 [calculating the year in business]

OUR TOP With a recession in the rearview mirror and constant chatter of a double-dip downturn on BUSINESS Wall Street, concerns for a fragile economic recovery in Arkansas and across the nation STORIES OF still dominated business headlines in 2010.

2010 However, as Arkansas garnered a reputa- tion for stability in down times – mainly due By TalkBusinessStaff to the fact that the gulf between recessions and boom periods are not as wide as other states – other top business headlines pushed “the state of the economy” out of the top spot. PHOTOS: FOTOLIA TB&P| 2011 14 www.talkbusiness.net although it was later disclosed that ABB had # made previous attempts to buy Baldor. ABB # 1 said it will keep the corporate operation in 3 Fort Smith - a move that the local and state business community hopes to see honored. The $63.50 per share price in the ABB-Bal- dor deal will provide an immediate economic stimulus to all Baldor employees, including about 2,000 in the Fort Smith region.

HOUSING RECOVERY STALLS HEALTH CARE REFORM Home sales across Arkansas started 2010 homebuyers and refinancing were extended No other topic infiltrated the business and with a bang as federal tax incentives for from late 2009. The incentives had been political psyche like health care reform did in 2010. After a Christmas 2009 vote to move a version of the controversial health care overhaul forward, the stage was set for this year and the reform measure stirred political passion and business uncertainty. WALTON MBA The bill led to the defeat of a two-term incumbent U.S. Senator from Arkansas, while creating landmark victories at the RANKED federal, state and local levels for Republicans. Buoyed by TEA Party conservatives, health care reform - and its perceived detrimental effects - became the rallying cry for a move- ment of voters. For businesses, many were quick to take one-time charges and cut benefits as they prepared for the changes. Others stewed in indecision awaiting controversial regulations that will be formed in 2011. From coffee shops to corporate boardrooms, the rollick- ing health care reform debate was the defin- ing issue of conversation for the entire year. #2

SWEDISH SUITOR CHASES BALDOR Among public Zurich, Switzerland-based ABB — a global power and automation systems company MBA Programs that employs 117,000 — announced on (full & part-time) by U.S. News & World Report 2011 Nov. 29 a $4.2 billion deal to acquire Fort Smith-based Baldor in a transaction expected to close in the first quarter of 2011. The gsb.uark.edu/ranked Baldor board unanimously agreed to the deal

2 011 | TB&P www.talkbusiness.net 15 put in place to stimulate the economy from Great Recession as the worst contraction of new acquisition opportunities, especially in its doldrums and they seemed to spark the postwar era,” Kaza said. Florida, Georgia and the Southeast. Other purchases. Dr. Michael Pakko, chief economist and banks to cash in on the deals included Pine In short, anybody who was going to buy state economic forecaster at the Institute for Bluff-based Simmons First and Bentonville- actually did. Economic Advancement at the University of based Arvest Bank. Through May 2010, year-to-date home Arkansas at Little Rock, said the report Still, Arkansas bankers expressed sales in Arkansas were up 13 percent, but as indicated the resilience of the Arkansas trepidation with the recently enacted the year wore on and the incentives phased economy in 2009. financial reform overhaul law known as out, that trend reversed. By the end of “Overall, looking at sectoral decomposi- the Dodd-Frank Act. November 2010, year-to-date home sales in tion of GDP in 2009 for the nation, it is Reynie Rutledge, Chairman of First Arkansas were more than six percent lower even more remarkable that Arkansas’ GDP Security Bancorp and former chair of the than the same period in 2009. displayed positive growth for the year,” Arkansas Bankers’ Association, said he Meanwhile, the number of bankruptcies Pakko said. lobbied Arkansas lawmakers to kill the in Arkansas was up 1.7 percent compared federal bill. He said increased insurance to a year ago. Year-to-date through Novem- limits for depositors, the recalculation of ber, 26,749 Arkansans filed for bankruptcy # FDIC premiums for community banks, and of some kind. Of that total, 21,286, or 81 5 the Fed’s additional powers and ability to percent, were Chapter 13 filings, the most monitor systemic risks to the overall common liquidation that allows homeowners economy were all good outcomes of the new to modify their mortgages and repay their law. outstanding debt over three to five years. However, Rutledge argued that too much new regulation for smaller banks and the # soon-to-be-powerful Consumer Financial 4 Protection Bureau will hurt Arkansas ARKANSAS BANKS FIND DEALS, BUT institutions. WARN DISASTER LOOMING With the closure of troubled First # Southern Bank in Batesville near the end of 6 the year, there have only been two Arkansas banks to land on the FDIC’s “failed banks” list in the last decade. At the same time, Arkansas banks emerged as major players IT’S STILL THE ECONOMY, STUPID in acquiring insolvent banks across the U.S. Surprise, Surprise, Surprise. from the federal government. A recent revised GDP report showed an As of Dec. 17, of the 157 Federal Deposit even gloomier picture of the U.S. economy in Insurance Corp.-insured institutions to crash 2009, with construction and manufacturing in the past year, Arkansas banks snapped STATE JOBLESS PICTURE MIRRORS showing the biggest declines. However, some up more than a dozen failing lenders in six NATION AS UNEMPLOYMENT were impressed with Arkansas’ toughness states with assets of more than $3.5 billion INSURANCE DEBT GROWS after reviewing the national trends. and customer deposits worth another $3.1 The employment picture for the state The federal Bureau of Economic Analy- billion. of Arkansas is a microcosm of the nation’s sis reported in December 2010 that 16 of 22 Bank of the Ozarks announced a week jobless recovery. Essentially, Arkansas’ labor “major industry groups” contributed to the before Christmas that it had entered into a market is mostly unchanged from a year ago, decline in real GDP growth in 2009. The deal to purchase assets and assume depos- except for the fact that the state’s civilian construction sector, down for the fifth its of Chestatee State Bank of Dawsonville, labor force is shrinking in size. consecutive year, saw economic activity Georgia. It is the fourth bank that Little Otherwise, the statistical information decline 15.6 percent in 2009, compared to a Rock-based Bank of the Ozarks has taken compiled each month by the Arkansas 5.7 percent decline in 2008. over this year. Department of Workforce Services is very Greg Kaza, an economic researcher and Conway-based Home Bancshares, the similar to 2009 – mired in the mud. For executive director of the Arkansas Policy parent company of Centennial Bank, example, Arkansas’ seasonally adjusted Foundation, said the revised BEA report is purchased six troubled banks from the unemployment rate has largely stalled, rising yet more confirmation of how deep the FDIC’s failed bank inventory. Home only three-tenths of a percentage point in recession was. Bancshares and Bank of the Ozark executives the past year, from 7.6 percent in November “The release confirms the severity of the have indicated they will continue to seek 2009 to 7.9 percent in November 2010. PHOTOS: FOTOLIA TB&P| 2011 16 www.talkbusiness.net 2 011 | TB&P www.talkbusiness.net At the same time, there are now 1,350,900 debt, but Arkansas business and government directors to Dillard’s board, New York-based in the state’s civilian labor force, a total of leaders don’t expect that to happen. Barington Group said changes were needed 23,300 fewer workers and jobseekers than a to improve the company’s operations, profit- year ago. Of that total, 1,244,400 Arkansans ability, corporate governance and share price were employed, more than 25,000 less than # performance. a year ago, as another 106,500 Arkansas 7 How things have changed. residents were out of work. Today, Dillard’s is one of the darlings of Meanwhile, the Arkansas legislature will the retail sector and recently landed on the face the looming question in the upcoming Fortune 500 list of top performing stocks of session of how the state will get a handle on 2010 at #10 with a year-to-date yield of 97 a nearly $400 million debt to the federal percent. It has traded above $38 per share in government related to unemployment ben- recent days. efit payments. The fund pays unemployment DILLARD’S, TYSON FOODS MOUNT The turnaround hasn’t been easy. Dillard’s insurance to workers who have lost their COMEBACKS had to significantly cut costs to stay afloat. jobs. However, since more workers across Christmas in 2009 or the year before Since 2008, the retailer has closed numerous the state are unemployed, the fund’s debt wasn’t a very merry affair for Dillard’s. But stores, shaved employees at its home office, continues to grow as more cash is being 2010 has been a year to remember for the and introduced strategies to more efficiently paid to jobless workers at a faster pace than Little Rock upscale retailer. manage its inventory. The net result was a employers can replenish the trust. It seems like only days ago when the Little profitable first three quarters in 2010. And Arkansas has been borrowing from the Rock retail chain’s stock fell to under four to top it off, Dillard’s recently announced feds since 2009 and the deficit of the state dollars a share. That precipitous drop in the that it will add 300 new jobs to the Arkansas unemployment trust fund is expected to spring of 2009 caused two New York hedge economy by locating an Internet Fulfillment reach $450 million in 2011. Other states are funds to seek changes to the company’s Center in Maumelle. in similar straits and some are in even deeper board of directors, voicing that the Dillard’s Tyson Foods’ turnaround in 2010 was holes. Officials in other states are hoping clan should be kicked out of the execu- a magnified mirror image of Dillard’s. The that the federal government will forgive the tive suite. In a proxy fight to add four new Springdale-based meat giant’s full year

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TB&P| 2011 18 www.talkbusiness.net earnings topped $780 million compared to drive upscale shoppers into Wal-Mart stores. car taxes, income taxes and more. a $547 million net loss in the previous year. A few months later, Wal-Mart Stores Beebe says that the half-cent grocery tax For Tyson, it was a back-to-basics approach announced that the board of directors had cut is all the state can afford, setting up a that helped restore company confidence and selected Charles Holley to succeed veteran potential showdown with lawmakers when reduce its debt to its lowest level in a decade. CFO Tom Schoewe. Shortly after taking on the 2011 General Assembly convenes. Tyson CEO Donnie Smith said that the the chief financial officer’s job, Holley made current fiscal year was off to a “strong” start. a big splash on Wall Street by announcing # He said Tyson Foods expects all segments the global retail giant’s plans to boost tepid 10 of its operation to increase production next U.S. sales and build upon international sales year and he noted that exports are likely to growth. grow in 2011. If Tyson stays the course, then Key aspects involve the company reducing the phrase “turnaround” may be replaced capital expenditures for fiscal year 2011 and with “business as usual.” refocusing on smaller markets with smaller stores - a move perceived by many retail analysts as an effort to compete with dollar # stores. FAYETTEVILLE SHALE DRILLING 8 More recently, Wal-Mart announced that MATURES Jeff Davis would be replacing Holley as Fueled by billions of dollars of new senior vice president and treasurer. Davis investment in the Fayetteville Shale, assumes responsibility for treasury Arkansas is now the 7th largest producer of operations, capital markets, investor marketed natural gas in the U.S., trailing only relations and risk management. Texas, Wyoming, Oklahoma, New Mexico, Colorado and Louisiana. WAL-MART EXECS PLAY MUSICAL Arkansas leapfrogged states such as CHAIRS # California, Utah and Alaska to jump into the Years from now, Wall Street analysts 9 nation’s top 10 in 2008, and has remained may look back at 2010 as a year of dynamic strongly in the position in 2009 and change at Wal-Mart, beginning in the execu- throughout 2010. The surprising ranking tive suite. comes from recent annual reports compiled Wal-Mart president and CEO Mike Duke, by the Energy Information Administration, who took over two years ago after the sur- housed in the U.S. Department of Energy, prise announcement that company chief Lee and requested information from the Scott would step down, began putting his TAX CUTS EMERGE AT STATE, FEDERAL Arkansas Oil and Gas Commission. stamp on the company in 2010. LEVEL In July, the company announced that A lame duck Congress passed a renewal OTHER SIGNIFICANT STORIES Duke’s former rival for the company’s top of the Bush-era tax cuts for two years as in 2010: spot was taking a new role as the president Democratic President Barack Obama and t
Windstream Continues its and CEO of Global.com and Global Sourc- GOP Congressional leaders struck a deal to Acquisition Binge and ing. Eduardo Castro-Wright, Wal-Mart’s vice extend the popular cuts. Recommitted to Little Rock as chairman and head of the company’s flagship The $858 billion compromise keeps in its Corporate Headquarters U.S. operations, was replaced by Bill Simon as place the Bush tax cuts, including tax rates t
Former Alltel Execs Form New president and CEO of Walmart US. for the wealthy that Obama had vowed to let Telecom Startup in Little Rock Although not termed a demotion, the expire. The deal also included a 13-month with 250 Jobs company said Castro-Wright would be extension of jobless benefits for the t
Southwest Power Pool relocating to the west coast and focusing on unemployed and a nearly one-third cut in Announces $62 million the retailer’s global sourcing and e-commerce payroll taxes that finance Social Security. Headquarters and 200 Jobs t
Arkansas Best and the Teamsters strategy. At the state level, Gov. Mike Beebe Union Caught in Legal Battle Shortly afterwards, Simon began proposed taking another half-cent off the t
SWEPCO’s SW Arkansas Saga restructuring the senior leadership at Arkansas grocery tax in his conservative, Persists After Legal Wrangling Wal-Mart domestic operations with the pre-session balanced budget. But Repub- t
UA System Receives $102 Million announcement that longtime Chief licans - and some Democrats - want more. Broadband Boost from the Feds Merchandising Officer John Fleming was More than a dozen pre-filed bills called for resigning from the company. Fleming additional state tax cuts. Proposals include Continue to see our top Political Stories of 2010 oversaw the company’s failed attempt to cutting the capital gains tax, new and used PHOTOS: FOTOLIA 2 011 | TB&P www.talkbusiness.net 19 PHOTO: FOTOLIA PHOTO: It was a banner year for political headlines in Arkansas. Retirements of veteran lawmakers, heated and crowded primaries, and some hotly contested general elections turned the state’s political establishment on its head. So here they are - the

TB&P| 2011 20 www.talkbusiness.net The end result is that Arkansas’ federal # delegation flipped from a 5-to-1 Democratic # 1 advantage to a 4-2 Republican tilt in one 4

election cycle. Arkansas’ constitutional FLICKR PHOTO:

PHOTO: FOTOLIA PHOTO: officer composition, which dictates majority- minority party status, is now just 4-3 for the Democrats. And, in the Arkansas House and Senate, Democrats hold very slim majorities that could easily reverse in the 2012 elections.

