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Committee Chairs 2005-2006Arkansas Small Business CouncilDr. Ashvin Vibhaker, UALR Institute forEconomic Advancement

Communications & Public RelationsCommitteeDenver Peacock, Cranford Johnson RobinsonWoods

Education Committee Stacy Pittman, Cranford Johnson RobinsonWoods

Tax CommitteeTom Kennedy, Entergy Arkansas

Unemployment CompensationCommitteeDaniel H. Woods, Timex Corporation

Workers’ Compensation CommitteeBill Walmsley, Walmsley Law Firm

Executive Committee 2005-2006ARKANSAS STATE CHAMBER OF COMMERCEChairman of the BoardHugh McDonaldEntergy Arkansas

First Vice PresidentK.W. “Kenny” SparksOG+E

Second Vice PresidentRandy WilbournALLTEL Communications, Inc.

Vice PresidentJoe KefauverWal-Mart Stores Inc.

Past Chairman of the BoardStacy B. Pittman, APRCranford Johnson Robinson Woods

ASSOCIATED INDUSTRIES OF ARKANSASChairman of the BoardArchie SchafferTyson Foods, Inc.

First Vice PresidentEd DrillingAT&T Arkansas

Second Vice PresidentBenny BakerInternational Paper Container Division

Vice PresidentPat ReedFedEx Freight

TreasurerJoe BossierAlbemarle Corporation

Past Chairman of the BoardRandy HopperWood Manufacturing Co./Ranger Boats

StaffPresident and CEORon Russell, rrussell@ascc-aia.org

Vice President of Governmental AffairsKenneth R. Hall, J.D., kenrhall@ascc-aia.org

Director of International Trade Angela DeLille, adelille@ascc-aia.org

Director of Communications, Events andMarketing Jeff Thatcher, jthatcher@ascc-aia.org

Financial CoordinatorLinda Curtis, lcurtis@ascc-aia.org

Communications and Events CoordinatorDeb Mathis, dmathis@ascc-aia.org

Administrative AssistantKelly Bowen, kbowen@ascc-aia.org

Website: www.ascc-aia.org

State Chamber DirectorsNick Akins AEP Southwestern Electric PowerDavid Allen Acxiom CorporationSharon Allen Arkansas Blue Cross and Blue ShieldRichard Arnold Conway CorporationGary Beasley E.C. Barton & CompanyDale Briggs City Electric CompanyRobert Brown Arkansas Tech UniversityDave Byerly Greater Hot Springs ChamberBill Walmsley Walmsley Law Firm.Tom Cloninger Acxiom CorporationJim Cooper Cooper Management CorporationJohn Cooper Cooper Communities Inc.Jack Davidson Cooper Clinic P.A.Oral Edwards GES Inc./Food GiantRobert Evans Arkansas State UniversityHorst Fischer Arlington Resort Hotel & SpaJim Gowen Merchants and Planters BankCoy Grace East Arkansas Community CollegeRussell Gunter Cross Gunter Witherspoon & Galchus P.C.Daniel Herrington Friday Eldredge & ClarkWayne Honeycutt Craighead Electric Cooperative Corp.James House USAble LifeRichard Hudson U of A FayettevilleKeith Ingram Razorback Concrete Company Inc.Michael Jones Gilker and Jones, P.A.Joe Kefauver Wal-Mart Stores Inc.Benny Koontz Koontz Electric Company Inc.Barry Ledbetter Simmons First Bank of JonesboroCheryl Martin Washington Group InternationalCharles Mazander Mazander Engineered EquipmentMartha McCaskill Roddy McCaskill RealtyZach McClendon Union Bank & Trust CompanyHugh McDonald Entergy Arkansas Mike McFarland First Security BankMike McFerran The Trane CompanyJack Meadows Meadows Enterprises Inc.Charles Moore Charlie's ThriftwayMichael Moore Friday Eldredge & ClarkRoy Murphy Mid-South Engineering CompanyJose Oakley Isle of Capri CasinoMichael Parker Dover Dixon Horne PLLCStacy Pittman, APR Cranford Johnson Robinson WoodsMaryJane Rebick Copy SystemsRay Reid CenterPoint Energy ArklaLynn Reinbolt Road Systems Inc.Spencer Robinson Ramsay Bridgforth Harrelson & StarlingDennis Smiley Arvest BankMilton Smith First National Bank of Lawrence CountyRobert Smith Robert D. Smith, IIIRosi Smith Arkansas Children's HospitalK.W. “Kenny” Sparks OG+EAlan Stewart Southwestern Energy CompanyF. "Sandy" Stroope Boat World Inc.Scott Tennyson First Federal Bank of ArkansasFrank Thomas Stephens Inc.Kirkley Thomas Electric Cooperatives of ArkansasNick Thompson Mitchell Williams Selig Gates &