# GOP TAKES 3 OF 4 CONGRESSIONAL HEALTH CARE REFORM 3 SEATS Interestingly, the top political story of Early and unexpected 2010 retirements 2010 was also the top business story on our from longtime Reps. Marion Berry and Vic list. Snyder left the Democrats scrambling for

Health care reform was an albatross for CAMPAIGNS CANDIDATE PHOTOS: replacements in an election year that was Democrats at the federal, state and even local challenging for the party of Jefferson and level. Health care political dynamics led to Jackson. Unrest with the Obama adminis- our #2 story and more. tration, frustration over health care reform and government activism, and out-of-control federal spending made for volatile # Congressional politics in Arkansas. 2 LINCOLN DEFEATED BY BOOZMAN As we’ve noted, it was the year of the This story is a tangible outcome of #1 Republican. and #2. Sen. Blanche Lincoln, a fixture in In the First District, Republican Rick Arkansas politics since 1992, was ousted in a Crawford won by nine percent over Berry’s landslide in 2010. The two-term Democratic chief of staff, Democrat Chad Causey, to Senator was at the center of controversy in become the first Republican since Recon- the federal health care debate and on other struction to hold that Congressional seat. issues. Her fate was known for months Despite Crawford’s scripted responses and despite a heavy campaign schedule and the personal bankruptcy, First District voters power of her Senate Agriculture chairman- sent a clear message that they wanted a new ship. direction in Congress. GOP TIDAL WAVE SWEEPS ARKANSAS Lincoln was a pinata for conservatives In the Second, controversial candidate Tim Arkansas Republicans may have never thanks to her casting the decisive vote to Griffin, a Republican with ties to George W. had it so good. Riding the waves of voter allow federal health care reform to move Bush and Karl Rove, handily won his race discontent on health care and other issues forward. She also did not endear herself to against Democratic State Senator Joyce and fueled in part by a visible conservative liberals with her health care positions and Elliott. TEA Party movement, the GOP saw unprec- other policy statements regarding labor and And, the Third District - a safe haven for edented gains at all levels of government in environmental issues. This just wasn’t the Republicans - saw a supermajority victory for 2010. They picked up Congressional seats, year for a “centrist” candidate and Lincoln Rogers Mayor Steve Womack after a crowded constitutional offices, statehouse victories found herself squarely in the middle of and competitive primary. Womack was and local representation. partisan crossfire. immediately tapped for important posts on There were plenty of GOP candidates Third District Cong. John Boozman, who the powerful Appropriations Committee and prepared to challenge for seats. At one point impressively won an 8-man GOP primary was recruited to be part of the GOP “whip” in time, there were 12 Republican candidates without a run-off, held his own in the few leadership in the House, as was Griffin. running for the U.S. Senate race. public debates with Lincoln. All he really Rep. Mike Ross, the lone federal Democrat It rarely mattered what some of the GOP had to say was, “I’m not Blanche Lincoln.” in Arkansas to win re-election, all but ran as a candidates said. If there was an “R” after the His bland but steady campaign scored him a Republican. He had a “D” after his name, but name, it was beneficial. Gov. Mike Beebe and 21-point victory on November 2nd and his positions on taxes, health care, illegal Cong. Mike Ross were the only Democrats made him the second Republican since immigration, and House Speaker Nancy with Republican opponents who escaped any Reconstruction to serve as a U.S. Senator Pelosi made it clear that he wanted as little casualties. from Arkansas. to do with the party label as possible.

2 011 | TB&P www.talkbusiness.net 21 5 POLLS THAT SURPRISED # In 2010, Talk Business launched a new polling division in conjunction with 5 Hendrix College’s political science department led by Dr. Jay Barth. Our polls were an excellent barometer of what was happening politically in the primaries and general election. Here were our 5 most surprising poll results. In early September, we tested the strength of little- # known Republican and Democratic constitutional officer 1 candidates and found that there was a huge generic GENERIC Republican advantage. We polled races for Lt. Gov., REPUBLICAN Sec. of State, and Land Commissioner and found the ADVANTAGE unknown Republicans had double-digit leads over their PHOTO: BEEBE CAMPAIGN PHOTO: Democratic counterparts. The polling leads proved to be foreshadowing of the eventual outcomes. In the three open head-to-head match-ups between Democrats and Republicans, the GOP won all three. Lt. Gov. Mark Darr, Secretary of State Mark Martin, and Commissioner of State Lands John Thurston led the Republicans to unprecedented state- wide gains and pulled them within one elective office of BEEBE EASILY RE-ELECTED achieving majority party status in Arkansas. In any normal election year, the re- In August, our first general election poll between election of an Arkansas Governor would be a # Crawford and Causey showed the Republican leading by 2 16 points over the Democrat in this district that had not contender for the top political story. But this REPUBLICAN been represented by the GOP since Reconstruction in the was not a normal year. RICK CRAWFORD 1800’s. The poll results were so incredulous, we polled One could argue that popular Democratic it twice and got the same result. Our final poll in that POLLS WAY AHEAD incumbent Gov. Mike Beebe’s cakewalk to an OF DEMOCRAT race right before early voting started in mid-October, CHAD CAUSEY showed Crawford with an 8-point advantage over Causey. election night victory despite the Republican He won two weeks later by 9 percentage points. tsunami that engulfed Arkansas may make it In April, we tested a few primary match-ups and the #1 political story of the year. # found some surprising results. Notably, latecomer to the Beebe’s re-election with 64 percent of the 3 Republican Senate field, Third District Cong. John vote was a remarkable feat considering the BOOZMAN Boozman pulled 46 percent of the vote, nearly four environment, but he was aided by four years HOVERS AROUND times his nearest competitor State Senator Gilbert 50 PERCENT Baker. All of the other GOP Senate wannabes were in of solid stewardship, bipartisan respect, and IN CROWDED single digits. about $5 million in campaign funds. PRIMARY Many critics suggested that there was no way For GOP challenger Jim Keet, it was a Boozman could win a crowded 8-man Senate field with- out a run-off, but as it turned out Boozman was capable. quixotic run that simply ran out of gas in the He pulled 53 percent in the May election in route to a home stretch. rout of Blanche Lincoln in the fall. Beebe will have his challenges with the # That same round of polling showed that a completely new Republican minorities, but he has always unknown Democratic Senate candidate, D.C. Morrison, been a solid negotiator and capable govern- 4 registered at about 10 percent of the primary vote and ment leader. We suspect he’ll score his fair D.C. MORRISON could thrust Blanche Lincoln and Bill Halter into a COULD FORCE Senate primary runoff. share of political victories during the next SENATE RUN-OFF Morrison, a first-time candidate who billed himself four years, and absent any major scandals, as a conservative, had a hard time identifying a current will likely leave office with one of the highest Democrat he’d support. He had voted against Mike Beebe just four years earlier. approval ratings of any Arkansas Governor. We were harshly criticized by the Lincoln campaign in particular for those poll results that showed Mor- rison with so much traction. As fate would have it, D.C. # Morrison wound up pulling 13 percent of the statewide 6 Democratic Senate primary vote and did indeed force that runoff. Finally, Talk Business was the first to tip you that # Speaker of the House Robbie Wills, the deemed front- 5 runner in the Second Congressional District Democratic CAMPAIGN HALTER PHOTO: ELLIOTT Primary, was actually in second place in that race. Our LEADS WILLS polling showed State Senator Joyce Elliott with a 21-16 percent lead - a trend that carried through on primary election night and through a heated run-off campaign. HALTER CHALLENGES LINCOLN Of course, Elliott lost handily to Republican Tim Griffin Lt. Gov. Bill Halter would kill you at poker. in the general election. For months, the one-term Democrat

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2 011 | TB&P www.talkbusiness.net 23 played his cards close to the vest on a and Joyce Elliott. To no avail. All three vehicles for personal use. The routine story possible primary challenge to embattled candidates lost convincingly, suggesting that took on a life of its own as other state incumbent Sen. Blanche Lincoln. When he even the old Clinton magic couldn’t pull the government officials and agency workers finally laid his cards on the table in the rabbit out of the hat in the 2010 election were discovered to have state cars for March filing period, it was clear that Halter environment. personal use. had been preparing for the race for some It helped the story stay alive that officials time. # like Attorney General Dustin McDaniel and He quickly ramped up a campaign 8 State Treasurer Martha Shoffner made operation, tapped money sources from the comments that fueled the story further. left, and gave Lincoln a run for her life for Republicans seized a political opportunity

the Democratic nomination. A third primary FOTOLIA PHOTO: to tie any abuses - real or perceived - to candidate, conservative D.C. Morrison, Democratic officeholders since they held all offered another alternative to Democrats the elected offices that were scrutinized. wanting to send Lincoln a message. In Gov. Beebe ultimately conducted a review the end, Morrison forced a Halter-Lincoln of state policy and enacted a directive run-off, and Lincoln squeaked out a narrow aimed at curtailing abuses throughout state victory. LOTTERY WOES agencies. The story remains in the headlines The Halter-Lincoln race will be a poster The Arkansas Scholarship Lottery provided today and will likely be a subject of discus- child for students of political history for thousands of college-bound students with a sion in 2011 as state lawmakers tackle the years. Halter’s Internet savvy and message much-needed boost. However, much of the issue in the legislative session. discipline was a stark contrast to Lincoln’s lottery’s goodwill was spent defending its and the bruising campaign ads exchanged actions at the administrative level. # between the two candidates provided daily Despite a rapid ramp-up, Director Ernie 10 fodder for those covering politics. Passailaigue found himself fending off critics versus receiving pats on the back. Lottery officials danced around some early adminis- # trative snafus until a legislative audit opened 7 up a can of worms that led to two lottery PHOTO: FLICKR PHOTO: commissioners calling for Passailaigue’s PHOTO: FLICKR PHOTO: ouster. Critics pointed to lax compliance with state travel reimbursement records, questionable contract agreements, and hiring workers without proper background HUCKABEE MOVES TO FLORIDA, checks. The soap opera involving the REMAINS IN PRESIDENTIAL SPOTLIGHT independent state agency even led Gov. Former Arkansas Gov. Mike Huckabee CLINTON COATTAILS DIMINISHED Beebe to comment, “All in all, I’ve been parlayed his unsuccessful 2008 Presidential We learned something new about the pretty unhappy with events.” run into a high-profile national media Bill Clinton political machine and its reach presence through Fox News and ABC News. in Arkansas in 2010. Clinton still holds # Huckabee moved his primary residence sway with Democratic voters, but his clout 9 from Arkansas to Florida in 2010 - either an is diminished with general election attempt to lower his tax bill or an effort to participants. position himself in a delegate rich state for Clinton threw his heavyweight status a future Presidential run. Who knows? He

behind Blanche Lincoln in her primary race FOTOLIA PHOTO: may just like the beach. against Halter, although Halter had served in Nonetheless, Huckabee remains a visible the Clinton administration. Many will argue and popular national political figure. His that the last-minute Clinton surge in the media enterprises have increased his house- Halter-Lincoln run-off provided Lincoln with hold name ID and he remains a contender for the final kick needed to win the race. the GOP Presidential nomination in 2012. In the general election, Clinton expended CAR CONTROVERSY Huckabee declares he is undecided at this his political clout to boost the fortunes of The Arkansas Democrat-Gazette initiated juncture and 2011 will be a pivotal year to Lincoln again, as well as Democratic an inquiry into outgoing State Land make his decision. We suspect we’ll be Congressional candidates Chad Causey Commissioner Mark Wilcox’s use of two state writing more about him in the new year.

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2 011 | TB&P www.talkbusiness.net 23 TB&P| 2011 26 www.talkbusiness.net Gov. Mike Beebe discusses his tactics for moving the state forward in an era of n the mid-1980s the Arkansas Times, then evolving agendas. a monthly magazine, published an admiring By JohnBrummett profile article on a rising Democratic political | Contributing Writer star, the “next Bill Clinton,” some were saying. The subject was a young lawyer and Democratic state senator from Searcy named Mike Beebe.

The piece concluded by saying that Beebe was no Clinton and by explaining the difference: After Clinton delivered a speech, he was inclined to ask you how he had done. After Beebe gave one, he did not ask because he did not seem to wonder. He knew, or at least appeared to assume, that he had done well.

2 011 | TB&P www.talkbusiness.net 27 A Blueprint for a Redenning State

Gov. Mike Beebe (D)

I thought about that during the last week of 2010 after I sat for prison reforms by which we would begin to incarcerate fewer types more than an hour with Beebe in the governor’s conference room at of offenders and reverse a jail-spending trend that will otherwise the state Capitol to interview him for Talk Business and the Arkansas bankrupt the treasury. You will notice that his priorities tend to be News Bureau. budgetary or at least fiscally driven. I drew the session to a close by asking the governor whether he, at But, as is his custom, he will do more flanking than charging. He the age of 64 and beginning his last term after a nearly 30-year career says: A highway tax program is politically unlikely, but up to the as a leading fixture of state government, had begun to ponder his legislature. Tax cuts emanating from legislators, beyond his food tax legacy. drawdown, will need to be accompanied by sound legislative plans to You will recall, perhaps, that Clinton spent much of his latter days find the money in the budget. He has no plans to engage directly in in the White House openly considering his legacy. But Beebe told me the natural gas severance tax issue. It is up to business and labor, and that he did not think so much about his. He said his legacy would in their interests, to agree on how to repay the federal government take care of itself over time if he did his job well and stayed in the for unemployment compensation borrowing because, otherwise, the moment. federal government will do it for them. He has ideas for ethics reform He said he was better as a tactician than strategist and he invoked but is hesitant to presume to try tell legislators how to behave in a military metaphor to explain that he had “always been better on the their separate and co-equal branch of government. battlefield than back at the map.” Along the way in this interview, Beebe said: That is stylistically better than -- but not substantively much t
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So that led me to ask about the prevailing criticism of this that, he emphasizes -- that Arkansas employers will drop their uncommonly popular governor. It is that he has been more employee health insurance plans under the new health care law transactional than transformative as a leader -- dealing with matters and choose instead to pay the penalty for uninsured employees as they arise rather than with his own forward-looking agenda -- and entering new health care exchanges. that he has failed to take full advantage of his bountiful political t
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capital, relying too much on caution and pragmatism. possible damages -- to pass a bill presuming to defy the federal Beebe went off a bit about that, albeit genially. He quoted Teddy government’s health insurance mandate. He wants legislators Roosevelt as saying that honor goes to the one in the arena. He who support such a notion to come to terms with the risks. quoted me, actually, as having once said – not originally -- that a But he will not vow a veto of such a bill because that would columnist’s job is to come in the day after the battle and shoot the take legislators off the hook by letting them rely on his certain wounded. He built on the military metaphor to say that sometimes it backstop. is best to charge the enemy straight-on, but that sometimes it is best t
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to flank him. lobbyists and thinks a “Wal-Mart rule,” by which a legislator He will do some charging in this legislative session as he confronts could not accept so much as a cup of coffee from a registered the most Republican-invaded legislative culture in the state’s history. lobbyist, could work. He will insist on lowering the grocery tax another half-cent. He will What follows are choice extended excerpts from the interview. insist on finding long-term savings in Medicaid. He will push for

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2 011 | TB&P www.talkbusiness.net A Blueprint for a Redenning State BRUMMETT: Governor, you’ve been a like what goes on in Washington and they Republican. Do you have a take on them? fixture of legislative sessions since ‘83. decry just lining up based on party, and if BEEBE: They’re not monolithic. They’re not BEEBE: Correct. the General Assembly did that, I think they one voice in one group. They’re like every- would be punished or those people who are body else. They’re like the Democrats. You BRUMMETT: Now would be the fourth identified as doing that will be punished by have some that are more moderate, you have decade, 25 years, 27 seven years. And you’re the voters and I think most of those folks some that are more conservative. You have a master of it, people believe. You have great are smart enough to know that. That doesn’t some that are interested in education issues command of the legislative culture, but right mean there won’t be differences, it doesn’t and some that are interested in lower taxes. now hasn’t that culture completely turned mean there won’t be ideological alignments So, you can’t paint them all with the same upside down on you, with the recent elec- that reflect party and reflect what they ran brush. They’re just like anybody else that gets tion? on, but the overt, rank partisanship for the elected to the General Assembly. They’re a BEEBE: Well, if it’s purely a partisan sake of it, I don’t believe... composite of people with different likes and analysis, it’s turned completely different. dislikes and priorities that won’t cause them I don’t yet subscribe to the idea that Little BRUMMETT: By that, you mean voting to look as if they are just one group or one Rock or Arkansas or specifically that the strictly according to your party to obstruct person. General Assembly is going to succumb to the the other party? partisan trap that we see in Washington. You BEEBE: Correct. BRUMMETT: So you’re describing the pos- know, throughout that 28 years or whatever sibility of a legislative session that would not it’s been, we’ve seen divisions, whether it’s BRUMMETT: You don’t think the people be notably different from others? urban and rural, or north and south or east would stand for it and you don’t expect it to BEEBE: Yeah, I’m describing one that’s not and west, or demographically, change differ- happen? as dire in terms of a political divide as a lot of ences and cause those rifts. If we see it on a BEEBE: Correct. the people who are watching all this, writing partisan basis, I’ll be disappointed. about it, talking about it, fear. I could be I think the people will punish anybody BRUMMETT: Now, you’ve been hav- wrong, I’m the eternal optimist, but only that does it, on either side of the equation. ing some gatherings - or you did over the time will tell. Arkansans don’t like that overt partisanship, holidays - in which you had the opportunity we see it evidenced all the time. They don’t to meet these newcomers, 44% of which are BRUMMETT: What about your prepara-

TB&P| 2011 30 www.talkbusiness.net tions? Is there anything different - consider- Democrat on the Congressional delegation to of what I was talking about - if they don’t ing that you’re encountering a Republican 4 to 2 Republican, so this stuff is volatile. It know you, this was a generic “R” year. If they caucus of size - is there anything you’re doing can change overnight. knew you, then what happened is my race. differently in the way you’re approaching it? So, I don’t think there’s any lasting trend BEEBE: Well, one of the things that’s that you can say for sure that things have had BRUMMETT: Okay, let me ask one more different is, I think you reach out to their a watershed, permanent change. I think the in that regard. Was your unusual success as a leadership more because you have to involve potential does exist there. I think you have to Democrat a result mostly of the fact that you them more, they need to be involved more, watch it. If it continues for 2 or 3 more elec- are well-known or is it also a factor that at they need to be part of the solution. And tion cycles, then I think you can fairly well the state level as the Governor, a Democrat when you’re running for office, you can make say that it’s a two-party state. can avoid some of the national liberal label- all sorts of claims, all sorts of promises, and ing that a member of Congress, having to have all sorts of ideas. BRUMMETT: The other side of that cast those votes, cannot afford? When you actually have to govern, often question is do you think it may be possible - BEEBE: I think both of those things are times, those initial thoughts get tempered. I you’re not saying it is - but it may be possible true, but remember what I’m talking about is don’t mean that in a bad way. I don’t mean that this was an anomaly, an abhorrent not necessarily the Congressional elections, that they’ll just say something and then occasion brought on by national issues and I’m talking about the constitutional officer totally change their mind. But the realization circumstances and a public mood that was elections and the legislative elections all of that your responsibility, the burden that ends especially strong at that time. which fall into that same category you just up on your shoulder as a member of the Gen- BEEBE: It could be. And all you have to mentioned about a Governor being able to eral Assembly, particularly in leadership roles do is look at my election to suggest that it avoid national issues. So I think what I said is in the General Assembly, often causes people wasn’t just a purely partisan election. I said applicable kind of across the board. to have a different perspective and mollify or throughout the course of the campaign, modify their positions somewhat so as to be going back to the summer, that this was a BRUMMETT: You would also agree that more pragmatic and less ideological on some generic “R” year, a generic Republican year, you’re probably, I’m going to try to get you to of the issues. I foresee that you’ll see some of which meant that if the voters didn’t know label yourself, you’re not going to do that but that. you well enough - now they knew everybody at least a centrist, maybe center-right... - but I mean substantively know you well BEEBE: Yeah I’m a moderate. I’m fiscally BRUMMETT: All right, the final question enough to vote for you or against you based conservative and on social issues I’m much in this new culture here. I want to get your on who you were or what you’ve done or how more moderate to sometimes liberal. political expertise. I suspect that you have they feel about you, that the default was to some considering the vote that you got in the “R”, the default vote when they didn’t *************************** the recent election. Have we now entered a know who you were, favored the Republican, permanent two-party culture? Have things just like in ‘06 it favored the Democrat. BRUMMETT: Let’s move to some issues permanently changed in Arkansas in our So we saw that occur and you know then that are likely to arise in this new politics and in our legislative politics, do you everybody thinks everybody knew Shane culture which may or may not be fundamen- believe? Broadway but people don’t. The insiders tally different, that we’re getting ready to BEEBE: I don’t think you can say that yet. know, but John Q. Voter didn’t know those encounter. If I know these Republicans, the Certainly, that’s a possibility but I remember folks and certainly they didn’t know them to two or three things they’re going to do, and in ‘08, two years ago, they were talking about the extent that they felt comfortable voting one thing I’m fairly certain they’re going to the Republican party being dead in Arkansas. based on that person, so you saw a default to do, is attempt to do what I think Missouri They couldn’t field a candidate against a sit- the “R” and even then it was a very close race. and Virginia have done and some other ting U.S. Senator, not even a candidate, and We saw in polling for the last several states, and that is pass a state law, seek to the numbers were such from ‘06 you had all months in both the Secretary of State’s race enact a bill, that says an individual cannot be seven constitutional officers were Democrats and the Lt. Governor’s race had a huge unde- mandated to go buy health insurance in this after having a couple of Republicans for a cided going right up to the last week, 30-35% state. Simply, seek to defy, differentiate from, decade. You had a reduction in the number undecided - flip-flopping from week to week or even defy the federal healthcare mandate. of Republicans in the General Assembly and because we polled every week - flip-flopping Do you expect that to come? What do you they were saying the Republican party was every week from the Democrat being up to think about it? If you had to, might you veto dead. two to the Republican being up two, it was such a thing? Well, we saw that that’s not true and in that volatile. BEEBE: Do I expect it? Yes. What does it just two short years they had the largest So when both the Republican nominee for mean? Depends. If all this litigation running number of members of the General Assembly Lt. Governor and the Republican nominee for through the various federal courts result in in history, or at least going back to Recon- Secretary of State ended up winning by two that end, in other words a court declaring struction. And they have 3 of the 7 constitu- points, or three points or whatever it was, it unconstitutional the federal mandate that tional officers and they’ve flipped from 5 to 1 wasn’t a surprise and it was further evidence people have to buy health insurance, then

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More than 50 locations in Arkansas | my100bank.com | 501-812-1400 TB&P| 2011 32 www.talkbusiness.net A Blueprint for a Redenning State it doesn’t mean anything. It’s a legislative BRUMMETT: How about the healthcare the state who now provide in a responsible pronouncement of what would be handled reform law in general? I think your insurance way as an employer health insurance cover- judicially, ultimately by the Supreme Court department and various agencies of state age for their employees who are saying to you because you’ve got different rulings right government are beginning to implement it as directly, “I think it’s a better deal if I just let it now from the various federal district courts. they must, or doing what is necessary to set go and pay the penalty.” What I worry about is if that doesn’t it up. How are you feeling about it these days, Beebe: No, nobody’s said that to me direct- happen, if it’s not thrown out by the federal in terms of whether it’s a workable, wise ly. I’ve gotten reports that people are saying judiciary, and we pass something like that, policy? You were worried about the Medicaid that. We are trying to get to the bottom of it what’s that going to cost our taxpayers? cost? and see if that’s accurate or if that’s merely a Because inevitably there’s going to be a law- BEEBE: Worried about the Medicaid cost scare tactic or if it’s innaccurate information. suit, inevitably there’s going to be damages, and I’m worried about some of the substan- inevitably there’s going to be repercussions tive parts on business, and let me tell you BRUMMETT: The other thing I know about from that. So if anybody does that, they what I’m talking about. I have gotten anec- Republicans is true is that we’re going to need to be prepared to understand what the dotal reports that it will be cheaper for some have quite a bit of discussion in the coming potential cost to the taxpayer might be. I of these companies to just quit paying health weeks about cutting assorted taxes. I think think it’s all premature right now to know insurance for their folks that they currently that’s a big thing. Let’s start with your tax how that... are paying and pay the penalty. cut. Is it your position that that’s absolutely If that’s true - and I’m not saying that’s all we can afford, period end of story. BRUMMETT: Well, I know, we’ll wait for BEEBE: It’s the only thing of any substance a Supreme Court ruling. It stands to reason or size that we can afford. If you’re asking me the legislative session will occur before the is there a million dollars here or two million Supreme Court ruling. You expect such a bill there that we could scrape up or find, I’m not to be introduced. going to be naive enough to say no there’s BEEBE: Yes. not a couple million dollars somewhere. However, all the tax cuts people are talking BRUMMETT: Very possibly passed in this about that I’ve heard are unsustainable under culture. our current projected revenue without sig- BEEBE: It’s possible. nificant cuts to major programs and the only significant tax cut, and if you want to call it BRUMMETT: And you’re saying, well you significant it’s only about 22, 23, 24 million need to understand the damages, the effect dollars, only about 15 out regular GR [gen- of what you’re doing, but are you going to get eral revenues] without the other educational out there and say, “Please don’t send me this excellence or adequacy funds being counted, because I think this is a bad idea, considering is the half cent on groceries that I proposed. the timing and the potential exposure to the That’s the only significant tax cut that I think John Brummett engages Beebe. state.”? we can afford without busting this budget. BEEBE: I very well may say that. true, I’m saying anecdotally we’ve gotten And when I proposed it, we built a budget some preliminary reports in some instances around that proposal. It wasn’t just proposed BRUMMETT: Why would you not? that that is the case. If that’s the case, then in a vacuum, it was proposed in conjunction BEEBE: I suspect I would say that. What it’s totally counterproductive. It would with the entire budget. I would not tell you is anything that would have the opposite of what it’s intended to cause people to be less than responsible and do and that is to get more people covered BRUMMETT: I know, but you and I have think I’m going to take care of everything. with insurance, spread the cost of healthcare had this discussion before and I think I hear across the board more and if that’s true, that you saying, “Look, this budget is based on BRUMMETT: I see. The old maxim that you needs to be fixed immediately or it creates revenue projections that are reasonable, don’t give away your hand or you don’t give another problem. My opposition to it based counting my grocery tax, and we can’t go any them a free shot to do something politically on Medicaid has been well documented since lower than what I’ve said.” You’re basically expedient, because the Governor is going to the outset. saying, “Mine is it, you all can’t find anything veto it anyway - you’re not saying that. Your else in here that I haven’t found.” Do you counsel will be: this is troubling, be careful. BRUMMETT: But that’s purely fiscal, you believe that to be the case? BEEBE: My counsel is this is troubling. shouldn’t make us have to spend money we BEEBE: I believe that to be the case. Be careful and if it’s going to cost us some don’t have. But when you say anecdotal in- money, you people doing this need to be formation - and I’ve heard this, I heard Sen- BRUMMETT: Before we dispense with the prepared to acknowledge that and to take ator-elect Boozman talk about it frequently grocery tax, I think you may have answered responsibility for the consequences. in his campaign - that there are employers in this before but I want to make sure. Another