Woodyard, PLLCDoyle Thresher Rheem Air Conditioning DivisionJerry Vest Regions BankWilliam Walker Stephens Production CompanyEwell Welch Arkansas Farm Bureau FederationDavid Wells South Arkansas Telephone Co.Randy Wilbourn ALLTEL Communications, Inc.

AIA DirectorsJoshua Allen Allen Canning CompanyNorman Anderson Lockheed Martin Missiles &

Fire Control-DallasScott Anderson Superior Graphite CompanyBenny Baker International Paper Container DivisionIan Beer Leer Limited Partnership,

Star/Starrett Products Div.Scotty Bell Virco Manufacturing CorporationJohn Bodart Cooper Tire & Rubber CompanyJoe Bossier Albemarle CorporationSteven Brothers American Greetings CorporationDan Caspall V & B Manufacturing CompanyRichard Chapman Weyerhaeuser CompanyW. C. "Buddy" Coleman Coleman DairySamuel Commella Nucor Steel-ArkansasSteve Cousins Lion Oil CompanySammie Cox AEP Southwestern Electric PowerSarah Dellinger The Boeing CompanyHaskell Dickinson McGeorge Contracting Company Inc.Ed Drilling AT&T ArkansasMark Feldman Flexsteel Industries Inc.Russ Ford Sanyo Manufacturing Corp.Roland Garlinghouse Gar-Bro Manufacturing CompanyDanny Glass Firestone Building Products Co.Arturo Gonzalez SGL Carbon, LLCLeon Hall Timex CorporationBill Hannah Nabholz Companies Inc.Brian Hastings Hiram Walker & SonsDan Haygood Arkansas Steel AssociatesSteven Henderson SMI Steel - Arkansas/Southern PostRandy Hopper Wood Manufacturing Co/Ranger BoatsW. Kent Ingram Razorback Concrete Company Inc.Jos Jacque' TrefilARBED Arkansas Inc.Jeff Jones CenturyTelJim Karrh Mountain Valley Spring Company, LLCRobert Langston Langston Companies Inc.Larry Lynn Central Moloney Inc.Patrick Mathieu Unilever Best FoodsW. Scott McGeorge Pine Bluff Sand & Gravel CompanyLarry Miller FedEx Freight - EastBert Parke Democrat Printing & Lithographing Co.Lee Pittman International Paper CompanyRandy Powell Arkansas EastmanJohn Pownall Kimberly-Clark Conway MillsDan Redmond Great Lakes Chemical Corporation,

a Chemtura CompanyBill Reed Riceland Foods Inc.Pat Reed FedEx FreightFrank Richardson American Greetings CorporationCharles Rink Remington Arms Company Inc.Perry Roberts Emerson Electric CompanySteve Ronnel Metal Recycling CorporationArchie Schaffer Tyson Foods, Inc.Tom Siebenmorgen Leisure Arts IncorporatedMelissa Smith McKee Foods CorporationDon Stephan Federal MogulLisa Stocker Potlatch CorporationMatt Szymanski Green Bay Pkg./Arkansas Kraft Div.Ed Tolleson Emerson Electric CompanyJames Walcott Weldon Williams & Lick Inc.Dean Williams MacLean-ESNADaniel Woods Timex CorporationAlbert Yarnell Yarnell Ice Cream Co. Inc.