2 011 | TB&P www.talkbusiness.net 33 A Blueprint for a Redenning State half cent would bring it down to... That’s my caveat to everybody. cut programs. BEEBE: One and a half. This is not a dictatorship, and one of the things I think that’s held me in reasonably BRUMMETT: And none of this is to say BRUMMETT: And you’ve got two or three good stead with my time as Governor was the you disagree that the used car tax can be more years after that. Are we going to get it experience I had in the Senate and the view onerous on the working man out there? gone by the time you’re gone? that I know that persists in the legislature BEEBE: No, I remember when all of that BEEBE: It is my desire to get it all gone ex- about a Governor trying to do things without was passed. I remember when the cost was cept that one-eighth that we can’t get gone. consulting or cooperating with or including shifted from new cars to used cars with that That was put on by the initiated act. the General Assembly. And those Governors revenue neutral thing years ago where we that try to be dictators or try to just take said, “Well, we’re going to lower the amount BRUMMETT: 15 million is not a great deal off and run off and leave the train, find that you have to pay to just the difference but of money, you said. the train will run over them and one of the we’ll make up for it because we’ll charge on BEEBE: 15 million from GR. things that I’ve tried to do is include folks. used cars above a certain limit or a certain That doesn’t mean I try to back up from the amount.” Yeah, and it is populist. BRUMMETT: And you’re not going to say responsibility of trying to lead them where What I would tell them - anybody that’s you can’t find a million here, a million there I think they need to be led, I think that’s a listening - was that nobody’s cut more taxes maybe. Forgive this hypothetical, you don’t Governor’s responsibility. than I have. Now, the legislature actually cut have to take it. Let’s say Gilbert Baker, who is them, but nobody’s proposed, pushed and a big advocate, he says from a populist point BRUMMETT: Let me paraphrase what I garnered more support for more tax cuts of view - which a lot of this Republican tax hear you saying, and you may need to correct in the history of Arkansas than I have, over cutting is from a sort of populist, not just me on this. “Listen folks, I’m a fiscal conser- the course of the last four years. So, I’ve got pro-business, but populist perspective - this vative. I’m going to take my grocery tax off a pretty strong credibility rating for cutting working man out there in Arkansas is just there if I possibly can, that comes first. This taxes, actually cutting taxes. But they’ve been getting hurt on this used car tax, goes and budget, I’ve got it as low as it can go and not targeted, they’ve been measured, and they’ve buys a pickup and the tax cut kicks in at hurt somebody.” been responsible and they were aimed some level he believes is too low and he’s, I BEEBE: You said it exactly right, I wish I frankly for the most part, there are some believe what he mentioned was raising the had said it that clearly. exceptions to this, but they’ve been aimed threshold for its application to $6,000, and I for the most part at helping folks who were believe he said that would cost $10 million. BRUMMETT: “Now, if you’ve got another disproportionately hardest hit by taxes. Are you saying to him and to others, we just idea to take some money out of it, tell me can’t do it? where.” And you don’t think there is any- BRUMMETT: Ok, what I understand is, BEEBE: Well, yeah you could do the $10 where? this may or may not bear out, but most million, but figure out and be honest enough BEEBE: There always is. You can cut of the projections of how this flows, how at that front end, instead of, you know I’ve another $100 million out of there but you’re this legislative session will flow, would be heard him say, well we’ll take care of that in going to hurt somebody and you better tell that any tax cut bills that you might find revenue stabilization. You can’t take care of somebody where it’s coming from. Are we worrisome, might likely pass the House of that in revenue stabilization. You can take going to close HDCs [human development Representatives, go to the Senate where care of overspending in revenue stabilization. centers]? There’s these consituency groups there’s a revenue and tax committee which You can’t take care of over tax-cutting in rev- out there, I’ve seen this. These folks that are would hold them until toward the end of the enue stabilization. That’s a totally different talking this stuff, they just gotta get ready session to do some sort of seamless thing animal. for this because we have cut it, as you said, as in which you consider the cuts at the same So if you’re going to do that, tell the folks low as I know how to cut it without hurting time you have pretty much dealt with your where you’re taking the $10 million. And people. revenue stabilization. If we’re going to have if it’s from UCA or U of A, if it’s closing a tax cuts considered, is that the way you think prison, if it’s taking folks out of nursing BRUMMETT: So further tax cuts would we ought to go? You don’t want them earlier homes, or cutting back on the payments to mean that you would have to start appor- in the session. nursing homes. You’re not going to touch tioning some pain to people. Wouldn’t the BEEBE: I certainly don’t want them early K-12, he knows that. So with over half of the first place that you would go, cause you can’t in the session, no. I don’t necessarily think total GR going to K-12, that limits where you touch the schools and obviously Medicaid is that’s the way it ought to go. I think I read can take the money from to only half of state something that’s difficult to cut, is institu- where you had interviewed Gilbert Baker. government that’s funded by GR. tions of higher education? Isn’t that the first Have the courage to tell the folks where place? BRUMMETT: Right, and he said that. you’re going to take it from then. And if you BEEBE: That’s usually who gets hurt the BEEBE: Which is certainly one scenario don’t do that, then I’m going to ask you to do first and the worst. And all that does is either that has some sense to it. The reason I don’t that, in fact I’m already asking you to do that. cause them to jack up tuition even more or just support that scenario is I would like the

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2 011 | TB&P www.talkbusiness.net 23 A Blueprint for a Redenning State House to also exercise the kind of restraint study having to do with, maybe in a longer continues as it has: $200 million a year. and responsibility that Gilbert’s suggesting term, we can stop this dream of incarcerating Nobody believes that we can spend another the Senate will exercise. I don’t think it’s so many people. Can you give us any detail $200 million a year on prisons. So what are always just the responsibility of the Senate to on what that’s going to be? you going to do? You’re either going to raise be the heavy or the bad guy or the respon- BEEBE: Money wise or substantive? some taxes and raise some money or divert sible party. some money to meet that $200 million de- We’ve got some bright young House BRUMMETT: Both. mand. members in this new bunch, some bright Beebe: No, I can’t on money yet. I’ve got Or you’re going to change what we’re doing young Republican House members, as well some preliminary information. in the way of punishment to accommodate so as bright, young Democratic House mem- that you don’t have to spend that much more bers. You don’t get a redshirt here with term BRUMMETT: Substantively. As I under- and we do have some success in alternative limits, you just don’t. They need to know as stand it, it’s non-violent offenders, the thing sanctions. The drug courts have really ap- freshmen that their vote means something we’ve long talked about, incarcerating fewer parently been successful with huge success and that their rhetoric and that their conduct of them, shorter periods of time. in lack of recidivism, or at least lack of folks means something. BEEBE: Punishing people who are non- getting caught and I’m sure there’s some violent offenders in a different way, that combination of both. BRUMMETT: So you’re not going to give doesn’t create letting them sit in a bed at a And anecdotally, we know that sometimes them a free pass... penitentiary that needs to be reserved for a when you send someone to prison that BEEBE: Absolutely not, I don’t think any- violent person who hurts you. Again, this is wasn’t hardened to begin with, by the time body deserves a free pass. I think they ran, a reality. We’re spending, it’s projected we’re they get out, they are hardened. So if you can and they got elected and with that comes a going to need to spend another $1 billion at divert and change behavior and conduct and responsibility to be responsible. our current rate just in prisons alone over the still punish them so that there’s a deterrent next 10 years. An additional billion dollars. to illegal activity, but do it in a way that’s not BRUMMETT: All right, enough of tax cuts, traditionally taking up $35,000 or $38,000 let’s get on the spending side. Aren’t you BRUMMETT: If we do nothing and con- a year in bed space that needs to be there for going to propose something in this session tinue to incarcerate at the level. a rapist or murderer, then you ought to be designed in part on some Pew Foundation BEEBE: If we do nothing and the trend about doing that.

TB&P| 2011 36 www.talkbusiness.net Other states have done that. And national BRUMMETT: But you don’t want that. BRUMMETT: I missed it. Sorry. Must have trends suggest they have fewer people in BEEBE: No, I prefer for us to solve our been during the holidays. prison than we did... Arkansas is bucking own problems, but ultimately if we can’t get BEEBE: It was in November, after the elec- that national trend by increasing our popula- management and labor together on some- tion. But I thought a two year waiting period tion of incarcerated vis a vis the rest of the thing that’s agreeable to get done, and with for legislators to become lobbyists was good country. And some of these states are compa- the kind of fractured nature of what you can public policy and something I would sup- rable states. Kansas has been cited as one of expect from this legislature, the feds will take port. What I’ve been really careful, and again the states, not unlike Arkansas population- care of it for us. So, am I staying out of it? this goes back to my days in the Senate, I’d wise, not unlike Arkansas in many respects, No. Is it a top priority for me to go fall on my tell them privately what I think and I think that’s actually seen a reduction in their sword when I know the feds are going to take there ought to be some significant reform, incarceration and their state penitentiaries care of it if we can’t get the parties together? that being one of them. But I remember that without an increase in their crime rate now, internally, when Governors stuck their nose because they’ve imposed some alternative BRUMMETT: And that the feds will take into the internal operations of the Senate, or sanctions. That’s what Pew is trying to help care of it ought to be a sufficient hammer on what we perceive to be the internal opera- us with, that’s what we’ve got to try to do, the parties. tion, it was often counter-productive. I’m that’s what we’re going to propose. BEEBE: I would think. more effective if I can privately talk to them and say “You guys ought to do this.” BRUMMETT: Are you going to stay out of BRUMMETT: You would think. I want to this matter on how we pay back the unem- ask you, ethics reform, that percolates out of BRUMMETT: Have you privately talked ployment compensation? some of the Republicans, a couple of colum- about what they ought to do in terms of BEEBE: Oh no! We’ve tried to knock their nists. the lobbyist-legislator direct relationship in heads together, that is labor and manage- BEEBE: It percolates out of me! terms of reporting what is spent, limiting ment, and we’ve run into a hurdle. And it’s a further what is spent on entertaining, is that hurdle that may not be either side’s fault, in BRUMMETT: Does it? To what end? something that you’re also receptive to in terms of federal requirements on what can be BEEBE: I spoke on my last Steve Barnes your private moments? done. Here’s the bottome line: the feds will television show. BEEBE: Sure I’m receptive to it. I’m recep- fix it for us if we don’t. tive to limiting the amount of money that

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2 011 | TB&P www.talkbusiness.net 37 A Blueprint for a Redenning State lobbyists spend on legislators, I’m receptive our own mortality from time to time, think jobs or a better place for jobs or a better to limiting the amount of money legislators about our legacy, whether it’s political legacy, opportunity for people to stay here or come draw. or busines legacy or personal legacy. So yeah, here and get good jobs, it’s another compo- from time to time those thoughts creep into nent in what I think is a legacy, or what I BRUMMETT: One more in this regard I’m my head. More often that not, I’ve always think is a strategic thought on my part. obliged to ask. Would a Wal-Mart rule in been a better tactician than I have been a Having said that, then my time is con- legislator-lobbyist relations work, by which I strategist. I’ve been better on the battlefield sumed, day to day with actual action pieces mean not even a cup of coffee? than I was back at the map. tactically, to how do you make that happen. BEEBE: Would it work? Sure. Would there How do we change tax laws, if at all? What be some cheating? I’m sure there would. BRUMMETT: You mean you work better... do we do specifically to change the delivery Would the consequences of that cheating BEEBE: I mean my concentration is more of education? What do we change funding- be important in terms of enforcing it going on what do we do tomorrow to make things wise, what do we change accountability-wise? forward? I think so. better. What specifically do we apply and How do we raise the bar? Those are all more improve the quality of our peoples’ lives? specific, tactical, hands-on approaches to af- ********************** How do we build our state? Now by its very fectuate those two strategic goals of improv- nature, that requires some degree of strategy ing education and economic development. BRUMMETT: While still a young man in and in my regard, those strategies encom- your manner and vigor… you’ve just been pass two major things and I still believe that BRUMMETT: So after you’re gone, and elected to the second and last term as Gover- today: education and economic development. we’re jumping four years ahead, and if I were nor of the state with an overwhelming ma- And those two big strategic corners, if you still writing columns, we hope that I will be, jority. A mandate. Are you beginning to think will, in my opinion, form what I’m all about and I said, in his time as Governor, school more about your place in history? The legacy as far as my time as Governor is concerned. performance got better in this state and the that you leave, whether you’re sufficiently Every time we’ve improved every aspect economy improved and third we did away using your political capital to do all that you of education, or every component, or each with the regressive grocery tax. That’s sort of might ought to do. Are these things that have component or any component, it is a building what you’re aiming for, it’s this general bet- begun to permeate your thinking? block to what I want our state to become. terment in those two areas and other things BEEBE: Oh, I think all of us, recognizing And every time we create more and better less?

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TB&P| 2011 38 www.talkbusiness.net BEEBE: I think betterment in those two timid. He looks for the transactional change different from news and it’s important. areas and I’m not limiting this now to K-12, rather than the transformational change.” But some of the people who would say improvement in those two areas will cause They say you don’t do all that you could do, that are in the category of folks who have all the other things to be better. It will cause or might think that you ought to do. How do never been in the arena except the day after healthcare to be better, it will cause nutrition you respond to any of that thought? the battle and it’s easy for them to shoot the to be better, it will cause tolerance and social BEEBE: Well, I’m glad that you’re not wounded, it’s easy for them to make pro- justice to be better, it will cause inclusive- somebody who’s made those characteriza- nouncements. They’ve never faced whatever ness and attacking bias, it will cause all the tions because I wouldn’t want to insult you in the challenge might be. high-minded social things that you probably my answer or be contentious. There are things that we take head on believe and I probably believe our people boldly, there are things that you try to take in need to embrace and encompass more to BRUMMETT: But I want you to. directly. There are times to charge the front, be more realistic in terms of their accom- BEEBE: What I would say to those people there are times to flank the enemy. There are plishments by our people. When we raise who say that is what Teddy Roosevelt times to retreat and go get higher ground in education levels and education quality and basically said: that the real honor goes to the order to be successful tomorrow. If Lee had when we create the kinds of jobs that cause person in the arena. All these Monday- not decided to go ahead and commit to battle folks to have that kind of ability to support morning quarterbacks, all these pundits, all on the second day of Gettysburg, we might themselves and their families, all those other these folks that sit on the sideline and don’t have two nations. Thankfully we don’t, but things are easier to solve. have the courage or the job to actually go and there are times to charge head-on and times do something, to actually go fix a problem. to do something different. BRUMMETT: There are those who say, and You said it better than anybody I’ve ever I try to know when to do both, I try to I don’t necessarily believe this, but there are heard say it. You were making a speech and encompass both. I’m not worried about those who say, I’m not calling their names, you said that a columnist is like the guy that whether a columnist wants to accuse me of and you just trust me that they say it. “You goes to the battlefield the day after the battle not being transformational when I could be. know Beebe - bright guy, knows the govern- and shoots the wounded… ment, tremendous approval ratings, has this I have a deep respect for what a columnist John Brummett is a columnist for the political capital that he just doesn’t spend. or a editorialist provides, an opinion-writer Stephens Media Group’s Arkansas He’s just by nature more conciliatory and provides because I think it’s important. It’s News Bureau in Little Rock.

2 011 | TB&P www.talkbusiness.net 39 TB&P| 2011 40 www.talkbusiness.net IN 2011, A BIG TO-DO LIST By TalkBusinessStaff

Every legislative session develops its own unique personality. It can be shaped by the forceful or passive leadership of the legislative and executive branches. Occasionally, as during the Lake View era, the judicial branch becomes a dominant factor in decision-making. While predictable topics often take center-stage, unexpected issues will certainly arise and move the agenda of the General Assembly this January. You never know when an argument may break out as to which city is the Purple Martin state capital or where the apostrophe should sit in the possessive nature of Arkansas’s name. We’ll be so bold as to predict a resolution to commemorate Bobby Petrino or Ryan Mallett or maybe the whole dad gum Razorback football team. That said, it is with the predictable that we have more confidence in our session intuition. In 2011, state lawmakers will have a huge to-do list - surprisingly larger than usual. Here are the major areas where you can expect the 88th General Assembly will get down to business.

PHOTO: FOTOLIA

2 011 | TB&P www.talkbusiness.net 41 A BIG TO-DO LIST TAX CUTS & THE BUDGET found strength at the state legislature and General Dustin McDaniel, will be wary of While Gov. Mike Beebe would prefer these this is an area where they may definitely flex changes to drug-related crimes. Murder- two areas of legislative activity be considered their muscles. They have even numbers on ers and rapists are easy targets to keep in separately, it will be hard for them not to the pivotal Senate State Agencies Commit- jail, but other less-threatening offenders become intertwined. tee, which will be charged with much of the still pose big risks in the eyes of some. This Republicans - and some Democrats - can oversight of redrawing those lines, and with debate has dangerous consequences. read the tea leaves of the last election and 3 of the 4 Congressional seats in the GOP’s they know that Arkansans want to see a control, it will be difficult for Democrats to MEDICAID & HEALTH CARE smaller, more efficient, less taxing govern- wrestle much advantage in this area. We may still be a legislative session away ment at all levels. While the session is taking place, another from a dire Medicaid financial crisis, but Gov. In layman’s terms, a language spoken by important redistricting process will quietly Beebe and a cadre of public health legislators many state representatives and senators, unfold. State lawmakers will look for ways to don’t want to wait until 2013. that means finding something symbolic and strengthen their political hands as the State The distressed economy has pushed reformatory in the state’s diversified tax Board of Apportionment reworks the 135 more onto the Medicaid rolls than many code. Beebe has proposed another half- House and Senate seats. imagined. Stimulus funds have helped plug cent reduction in the grocery tax and says Population shifts will give Republicans gaps in funding, but those funds are soon to nothing more can be cut without losing easy pick-ups, particularly in northwest run out. With unemployment expected to essential state services. Arkansas, where a new Senate seat is remain high, prospects for Medicaid recipi- Lawmakers will buck the Governor on this expected to be drawn. Be on the watch for a ents to decrease is largely unanticipated. issue and set up a late-session showdown. possible Latino-majority House seat in the There will be a push to find more Capital gains taxes, personal and corporate region, too, as Hispanic population growth efficiencies in the Medicaid system through income taxes, new and used car taxes, and a may finally have tipped the scales in streamlining processes and new technology. variety of exemptions will all be examined, Arkansas. However, at some point in the near future, re-examined and debated. Without the Though redistricting should be a visible benefits will have to be reduced or revenues Governor leading the charge, it is unlikely area of partisanship, other issues may be raised. The choice may come down to kicking that a massive overhaul or re-thinking of the more difficult to observe. Taxes are a logical grandma out of the nursing home or reaching state tax code will occur. topic of potential divide and ethics may be deeper into taxpayers’ pockets. It is more likely that a change to the used another arena, but don’t be surprised to see In a larger context, the implementation car tax might give legislators that symbolic Democrats in agreement with Republicans on of federal health care reform at the state victory of “more” in the tax cut arena. They’ll many of these issues. Suggestions of level promises a few fireworks. Many newly certainly give Beebe the grocery tax partisan derailment at the legislature may elected legislators, especially Republicans, cut. Watch for state revenues to see an never truly materialize in 2011. rode in on a wave of anti-health care reform. uptick late in the session. That combined But the state is under a federal mandate with a little nip-and-tuck in the state budget PRISONS until either Congress overturns the law or will produce the needed savings to do more Arkansas has a prison crisis. It is not that the U.S Supreme Court reverses the law’s than what the Governor wants at this we don’t want to or can’t keep bad guys in trajectory. Public health and state insurance juncture. jail with tough laws. The problem is the state officials are moving full-steam ahead to meet can’t afford to keep them behind bars. federal regulatory goals. REDISTRICTING & PARTISAN REALITIES The state’s prison woes are expected to State lawmakers looking to apply the Redrawing congressional district lines cost an additional $1 billion during the next brakes may have no jurisdiction to do so and will be a huge undertaking in the 2011 10 years if trends continue. The Governor, as the money for instituting the changes is session. So will getting state legislative legislators and prison officials know this kind coming from the feds, there may be little boundaries prepared for reapportionment. of money doesn’t and won’t exist. ability to stop the speeding train. The General Assembly will vote on new Arkansas will look at how other states boundaries for Arkansas’ four Congressional are successfully addressing this burgeoning UNEMPLOYMENT TRUST FUND & Districts thanks to new data from the budget and social issue. States as big as ECONOMIC DEVELOPMENT decennial census. The First District is bound Texas have made strides; so have comparable The state of Arkansas is expected to be to get more Republican as will the Third. counterpart states like Kansas. about $450 million in debt to the federal Scenarios abound for the Second and Fourth Expect to see a plethora of initiatives government by the end of 2011 for money Districts - two areas Democrats would like to aimed at reducing some sentences, shifting borrowed to pay laid-off workers. keep as Democratic as possible. non-violent offenders to more community A state unemployment trust fund, Unfortunately for them, the Democrats punishment-oriented work, thus freeing up supported by employer taxes, was tapped dry don’t have the supermajorities of the past to beds for true threats to society. in 2009 due to fast-rising jobless claims. The control the redrawing of these lines. Repub- A point of contention to watch: law inability to replenish the fund led to lican gains in 2010 have given the GOP new- enforcement officials, including Attorney mandatory borrowing from the feds, and in

TB&P| 2011 42 www.talkbusiness.net 2 011 | TB&P www.talkbusiness.net A BIG TO-DO LIST 2011, interest on those borrowed funds must implemented if the business comes to the formula for two-year and four-year schools, begin being paid back. state and performs at the levels it promises but if the economy takes an unexpected Business and labor groups are trying to - but giving up existing revenue, such as downturn, college campuses will bear the hammer out a deal, but can’t seem to find knocking more off of manufacturers’ utility brunt of the financial cuts. common ground. If they don’t reach a sales taxes, will be a tougher sell. compromise, the federal government is likely LOTTERY to impose a solution on Arkansas businesses. EDUCATION Two years ago when we previewed the Major employers, like Wal-Mart and Tyson Since K-12 and higher education account lottery, we noted that the heavy lifting Foods, would prefer a state fix versus a for nearly 70 percent of the state’s budget, would be on creating the framework for the federal one. Expect some jobless benefits to it just wouldn’t be a regular session without scholarship lottery’s start-up. be scaled back to bring Arkansas in line with major legislative activity in this realm. The lottery had a successful first year in its regional counterparts. However, the Expect a lot of tinkering with aspects of terms of a quick start-up, revenue projec- counterbalance - raising taxes on businesses - the Lake View decision, such as the minimum tions, and certainly scholarships for the isn’t likely to garner much legislative enrollment thresholds for school districts college-bound. However, the lottery’s warts support. to survive. In the end, nothing much will will make this session a difficult one for its Of course, a solution for Arkansas’ change. The threat of re-opening the old directors and management. jobless problem - state unemployment is legal wound and the fact that a circuitous A number of problematic internal near 8 percent - is to create new jobs. The process exists to make changes to Lake View controls were revealed in a scathing audit Governor’s quick action closing fund of will keep the status quo. of the lottery’s administration in late $50 million has been a big gun in Beebe’s Attorney General McDaniel is pushing 2010. Lawmakers know that the lottery’s economic development arsenal. Look for the hard to end the long-running desegregation critics and the general public are insisting legislature to at least replenish it; there may case in central Arkansas. This effort, on higher standards of operation. Some even be an effort to expand it. combined with civil rights litigator and legislators will take up the crusade and make Arkansas will bring a few more new freshman Rep.-elect John Walker’s first term, the pursuit of lottery perfection his or her economic development ideas to the table in will make the case an interesting issue to cause. Expect to see a lot of legislative 2011, mirroring what other states are doing. follow. Also, higher education officials are inquiry on the inner workings of the lottery Incentives will likely pass - they are only looking at substantial changes to the funding from how it handles contracts to its

TB&P| 2011 44 www.talkbusiness.net marketing activities to its constitutional only about $4 billion in funds to serve those ETHICS independence. interests. Last, but certainly not least, Arkansas A blue ribbon panel sought to find new lawmakers are openly discussing changes to CONSTITUTIONAL INDEPENDENCE ways to pay for more roads, but most of the state’s ethics laws. Conviction is driving Speaking of independent constitutional its proposals included tax hikes or shifting the debate for some, while others see agencies, the Arkansas Game and Fish general revenue money away from existing political opportunity. Commission and the Arkansas Highway government programs. There is not much Legislators are considering everything Commission can expect additional scrutiny gubernatorial or legislative support for the from limiting their per diem expense this session. You may even see efforts made ideas. reimbursements, altering travel expense to allow a public vote on rescinding their All of this activity has produced a rising loopholes, and a cooling-off period for independent status. chorus to see that more money is spent on former lawmakers before they could lobby Game and Fish has brought hardships on roadway infrastructure in densely- in the capitol halls. There is even support for itself. During the past year, it has been at the populated areas of the state, a.k.a. the “Wal-Mart rule,” which would prohibit center of some scandal doozies. The nature northwest and central Arkansas. Highway lobbyists from so much as buying a cup of agency has more state vehicles than commissioners contend that the money is coffee for a legislator. employees; it tried to circumvent the already disproportionately shifted to these That could cut down on the lunchtime wait Freedom of Information Act; and it has been areas, and besides, if all the money was at Doe’s or Cotham’s, and it would certainly in a high-stakes pissing match with former moved to population centers, it still wouldn’t put a dent in the after-hours crowd at The commissioner Sheffield Nelson, which has be enough. Peabody or Capital Hotel Bar. The real proof garnered the commission some unsavory Expect emotion to trump logic in this will be in the pudding on ethics reform. headlines. debate. Lawmakers will at least push a Introducing the legislation is going to be the The Arkansas Highway Commission is constitutional amendment to have highway easiest part of passage. Finding a majority of undergoing a renewed look at its department commissioners elected; they could go even votes in two committees and two legislative operations as a huge gap between tax further and call for an all-out repeal of the chambers may pose a bigger ethical dilemma. revenues and highway wants and needs Mack-Blackwell amendment, which passed in widens. By some estimates, there are $19 1952 to make the highway department and Continue to see our list of top billion in road needs across the state, but independent outfit. legislators to watch for 2011

2 011 | TB&P www.talkbusiness.net 45 By TalkBusinessStaff e acknowledge on the front end that there will be an exceptional number of legislative ringleaders in 2011 in addition to Speaker of the House Robert Moore and Senate President Paul Bookout. Term limits and Republican gains have shifted the balance of power in both chambers. And, this particular cycle appears to have more natural leaders than legislative classes of the past. A number of freshmen may make an immediate mark in both the House and the Senate, but the returning veterans in both chambers are filled with savvy lawmakers. While noting that this list will be deficient in covering everyone and everything, we lay out our pre-session picks for returning legislators to keep your eye on. These 12 returning Senators and Representatives will be heavily involved in leadership decisions, big agenda items, and controlling the all-important purse-strings. PHOTO: COURTESY ARKANSAS SECRETARY OF STATE

SPEAKER OF THE HOUSE ROBERT MOORE DEMOCRAT – ARKANSAS CITY In any session, the leader of the House of Representatives has wide-ranging power and influence. His committee appointments and assignment of bills control the flow of business in the House. Moore will be dealing with one of the most interesting political dynamics of modern sessions with the Democrat-Republican balance, but his smooth demeanor, keen intellect and south Arkansas charm will no doubt keep him in good stead with his peers. Moore already made good on a promise to construct a bi-partisan leadership team. Republicans were named as chairmen to about one-third of the significant House committees and Moore named Republicans to two of his four assistant pro temp positions. His time will be consumed with the management of day-to-day requests and activities from his 99 counterparts. Moore has also said he’ll use his influence to develop a highway program proposal to meet the state’s major road needs and to alter the long-term viability of highway funding. He faces a few roadblocks on this front. Most of the 46 new House members in this session ran on anti-tax, smaller government platforms, and the Senate leadership and Governor have expressed doubt that agreement for anything visionary can be found. Speaker of the House Robert Moore SENATE PRESIDENT PAUL BOOKOUT DEMOCRAT – JONESBORO The Senate President keeps the trains running smoothly in the upper chamber. With only 35 members, the Senate is more informal and collegial than the House. Democrats only outnumber Republicans by a 20-15 margin in the Senate, but party affiliation has typically been a non-issue in the Senate. Bookout told reporters he doesn’t think that premise will change despite the GOP gains from the 2010 election. Bookout is as easy-going and laid-back as an elected official can be. He likes to say he “grew up in the Senate” as his father, Sen. Jerry Bookout, served for more than two decades in the legislature. He prefers to work behind-the-scenes and in private to smooth out potential confrontations. It is a style that has earned him respect among his peers and trust among capitol insiders. Bookout is also a former House member, so he understands the other side of the capitol. Don’t expect him to use his post as a bully pulpit. If you don’t hear much controversy out the Senate, you’ll know Bookout did his job to perfection. While he will likely stay out of the headlines on a regular basis, look for Bookout to be guiding the big debate on tax cuts on the Senate end. He supports the Governor’s reduction of the grocery tax, but has also expressed interest in raising the threshold for the used car tax to kick in. Bookout’s negotiations will steer this debate in the Senate. Senate President Paul Bookout

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REP. JOHN BURRIS R-HARRISON Burris is the minority leader in the House of Representatives. He will work with vocal members of the GOP and be driving the strategy on a variety of issues, including ethics reform, tax cuts and redistricting. Burris will also use his influence to round up crucial votes.