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2 85th Arkansas General Assembly top priorities.

3 85th General Assembly lobbying summary.

5 National issues.

6 Significant accomplishments.Staff activities.

8 Just for the Kids.Metro 2030 Long Range Transportation Plan.

10 Annual Meeting summary. Beebe speech.

11 Hutchinson speech.

12 Bond Proposals.

13 Lake View case update.

14 SSTP presentation.Utility sales tax exemption presentation.

15 Immigration reform.State trade mission to Japan.U.S. Chamber update.

16 Disaster planning and crisis communication.

17 FedEx and Entergy disaster responses.Ta

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Front cover photo courtesy of Sammie Cox

StateChamber/AIAAccomplishes

Top Priorities In85th Arkansas

General AssemblyThe State Chamber/AIA’s

governmental affairs work in 2005 focusedon the 85th Arkansas General Assembly,which met for 94 days from January 10until April 13. We had a successful sessionoverall and accomplished our top prioritiesfor the session by protecting the educationreform and tort reform legislation passedin the 84th General Assembly.

Legislators set a new record by filing3,327 bills and resolutions. We tracked698, which was a 75 percent increase inour bill tracking over 1999, the first yearthat term limits impacted the House ofRepresentatives.

We view education as economicdevelopment of our State’s mostimportant resource.

Consequently, we maintained our roleas the leading advocate for educationreform in Arkansas.

This required diligent efforts to protectthe reforms passed by the 84th GeneralAssembly. The State Chamber/AIAsuccessfully led efforts to defeat bills thatwould: have eliminated the requirementthat all school districts must teach aminimum of four Advanced Placementcourses at the high school level; provided aback door out of mandatory curriculumrequirements that would allow districts toteach less than the required 38 minimumunits; cut professional development and

urged the repeal of a temporary incometax surcharge. The State Chamber/AIAalso led the effort that blocked an attemptto pass unitary combined income taxreporting that would have crippled home-based corporations.

Unemployment insurance, which yearsago was the source of much legislationwith costly impacts on business, remainedunder control through the StateChamber/AIA’s participation in the state’sUnemployment Insurance AdvisoryCouncil. This group developed agreedlegislation that was refined, approved andsuccessfully pushed to passage by the StateChamber/AIA’s Unemployment InsuranceCommittee.

The State Chamber/AIA led efforts toallow local elections that could authorizeadditional electronic games of skill athorse or greyhound racing parks. We alsohelped pass legislation that requireslegislative review of any bill or interimstudy that proposes a mandated healthinsurance benefit or service and sets up anAdvisory Commission on MandatedHealth Benefits. Additionally, we pushedthe State Department of EconomicDevelopment’s legislative package that wasadopted, and helped pass neededlegislation to prevent raiding of theLandfill Post-Closure Trust Fund. We alsohelped block dangerous bills dealing withdeceptive trade, environmental laws andminimum wage laws.

In summary, we upheld our mission ofenhancing the economic climate inArkansas by continuing to be the leadingadvocate for the business community andone of the most effective lobbying groupsin the state.

in-service training for teachers; diluted thenew requirement that every school haveaccess to teachers certified in art andmusic; provided more flexibility to andfewer sanctions for school districts thatfile data and reports late, and watereddown the omnibus Quality Education Act.

Our education reform effortscontinued after the session through ourcontinued participation in the Lake Viewcase. We filed two amicus briefs. One wasfiled before hearings were held by speciallyappointed masters, and the second wasfiled with the full state Supreme Court thaturged the Court to let the reforms passedby the 84th General Assembly have moretime to develop before requiring moremoney to be thrown at the system.

An expected effort toweaken tort reform measurespassed by the 84th GeneralAssembly never materialized. Acouple of bills were filed, butwere immediately placed onhold after State Chamber/AIAand other pro-tort reforminterests suggested additionalreform measures might be filed.This success was supported bydiligent work in the 2004election year to block efforts toelect more anti-tort reformlegislators.

Protecting the WorkersCompensation reform of 1993is a priority for the State

Chamber/AIA in every session. OurWorkers’ Compensation Committeeprovided direction as we successfullynegotiated agreed legislation with theAFL-CIO and passed all four bills. Laborgained minor changes to thedefinition of hearing lossand neck and back injurycases, while management gota needed fix in the use ofcertificates of non-coverage.We also blocked efforts todrastically reduce the salariesof Workers’ CompensationCommissioners and toremove the at-willemployment status ofadministrative law judges.

The tax increases passedby the 84th GeneralAssembly created a muchwelcomed anti-taxatmosphere for the membersof the 85th. We successfully

MAKING A POINT – (From left) State Chamber/AIA VicePresident of Governmental Affairs Kenny Hall makes a point withState Rep. Eric Harris of Lowell during the 85th ArkansasGeneral Assembly.

THE LEGISLATIVE PROCESS IN ACTION – (From left) StateChamber/AIA Vice President of Governmental Affairs Kenny Hall,State Sen. Terry Smith of Hot Springs and State Chamber/AIAPresident and CEO Ron Russell discuss pending legislation at theState Capitol during a break in the action at the 85th ArkansasGeneral Assembly.

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85th General AssemblyOf Arkansas

State Chamber/AIALobbying Summary

The 85th General Assembly met for 94days before adjourning on Wednesday,April 13. Here is a summary of the issuesthat the State Chamber/AIA lobbiedduring the session.

State Chamber/AIA Top PrioritiesTort Reform

Going into the 85th General Assembly,the State Chamber/AIA set as its toppriorities the protection of tort reform andeducation reform measures passed duringthe 84th General Assembly. We are happyto report that we were completelysuccessful on both accounts.

Only a few anti-tort reform measureswere proposed and none were passed. HB2478, HB 2479 and HB 2522 all by Rep.John Verkamp (R-Greenwood) were filedthe last day of filing and were immediatelyplaced on the inactive agenda, where theyremained until the session ended.

HB 2637 by Rep. Steve Harrelson (D-Texarkana) would have changed survivalactions filed by descendants for wrongsdone to person or property. Its impact ontort reform was not noticed immediatelyand the bill slipped out of the House. Wediscovered the bill as it was assigned to theSenate Judiciary Committee, where it diedfollowing excellent opposing testimony byattorney Nick Thompson representing theCommittee to Save Arkansas Jobs, the StateChamber/AIA and the Arkansas MedicalSociety.

SB 937 (now Act 1380) by Sen. JimLuker (D-Wynne) changes the effectivedate of the $25 million cap on appealbonds. It was filed by the tobacco industryto gain the use of the cap on a pre-existingcase that could produce a judgment largeenough to force bankruptcy and endangerthe state’s continued receipt of TobaccoSettlement funds.

improved education laws.SB 1130 (now Act 2005) by Sen. Steve

Bryles (D-Blytheville) is a bill the StateChamber/AIA supported that improvescharter school laws.

HB 2530 (now Act 1672) by Rep. LeroyDangeau (D-Wynne) is a bill that StateChamber/AIA Education CommitteeChair, Stacy Pittman, testified in support ofand helped pass. It renames the director ofthe State Department of Education as thecommissioner and reorganizes theDepartment into four new divisions and acentral administration as of July 1, 2005. Italso adds the Division of AcademicFacilities and Transportation and theDivision of Accountability to theDepartment effective July 1, 2007.