REP. DAVY CARTER R-CABOT A banker, lawyer, and respected leader among his GOP peers, there should be no doubt that Carter will be a go-to guy when the deals Rep. John Burris, R-Harrison are cut. In a surprise move, Speaker Moore named Carter as chairman of the House Revenue & Tax Committee, a very pivotal panel that will handle the numerous tax cut bills in the session.

REP. KEITH INGRAM D-WEST MEMPHIS Ingram is a sharp businessman and very politically connected lawmaker with pull Rep. Davy Carter, R-Cabot in eastern Arkansas and among the power structure in the lobbying corps. He also wants to be the next Speaker of the House. He’ll be in the decision making mix daily.

REP. KATHY WEBB D-LITTLE ROCK The soft-spoken Little Rock lawmaker is a Rep. Keith Ingram, D-West Memphis coalition builder and, despite her liberal leanings, has built a reputation with her peers to get things done. Webb’s powerful seat as House chair of the Joint Budget Committee puts her at the epicenter of control.

REP. DARRIN WILLIAMS D-LITTLE ROCK A former chief of staff for then-Attorney Rep. Kathy Webb, D-Little Rock General Mike Beebe, Williams is congenial, smart and hard-working. He’ll contest Ingram for the future Speaker’s seat, although Republicans have designs on electing one of their own. Look for Williams to also be high-profile as chair of the Judiciary Committee, which will handle the lion’s share of prison reform legislation. Rep. Darrin Williams, D-Little Rock

2 011 | TB&P www.talkbusiness.net 47 SENATE

SEN. GILBERT BAKER R-CONWAY Baker will once again serve as Senate chair of the Joint Budget Committee, which controls the $4.6 billion state budget. Baker, a Republican still with statewide political aspirations, is also vice-chair of the State Agencies panel, which will realign Congressional districts and have influence on referred ballot proposals.

SEN. LARRY TEAGUE D-NASHVILLE Teague is in a precarious position. As chair of his chamber’s Revenue and Tax committee, Sen. Gilbert Baker, R-Conway he could be in the hot seat to put the brakes on the bevy of tax cut proposals flowing in this year’s legislature. He’s up for re-election in 2012 in a district that the GOP will target.

SEN. ROBERT THOMPSON D-PARAGOULD Thompson, a highly intelligent lawyer and well-respected legislator, is a loyal lieutenant for Senate President Paul Bookout. Sen. Larry Teague, D-Nashville Thompson looks to carry out many of the missions that Bookout will want and need executed.

SEN. MICHAEL LAMOUREUX R-RUSSELLVILLE This River Valley Republican has been at work since winning his special election seat. Sen. Robert Thompson, D-Paragould Lamoureux will not only shape GOP strategy in the Senate, but he is the #2 on the Revenue and Tax committee, which could be a very influential position for securing tax cuts beyond Gov. Mike Beebe’s stated wishes.

SEN. PERCY MALONE D-ARKADELPHIA Malone’s capitol politics carry back to the Clinton gubernatorial administration. He’s Sen. Michael Lamoureux, R-Russellville been in the Senate for a decade and will be a voice for institutional knowledge in this session. As vice-chair of Joint Budget and head of Public Health, Malone will be the blunt legislative dean who will “call it like he sees it.”

Sen. Percy Malone, D-Arkadelphia

TB&P| 2011 48 www.talkbusiness.net 220120 01100111 | TB&PTB&TBTBB&&P www.talkbusiness.netwwwww.tattaalkbllkkbkbusiussinesneess.nnetet 494 “LET ARKANSANS TAKE CARE OF ARKANSANS.”

BobOcken Photograph

TB&P| 2011 50 www.talkbusiness.net ARKANSAS INSURANCE COMMISSIONER Jay Bradford Meet the man leading Arkansas’ efforts to implement health care reform. By SuziParker | Contributing Writer

rkansas Insurance Commissioner Jay Bradford will be busy – and front and center – during the legislative session. And he knows it. That’s because Bradford will oversee the implementation of rules and regulations in the state in regard to federal health care reform. “During this session we’ll be approaching the legislature to give us flexibility on a statewide level to address the federal rules and regs so we can respond to the federal legislation,” Bradford said in an interview with Talk Business & Politics. He says this issue will zoom at lightning speed once the session starts. He realizes there will be some resistance to the controversial changes. “It’s best for Arkansas to regulate and enforce the regulations for consumers of Arkansas,” Bradford said. “If the state doesn’t do it, the federal government will. And they may not have the state’s best interest at stake.” Many existing laws in Arkansas do not address new re- quirements in the Patient Protection and Affordable Care Act, which passed in 2010. Bradford has outlined several state laws that might be needed for Arkansas to comply with the new provisions in the federal health care law.

2 011 | TB&P www.talkbusiness.net 51 Beginning in 2014, all insurance policies legislation stays intact, many Arkansans getting these laws passed this session so they sold through a health care exchange must will be able to get health insurance policies are in place regardless of what happens in the include all essential benefits as determined regardless of medical history or gender. future,” Bradford said. by the federal government. If a state He estimates that will include 300,000 to Part of the health care reform law has mandates coverage for treatment that is 400,000 people who have no coverage now. already kicked in. Beginning last August, an essential benefit, the state must pay “We have a lot of people who fit into Arkansans who had been denied health the cost of these. Some benefits include that category,” Bradford said. “It will be insurance coverage for pre-existing mandatory coverage for impairment of tremendous to small business people and conditions and who had been uninsured for speech and hearing, hearing aids, mental individuals.” at least six months could apply for a new plan illness, hospice care, mammograms and a The downside of the new law, Bradford administered through the state. Enrollment host of other health issues. says, will be the mandate that people have in the new plan is limited to 2,500 people in The Congressional Budget Office (CBO) to apply for insurance or face a penalty. He the first year. Arkansas received $46 million estimates that the coverage provisions in the stresses that the penalty is “very, very from the federal government to provide the bill will cost $848 billion over 10 years (fiscal nominal” at this stage. new insurance offering. years 2010-2019). But the major provisions He said insurance rates should be Bradford admits that the insurance in the bill would not take effect until Jan. affordable if everyone joins. If they don’t industry is in transition because of the new 1, 2014, meaning the bill uses 10 years of join, he said, that’s when a problem arises. law. revenue to pay for six years of coverage. Bradford said he could see some resistance “It seems the industry is accepting this Bradford said that Gov. Mike Beebe has in the session regarding implementing new change,” Bradford said. “They could forecast given strict instructions not to involve state laws about health care reform, but that it that it was coming long before the legislation general revenue in this endeavor. behooves the state to go forward. If the new passed, and they have been gearing up for it.” “We will do our best to stick to that plan,” Congress decides to repeal President Barack In the early days of the session, Bradford he said. Obama’s health care law, he said Obama said he will ask the legislature to give the Bradford, who served in the legislature would just veto it. He said many changes are commissioner flexibility in adapting rules for 24 years, has worked for years in the likely to come about as the law is a work in and regulations, but he also wants them to insurance industry. He says that currently no progress. look at the hard facts. state money is being used to implement the In December, U.S. District Court Judge “We want to prove to the federal changes. Instead, federal grants have been Henry Hudson ruled that a portion of the government that we have the authority issued to cover the transition work. More health care law is unconstitutional in that it and capacity to regulate this industry on a grants will be applied for in the near future. “exceeds” the power of Congress to require state basis,” he said. “We have got to have “For the average Arkansan, there is a lot of Americans to purchase a product. That ruling legislation that will allow the commissioner emotion in this issue,” Bradford said. isn’t slowing down Bradford. to do it. Let Arkansans take care of But he says that if the current federal “It’s best as a state to go forward with Arkansans.”

Jay Bradford | Arkansas Insurance Commissioner

Jay Bradford was appointed Arkansas Insurance Commissioner on January 15, 2009, by Governor Mike Beebe. Bradford has more than four decades of experience in the insurance industry, including thirty years as founder, chairman, and former shareholder of First Arkansas Insurance Group, a statewide network of independent property and casualty agencies. Prior to his appointment, Bradford served for two years as the Director of the Division of Behavioral Health Services within the Arkansas Department of Human Services. Bradford served in the Arkansas Legislature for twenty-four years serving as both Speaker of the House and Senate President Pro Tempore during his tenure. He also served as Chair of the Public Health, Welfare and Labor Committee in both bodies. A graduate of Subiaco Academy, Bradford holds a Bachelor of Arts degree in Economics and Psychology from Henderson State College and has also been recognized as a Distinguished Alumnus of that institu- tion, now known as Henderson State University. He is a Certified Insurance Counselor (C.I.C.) and holds an Honorary Doctor of Science from the University of Arkansas for Medical Sciences.

TB&P| 2011 52 www.talkbusiness.net 2 011 | TB&P www.talkbusiness.net 51 TB&P| 2011 54 www.talkbusiness.net By MichaelTilley | Contributing Writer BobOcken | Photography

“That was the sum total of Arkansas’ investment in West In 1992 there was a Memphis,” said Glen Fenter, pointing to an overhead picture of the 1992 campus. “It certainly was a place that the state needed truck driving program to be making significant investments in changing the educational infrastructure, but it wasn’t happening.” and a nursing program Fenter was hired in early 1992 to lead the small community college. at a vocational-technical Changes since 1992 are superficially measured by another nearby set of overhead pictures that show a sprawling campus cut school in West Memphis. into large areas of what was once wide open row-crop fields. The changes are anything but superficial. Or cheap. There were about Fenter, now the president of what has become Mid-South Community College, said about $75 million has been invested in the campus since 1993. Only about $10 million of that has 80 students attending come from state funding. The other $65 million comes from local taxes and donations from the Donald W. Reynolds Foundation, the school consisting of other private sector donations and federal matching and/or grant money. three small buildings on Pride and concern are constants during a recent interview with Fenter. With each new program he describes, each student a campus smaller than a success story he relays and each national recognition he notes has been bestowed upon MSCC, Fenter wonders aloud if Walmart parking lot. legislators and state education officials will continue to support

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(clockwise from top left) Test driving a road simulator; a nursing training program is underway; and students learn the mechanics of diesel engine technology.

what has grown into a 13-county workforce arriving at the community college, Fenter that a revamped community college could development plan. solicited the support of many in the create a new economic future. It worked. The “We’ve built this up and are now at the community to help pass a 12% increase in vote passed with 75% approval, and the tax edge of seeing some big things happen,” the local millage rate. now generates about $1.5 million a year for Fenter said. “I’ve gotta tell you, I’m not “From April of 1992 to February of 1993, MSCC. always convinced they (state officials, both our sole focus was trying to convince the “It (3-to-1 vote margin) was a testament elected and appointed) understand how community, primarily made up of farmers, to how desperate the people here were to important this is.” that they needed to tax themselves, to get create something better for their commu- His concern was expressed in an MSCC something better for their future,” Fenter nity,” Fenter said. 2009 legislative agenda document. explained. Creating something better for the “(T)he question remains whether we have Those pushing the millage increase were community required a system that could the strength of conviction required to sustain pushing against regional economic history. improve access to higher education and the resources needed to maintain the effort. Agriculture was the key economic activity, include more technical certificates. This Unquestionably, the economic future of the and that activity was historically based on system also needed to keep students Delta, and ultimately that of the state of cheap labor. Because educated folks left connected to a “pathway” enabling them to Arkansas as a whole, is dependent upon that town, local leadership for many years was not reach a four-year degree rather than “end answer,” notes the closing line in document’s interested in educating the masses. But when their education career” with a skill certificate executive summary. technology and science changed the agri or associate’s degree, Fenter said. labor dynamic, economic conditions changed. With funding and a more aggressive THE TRANSITION BEGINS Unfortunately, the education model didn’t, approach to growing the community college The first of two major transitions for leaving the area without a skilled workforce. by connecting with the regional business MSCC happened in February 1993. After Fenter’s challenge was to convince voters community, MSCC began to expand its

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program offerings in industry sectors INSTITUTIONAL DECISION four-year degree population if the state was expected to grow in the region. Those About 10 years into rapid MSCC program to reach its goal of diversifying the job base included transportation-logistics, education, and enrollment growth, the conventional and raising average incomes. health care, advanced manufacturing and wisdom began to shift toward the need for a That pressure was especially felt in West agriculture. greater percentage of a population to hold a Memphis. In 2005, only 12.8% of people in Enrollment was another testament of four-year degree. The information available Crittenden County held a four-year degree, pent-up desperation. The student population in 2003 showed that a person with a college well below the Arkansas average of 16.7% grew from less than 100 in 1992 to almost degree earned on average 62% more than a and the national average of 27%. In nearby 2,200 by Spring 2010. The Spring 2010 person with just a high-school diploma. And Cross County (Wynne), the rate was 9.9%, enrollment grew 20% compared to Spring state economic development officials began and down to 9.6% in St. Francis County 2009. to preach the need for Arkansas to boost its (Forrest City). What’s more, many of the east Arkansas counties with large minority populations and low four-year degree attainment rates were not near four-year universities. “We could have fixed it (low education rates) in one of two ways. I could have followed the ginormous ego model that says you are a megalomaniac and you want to create a four-year university here. Which, politically, when we started showing this map (showing a lack of university access in the region), we were in a position to do about Hands on experience: A whatever we wanted to do,” Fenter said. “But student experiences advanced manufacturing up-close; if we started our own university, it would students get under the hood have taken us 25 years to get any credibility to jump-start their learning. and we would have never been able to reach

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as many people as quickly.” Fenter, who was raised in Charleston and was familiar with what the late Joel Stubblefield worked to create at Westark Community College in Fort Smith, pushed for an aggressive community college model. One of the first things he did was hire Dr. Gibson “Sunny” Morris as executive director of Arkansas Delta Workforce Innovations in Regional Economic Development. Morris was enjoying retirement in Fort Smith, on the other side of the state. Prior to retiring, Morris had helped Stubblefield create many of those nationally-acclaimed workforce training programs. “His job is to find other people’s money to accomplish what we want to accomplish,” Fenter said of Morris. “He’s a star for us. If it’s (public or private dollars) out there, he knows about it.”

SYSTEM LOOP Fenter also wanted MSCC to connect certificate programs and associates’ degrees with a “system loop” that tied needs of business and industry, the demands of higher education and convenience for students and adults eager to continually upgrade their education level. It’s the “system loop” that Jim Purcell, director of the Arkansas Department of Higher Education, says is important. He said in the 1980s and 1990s, “access” was the primary policy driver in Arkansas’ higher education circles. Today, access is important, but the new focus is on creating a “seam- less” system allowing students of any age and background to maximize their time and money. Also, he says, the state can’t afford to spend dollars on training that leaves a student with a “dead-end skill.” In the past, some community colleges and universities were too eager to please the training needs of (clockwise from top) business and industry and created training Dr. Sunny Morris; that failed to provide a path to an associates Dr. Glen Fenter; a student programs degree, Purcell explained. Without keeping an advanced doors open to higher education attainment, manufacturing students won’t push forward and the state computer. wastes dollars on training that may not help the workforce compete for jobs that have yet to be invented. And then, after a long and publicized recruitment battle between several southern

TB&P| 2011 60 www.talkbusiness.net states, Toyota decided to build a truck plant APPLIED RESEARCH out of a job and need to do something with in Tupelo, Miss., instead of Marion — a small Arkansas State University, Arkansas Tech their education. It’s all here,” Fenter said, city near West Memphis. University, the University of Arkansas at Fort standing in the parking lot of the Donald Smith and the University of Central Arkansas W. Reynolds Center and pointing in various THE SECOND TRANSITION are some of the colleges with classrooms on directions. “You don’t need to be a university State officials and economic development the five community college campuses. The and all that goes with that to provide training consultants blamed the Toyota loss on a poor population in 12 eastern Arkansas counties from diesels to health care or up and on to a workforce in the Memphis-West Memphis now have access to a wide-range of higher (four-year) degree.” area. Fenter took that personally. education opportunities. It has worked. “That just really pissed me off, because “You can take a kid from high school, or his “ADTEC has now been recognized for four that was not the case. The truth is they mom or dad who are, for whatever reasons, straight years as a model program for (Mississippi) outspent us and they out- politicked us. And that’s OK. ... Just stand up and tell them that we got out-politicked and outspent. But don’t blame it on the poor folks over here who never had an opportunity to do better. Don’t say we were the reason they (Toyota) didn’t come,” Fenter passionately explained. The initial anger turned to resolve. “The day they made that announcement, I promise you, and I know this may sound corny and simplistic, but I took an oath that they would never say that about us again,” WELCOME TO Fenter said, pointing to Little Rock. That’s when the Arkansas Delta Training THE BACKROOM. & Education Consortium (ADTEC) process began. In late 2005, Arkansas Northeastern College, East Arkansas Community College, MSCC, and Phillips Community College of the University of Arkansas partnered to form ADTEC. Arkansas State University- Newport joined in July 2006. The 12-county partnership was kickstarted with a $5.935 million grant from the U.S. Department of Labor in March 2006. That was followed by a $5.1 million grant from the Department of Labor to create the Arkansas Delta Workforce Innovation in Regional Economic Development (ADWIRED) program underneath the ADTEC umbrella. By April 2009, ADTEC and associated programs had received more than $36.12 million in federal, state and private grants to push a new workforce model. Programs created include the training of more than 8,000 area workers in advanced THE PEABODY LITTLE ROCK IS THE PLACE TO BE FOR VIP TREATMENT, WHETHER YOU’RE LOOKING TO MAKE A DEAL OVER manufacturing techniques, more than 200 A DELICIOUS PRIME STEAK DINNER OR ENTERTAIN OVER CIGARS AND DRINKS AT MALLARDS BAR. in science, technology, engineering and mathematics (STEM) training and $5.594 million in state funds to create the ADTEC Regional University Center. K?I<<ÛJK8K

2 011 | TB&P www.talkbusiness.net 61 A WORKFORCE IN PROGRESS IN THE DELTA

could become a national draw for those wanting to enter a sector with 135,000 high- paying jobs by 2016. Next up is a diesel technology facility that could hold the potential of being one of the few state-of-the-art testing and training centers in the U.S. Fenter says the facility, also connected with FedEx, “would standard- ize the testing of biofuels” in Arkansas. It would also test various biofuels and diesel fuels on jet engines. “This is nothing more than applied research happening at a community college level as opposed to happening at a university,” Fenter said.

BROKEN MODEL Fenter told several stories of young area students falling between the cracks of the (top to bottom) diesel fuel research; traditional system. There was the young mechanical drive man who was probably a few months from systems; igniting dropping out of high school. A chance visit welding equipment. to learn about the diesel tech program at MSCC changed all that. Now he’s dedicated to finishing high school so he can finish an associate’s degree in a field that challenged his emotional and intellectual needs. Another young man said he’d probably be out of school and working at Burger King or some other fast food place. Instead, he entered the MSCC advanced manufacturing course. Now, a young man who had no interest in college less than 18 months ago, has a scholarship to pursue an engineering degree at Arkansas State University. Fenter gets an edge to his voice when comparing what he has had to do to convert MSCC to the resources more easily given Arkansas’ universities. When reminded that workforce training,” notes a thick document the interview is on the record, he shrugs Fenter has compiled in an attempt to his shoulders and notes that his efforts and summarize what has happened since 1992. comments “have run afoul of several of their “The consortium earned a 2007 Southern (Arkansas Department of Higher Education) Growth Policies Board Innovator of the Year bureaucracies.” The model, he says, is broken, Award and a 2008 U.S. DOL Recognition of but legislators and higher ed officials “have Excellence Award for Building a Regionally more than 35 gods they have around the Focused Workforce Strategy. In 2009, ADTEC state that they have to appease.” He doesn’t received recognition in a workforce training stop there. report commissioned by the Bill & Melinda “Arkansas’ model for funding higher Gates Foundation.” education is based on one thing: maintaining In March, Morris helped use $3.4 the status quo. So if you’re trying to create a million in federal stimulus dollars to system that is everything but status quo, convince Memphis-based FedEx Express to you can’t depend on the state to do that. So create an aviation mechanic program that we had a choice. We could sit around and

TB&P| 2011 62 www.talkbusiness.net bitch and moan about it, or we could try their skills and education levels. He suggests the state will have to make to find somebody else’s money,” Fenter The study, produced by the Georgetown some hard funding choices in the near casually explains. “We’ve (Arkansas) never Center on Education and the Workforce, future as it relates to funding requests from had a plan that says, ‘Here’s what they suggests that the number of jobs requiring established academia and funding emerging (education models) ought to look like, let’s at least a two-year associate’s degree will be programs like ADTEC. Further, he argues make people go there.’ They’ve pretty well greater than the number of qualified people. that if the key is to eventually increase the just reacted. We haven’t been strategically The report notes: “High school graduates number of Arkansans with four-year degrees, proactive, we’ve been reluctantly reactive. So and dropouts will find themselves largely left then he recommends the ADTEC “snowball you get what you get. Which is, it’s working behind in the coming decade as employer effect that continuously” seeks to make the for some places and not working for others.” demand for workers with postsecondary process more relevant, practical and effective Purcell says the state does a good job degrees continues to surge.” for all involved. balancing the demands of community Arkansas will also see the trend if “The model is based on asking, ‘If you colleges with those of the four-year schools. nothing changes. Between 2008 and 2018, started your educational systems over, what But he does acknowledge that the state new jobs in Arkansas requiring postsecond- would they look like?’ Because, quite frankly, must do a better job connecting education ary education and training will grow by the old models are broken. We’ve said you to economic development. The political 86,000 while jobs for high school graduates need to connect all the dots so that there appointee praised his boss, Gov. Mike Beebe, and dropouts will grow by 63,000, according is a seamless model for students to move for making the connection a top priority of to the report. through. ... You start working with students his administration. while they are still in high school, you move Citing the results of a Georgetown A ‘STRATEGIC PATH’ them through the technical certificates, you University study released in June, Purcell “There’s no opportunity in that, and move them into associate degrees and into predicted “disaster” for Arkansas’ economy there’s no future in that. We can’t afford to baccalaureate degrees in one strategic path. if the state doesn’t use its limited resources let that happen” Fenter said of Arkansas They may not do this all at once. They may to push people into a seamless education not doing more to get high school kids and move in and out of the workplace ... but we system that provides economic and the unemployed into the education “system have created that link where they can come structural incentive to continuously improve loop.” back and move up to the next level.”

2 011 | TB&P www.talkbusiness.net 63 By TalkBusinessStaff 2011 could be a break-out year or a turn- around year for several of Arkansas’ most high-profile publicly traded companies. What are they saying about their business mix and prospects for the future?

On the up side, comments from company decide early in 2011 if they will continue officials and market analysts indicate a trend legal action against the Teamsters. The of improving freight tonnage and gains in company was rebuffed in an attempt to sue market share — especially in the regional competitor YRC and the Teamsters over freight segment where ABF Freight alleged unfair wage concessions. System has geared up to capture next-day and second-day freight. “I am looking forward to improved economic conditions in 2011 as a result of a growing manufacturing sector and a retail Transportation: Arkansas Best sector that is showing signs of improvement. There is no better example of uncertainty It appears that the housing/construction as to what 2011 holds for Arkansas Best sector of the economy will continue to be Corp. than in the wide range of analyst weak for some time,” Arkansas Best CEO estimates for the company’s fourth quarter Judy McReynolds tells Talk Business. earnings. “Each of these sectors of the economy Energy: Murphy Oil Of 16 analysts surveyed by Thomson has an impact on the available tonnage in As the international price of crude oil Financial, the consensus the freight markets. We have experienced moves toward $100 a barrel, 2011 could be a estimate is that the Fort Smith improving trends since April of last year. If banner year as El Dorado-based Murphy based transportation holding the economic environment improves and Oil Corp. ramps up oil and natural gas company will lose 8 cents per trucking industry capacity tightens because production. share, not a good number, but of additional freight being handled, shipment In the third quarter, the company’s crude certainly better than the loss of 88 cents per pricing should also increase,” she added. oil, condensate and gas liquids prices share in the 2009 fourth quarter. The negatives for Arkansas Best continue averaged $65.45 per barrel compared to However, the low estimate is a loss of 27 to be weak economic recovery, too much $61.13 in the 2009 cents per share and the high is a gain of 3 capacity in the system and rising fuel prices. period. Total hydro- cents per share. Also, Arkansas Best officials are likely to carbon production

TB&P| 2011 64 www.talkbusiness.net PHOTOS: FOTOLIA averaged 181,733 barrels of oil equivalent Administration said it expects a continued presence in unfamiliar urban and rural per day in the 2010 third quarter, a 12% tightening of world oil markets over the next markets in Kansas and Missouri. increase from the 162,004 barrels equivalent two years, which analysts say could push per day produced in the 2009 quarter. worldwide oil prices well beyond $100 a What does that mean? A potential barrel. Still, the bank’s earnings in 2011 may explosion in profits. Consequently, EIA expects the market depend on how Simmons handles loans and According to Murphy’s recent 10-Q filing, will rely on both inventories and significant foreclosed assets recently acquired from the the Arkansas oil giant saw an average price increases in production of crude oil and non- FDIC’s growing troubled bank portfolio. over $80 a barrel for West Texas intermedi- crude liquids by OPEC to meet world demand On Oct. 15, Simmons announced that it ate crude oil in October, which was about $5 growth. entered into a “purchase and assumption a barrel above the third quarter price for light That means that Murphy’s increased oil agreement” with the Federal Deposit sweet crude. production could put it in the perfect posi- Insurance Corporation (FDIC) to acquire Murphy said it expects its oil and natural tion to cash in on higher oil prices in 2011. most of the assets and deposits of Security gas production to average about 198,000 Savings Bank in Olathe, Kansas. Earlier in barrels of oil equivalent per day in the fourth 2010, Simmons acquired Southwest quarter 2010, up 9% from the previous Community Bank in Springfield, Mo. through quarter. Light, sweet crude for February a similar FDIC loss arrangement. delivery was trading just over $90.00 a barrel Simmons Chairman and CEO J. Thomas on the New York Mercantile Exchange. May has applauded both deals as “accretive” And although Murphy has acknowledged to the company’s future earnings. that its U.S. retail marketing margins have “The long-term effects that the company fallen and margins remained under pressure may experience will depend primarily on the at the company’s refinery operations, the ability of the borrowers under the various increased crude oil and natural gas prices will Banking: Simmons First loans covered by the loss sharing agreements more than offset any losses in those In 2010, Simmons First National Corp. to make payments over time,” Simmons said businesses. expanded its footprint beyond its Arkansas in a recent SEC filing detailing the Security On Jan. 11, the Energy Information borders for the first time, depositing its Bank acquisition.

2 011 | TB&P www.talkbusiness.net 65 PHOTOS: FOTOLIA

Simmons officials also said the bank’s meal and other commodities began to move liquidity has improved due to the FDIC- higher, causing many industry officials and assisted transactions. market watchers to wonder if poultry profits At the end of the third quarter, the may be non-existent in 2011. acquisitions made up 15.2%, or $457.6 Tyson Foods says corn and soy meal are million, of the company’s total assets of 42% of its cost in growing poultry, with price $3.02 billion. The new deposits assumed increases likely to “adversely affect our make up 14.2%, or $338.2 million, of earnings.” The company says it plans to Simmons’ total deposits of $2.38 billion, offset the commodity price increases “with Communications: Windstream recent securities filings show. operational and pricing improvements.” Little Rock-based Windstream Corp. “(Simmons) believes that the transaction continues to reshape its strategy in a world will improve the company’s net interest where rapid evolution of telecommunications income, as the bank earns more interest on and broadband is difficult to predict. its loans and investments than it pays in In 2010, Windstream recommitted itself interest on deposits and borrowings,” The to Arkansas by announcing it would main- Pine Bluff bank said. tain its headquarters presence at its present West Little Rock campus. It also embarked on four major acquisitions and reworked its credit facilities and debt to improve its financial position. Windstream highlights give a solid Retail: Wal-Mart indicator of the direction its customer base Wal-Mart remains the singular most high- and industry economy is heading: profile public company based in Arkansas. t
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two years, with 2010 producing an with a more compact store format. It is also business revenues represented 53% of impressive turnaround in the company’s continuing to facelift its older stores and total revenues for the first 9 months of beef, chicken and pork segments. At the end Sam’s Club facilities. 2010 compared to 43.5% in 2009. of the fiscal fourth quarter, operating income With $405 billion in annual sales, shaving CEO Jeff Gardner says he’s “optimistic” for chicken, beef and pork was $141 million, $1 billion out of the capital expenditure about 2011. He has cited recent develop- $121 million and $125 million, respectively. budget may not sound like much, but the ments in Washington, D.C. as good for the Overall, fourth quarter earnings were $213 ripple effect will be significant. economy. million, compared to a loss of $457 million in CEO Mike Duke told investors and “The decision to extend favorable tax rates the 2009 period. analysts recently that the November on dividends increases investor confidence The markets rewarded the gains, with election cycle still left its core customers with and decreases uncertainty, and the new Tyson Foods shares closing 2010 at $17.22, “financial uncertainty” based on its internal bonus depreciation rates will help spur up 40.6% from the January 2010 opening surveys and reports. capital investment in 2011. In short, price. “The paycheck cycle is still pronounced for Windstream starts 2011 with a lot of And while Tyson officials said in late these customers. Whether it’s for everyday momentum that we believe puts us in a 2010 that export growth will help boost per- groceries, or for discretionary items,” Duke position to continue to improve the financial formance in 2011, recent shifts in corn, soy said. profile of the business,” Gardner said.

TB&P| 2011 66 www.talkbusiness.net DŝůĞƐƚŽŶĞ͗Ϯϲ͕Ϯϳϯ ƌŬĂŶƐĂƐĂƌĞĞƌZĞĂĚŝŶĞƐƐĞƌƟĮĐĂƚĞƐŝƐƐƵĞĚƚŽĚĂƚĞ͊ dŝŵĞŝƐDŽŶĞLJ͘ ^ĂǀĞďŽƚŚǁŝƚŚƚŚĞƌŬĂŶƐĂƐĂƌĞĞƌZĞĂĚŝŶĞƐƐĞƌƟĮĐĂƚĞWƌŽŐƌĂŵ͊ ͻ ,ŽǁĐĂŶ/ůŽǁĞƌŵLJŽǀĞƌŚĞĂĚĞdžƉĞŶƐĞƐ͍ ͻ ,ŽǁĐĂŶ/ƌĞĚƵĐĞĞŵƉůŽLJĞĞƚƵƌŶŽǀĞƌ͍ ͻ ,ŽǁĐĂŶ/ďĞƐƵƌĞĂũŽďƐĞĞŬĞƌŚĂƐƚŚĞƐŬŝůůƐƚŚĂƚ/ĂŵůŽŽŬŝŶŐĨŽƌ͍ ͻ ,ŽǁĐĂŶ/ŵĂŬĞŝŶĨŽƌŵĞĚĚĞĐŝƐŝŽŶƐĂďŽƵƚƉƌŽŵŽƟŽŶĂŶĚƚƌĂŝŶŝŶŐ͍ ŵƉůŽLJĞƌƐŝŶƌŬĂŶƐĂƐĂƌĞĨĂĐŝŶŐĨŽƌŵŝĚĂďůĞĐŚĂůůĞŶŐĞƐŝŶƚŽĚĂLJ͛ƐĞĐŽŶŽŵŝĐĐůŝŵĂƚĞ͘dŚĞƌŬĂŶƐĂƐĂƌĞĞƌZĞĂĚŝŶĞƐƐ ĞƌƟĮĐĂƚĞŚĂƐƉƌŽǀĞŶƚŽďĞŝŶǀĂůƵĂďůĞƚŽƚŚĞĞĐŽŶŽŵŝĐĂŶĚƉƌŽĨĞƐƐŝŽŶĂůĚĞǀĞůŽƉŵĞŶƚŽĨƌŬĂŶƐĂƐĞŵƉůŽLJĞƌƐĂŶĚ ũŽďƐĞĞŬĞƌƐ͘dŚŝƐĂĚǀĂŶƚĂŐĞĐŽŵĞƐŝŶƚŚĞĨŽƌŵŽĨĂǁŝĚĞůLJƌĞĐŽŐŶŝnjĞĚĐƌĞĚĞŶƟĂůƚŚĂƚĐĂŶŚĞůƉďƵƐŝŶĞƐƐĞƐƋƵŝĐŬůLJ ĂŶĚĞĂƐŝůLJŝĚĞŶƟĨLJũŽďƐĞĞŬĞƌƐǁŚŽŚĂǀĞŶĞĐĞƐƐĂƌLJǁŽƌŬƉůĂĐĞƐŬŝůůƐ͘ 'ŽǀĞƌŶŽƌDŝŬĞĞĞďĞĂŶĚƚŚĞ'ŽǀĞƌŶŽƌ͛ƐtŽƌŬĨŽƌĐĞĂďŝŶĞƚůĂƵŶĐŚĞĚƚŚĞƌŬĂŶƐĂƐĂƌĞĞƌZĞĂĚŝŶĞƐƐĞƌƟĮĐĂƚĞ WƌŽŐƌĂŵŽŶ:ĂŶƵĂƌLJϭϰ͕ϮϬϬϴ͘^ŝŶĐĞƚŚĞŶ͕ŵŽƌĞƚŚĂŶϮϲ͕ϬϬϬĐĞƌƟĮĐĂƚĞƐŚĂǀĞďĞĞŶŝƐƐƵĞĚ͕ĂŶĚŵŽƌĞƚŚĂŶϮ͕ϱϬϬ ĞŵƉůŽLJĞƌƐŚĂǀĞŚŝƌĞĚũŽďƐĞĞŬĞƌƐǁŚŽŚĂǀĞƚŚĞĐƌĞĚĞŶƟĂů͘ dŚĞZƉƌŽŐƌĂŵŝƐĂƉĂƌƚŶĞƌƐŚŝƉďĞƚǁĞĞŶƚŚĞ'ŽǀĞƌŶŽƌ͛ƐKĸĐĞ͕ƚŚĞƌŬĂŶƐĂƐĞƉĂƌƚŵĞŶƚŽĨtŽƌŬĨŽƌĐĞ^ĞƌǀŝĐĞƐ͕ ƌŬĂŶƐĂƐĐŽŶŽŵŝĐĞǀĞůŽƉŵĞŶƚŽŵŵŝƐƐŝŽŶ͕ƚŚĞƌŬĂŶƐĂƐtŽƌŬĨŽƌĐĞ/ŶǀĞƐƚŵĞŶƚŽĂƌĚ͕ƌŬĂŶƐĂƐĞƉĂƌƚŵĞŶƚ ŽĨĂƌĞĞƌĚƵĐĂƟŽŶ͕ƌŬĂŶƐĂƐĞƉĂƌƚŵĞŶƚŽĨ,ŝŐŚĞƌĚƵĐĂƟŽŶ͕ƌŬĂŶƐĂƐĞƉĂƌƚŵĞŶƚŽĨĚƵĐĂƟŽŶ͕ƌŬĂŶƐĂƐ ^ĐŝĞŶĐĞĂŶĚdĞĐŚŶŽůŽŐLJƵƚŚŽƌŝƚLJ͕ĂŶĚƚŚĞƌŬĂŶƐĂƐƐƐŽĐŝĂƟŽŶŽĨdǁŽͲzĞĂƌŽůůĞŐĞƐ͘ƌŬĂŶƐĂƐŝƐŽŶĞŽĨϰϵƐƚĂƚĞƐ ǁŝƚŚĂĂƌĞĞƌZĞĂĚŝŶĞƐƐĞƌƟĮĐĂƚĞƉƌŽŐƌĂŵ͘ůůŽĨƚŚĞƐĞĐĞƌƟĮĐĂƟŽŶĞīŽƌƚƐĂƌĞďĂƐĞĚŽŶƚŚĞtŽƌŬ<ĞLJƐΠƐLJƐƚĞŵ ĚĞǀĞůŽƉĞĚďLJd/ŶĐ͘Π͕ŽƌŝŐŝŶĂƚŽƌƐŽĨƚŚĞƌĞƐƉĞĐƚĞĚĐŽůůĞŐĞĞŶƚƌĂŶĐĞĞdžĂŵ͘ dŚĞtŽƌŬ<ĞLJƐΠĂƐƐĞƐƐŵĞŶƚƐĂƌĞĐŽŵƉƌŝƐĞĚŽĨƚŚƌĞĞŵŽĚƵůĞƐ͗ZĞĂĚŝŶŐĨŽƌ/ŶĨŽƌŵĂƟŽŶ͕ƉƉůŝĞĚDĂƚŚĞŵĂƟĐƐĂŶĚ >ŽĐĂƟŶŐ/ŶĨŽƌŵĂƟŽŶ͘dŚĞĂƌĞĞƌZĞĂĚŝŶĞƐƐĞƌƟĮĐĂƚĞƉƌŽŐƌĂŵƐĂĐƌŽƐƐƚŚĞŶĂƟŽŶƵƐĞƚŚĞƐĞƚŚƌĞĞŵŽĚƵůĞƐĨŽƌ ĂƌĞĞƌZĞĂĚŝŶĞƐƐĞƌƟĮĐĂƟŽŶďĞĐĂƵƐĞŶĂƟŽŶǁŝĚĞƌĞƐĞĂƌĐŚƌĞǀĞĂůĞĚƚŚĂƚĞŵƉůŽLJĞƌƐǀŝĞǁƚŚĞƐĞƐŬŝůůƐƐĞƚƐĂƐĐƌƵĐŝĂů ƚŽĂŶŝŶĚŝǀŝĚƵĂů͛ƐƐƵĐĐĞƐƐŝŶƚŚĞŝƌǁŽƌŬƉůĂĐĞƐ͘ ŵƉůŽLJĞƌƐǁŚŽƌĞĐŽŐŶŝnjĞ͕ƌĞƋƵĞƐƚŽƌƌĞƋƵŝƌĞĂŶƌŬĂŶƐĂƐĂƌĞĞƌZĞĂĚŝŶĞƐƐĞƌƟĮĐĂƚĞŝŶƚŚĞŝƌŚŝƌŝŶŐͬƉƌŽŵŽƟŽŶĂů ĚĞĐŝƐŝŽŶƐĐĂŶĞdžƉĞĐƚƚŽƐĞĞƌĞĚƵĐĞĚĞŵƉůŽLJĞĞƚƵƌŶŽǀĞƌƌĂƚĞƐ͕ŚŝŐŚĞƌƉƌŽĚƵĐƟǀŝƚLJĂŶĚůŽǁĞƌƚƌĂŝŶŝŶŐĐŽƐƚƐ͘ &ŽƌŵŽƌĞŝŶĨŽƌŵĂƟŽŶĂďŽƵƚƚŚĞƌŬĂŶƐĂƐĂƌĞĞƌZĞĂĚŝŶĞƐƐĞƌƟĮĐĂƚĞWƌŽŐƌĂŵ͕ƉůĞĂƐĞĐĂůůϭͲϴϲϲͲϳϱϳͲϮϵϵϵŽƌǀŝƐŝƚ ǁǁǁ͘ƌŬĂŶƐĂƐƚtŽƌŬ͘ŽƌŐ͘ ͞ƋƵĂůKƉƉŽƌƚƵŶŝƚLJŵƉůŽLJĞƌͬWƌŽŐƌĂŵ͟ ͞ƵdžŝůŝĂƌLJĂŝĚƐĂŶĚƐĞƌǀŝĐĞƐĂƌĞĂǀĂŝůĂďůĞƵƉŽŶ ƌĞƋƵĞƐƚƚŽŝŶĚŝǀŝĚƵĂůƐǁŝƚŚĚŝƐĂďŝůŝƟĞƐ͘͟ sŽŝĐĞϭͲϴϬϬͲϮϴϱͲϭϭϮϭ dϭͲϴϬϬͲϮϴϱͲϭϭϯϭ Natural Gas and the Natural State Natural gas is critical to the future of our energy independence and our communities. It’s a clean and reliable energy source that provides vast opportunities for Arkansans and for our local economies. Natural gas means good local jobs, a strong tax base and growth for businesses here in our state. Arkansas natural gas . . . good for today and tomorrow. Learn more about the benefits of clean, American natural gas by visiting www.anga.us.

Collins Creek Cascade, Arkansas