HB 2520 by Rep. Bill Abernathy (D-Mena) was strongly opposed by the StateChamber/AIA. It would have greatlyweakened the recently passed reformrequiring schools to offer 38 units eachyear. It was set for a special order ofbusiness in the House EducationCommittee but was never considered.

Tax IssuesSSTP

Another issue that we worked on heavilyin the background was modification to theArkansas Streamlined Sales Tax Project(SSTP). We started discussions on this issuelast fall in State Chamber/AIA TaxCommittee meetings.

Our committee identified two criticalproblems with the SSTP law regardless ofits effective date: sourcing and theelimination of local sales tax caps. Thecommittee discussed the following potentialsolutions: 1) Creating a tax credit/rebatethat would offset the dramatic increase insales taxes caused by the loss of local caps;2) Exemptions for the amount of the nowuncapped sales taxes; 3) Delay enactmentof the Arkansas SSTP law. The committeeformed a working group to further developsolutions and attempt implementation.

Going into the session, we knew thatthe state Department of Finance andAdministration (DFA) was interested in anearlier implementation date and if Arkansaswere one of the first 10 states to pass SSTPlegislation, the state would get a seat at thenational table.

We also knew that getting Sen. Jim Hill(D-Nashville), sponsor of the originalSSTP legislation and the most experiencedmember of the Senate, to support ourconcerns would be vital to resolving thisissue. We felt sure that Sen. Hill wouldlisten to the business community’s concernsas well as to DFA’s concerns. This meantthat a grassroots effort could disrupt theprocess. Therefore, beginning lastNovember and continuing through finalpassage of SB 1173 (now Act 2008), MikeParker of the Dover Dixon Horne law firmand Morril Harriman, executive director of

The possibility of this bill being filedcreated tension between pro-tort reformand anti-tort reform groups. SpeakerStovall assembled a meeting of allinterested parties early in the session in anattempt to diffuse a situation that couldhave resulted in a rash of bill filings by pro-tort reform and anti-tort reform groups.

The tobacco industry eventually filedthe bill and managed to get the measurepassed without support of businessinterests and with opposition by thoseagainst tort reform.

An interesting by-product was thebeginning of a dialogue begun between theCommittee to Save Arkansas Jobs/StateChamber-AIA and the trial lawyersassociation. This dialogue helped suppressaction on Rep. Verkamp’s three anti-tortreform bills mentioned above. It is possiblethis dialogue could continue into futuresessions much like we have between theState Chamber/AIA and the AFL-CIO onworkers’ compensation and unemploymentinsurance issues.

Since the close of the 2003 session, anti-tort reform groups had been talking aboutthe need for insurance reform legislation.SB 233 (now Act 1697) by Sen. BobJohnson (D-Morrilton) was a preemptiveattack by the pro-tort reform group thatmoved cleanly out of the Senate. The anti-tort reform group held the bill in theHouse Judiciary Committee while HB 2075by Rep. Chris Thomason (D-Hope) wascrafted. (SB 228 by Sen. Irma Brown wasfiled the same day as SB 233 but was neveracted upon.) Eventually, a compromise wasreached and some of the provisions of HB2075 were merged into SB 233, which ledto the adoption of SB 233 in the Housewith only one dissenting vote.

Except for HB 2637, we made very littlemention, if any at all, of the rest of thetort reform bills described above in ourdaily updates. Occasionally issues are sovolatile that grass roots contacts mightactually hurt. Tort reform was certainly anissue that we managed more effectively

without making our actionsknown. Nick Thompson ofthe Mitchell Williams lawfirm in Little Rock, andMorril Harriman, executivedirector of the PoultryFederation, did terrific workfor us on this issue.

Education ReformThankfully, very few

attempts were made toweaken the major educationreforms passed in the 84thGeneral Assembly. Most ofthis session’s education focuswas on funding ofeducational facilities and thegeneral education funding forthe next biennium. Therewere also a few measures that

LISTENING INTENTLY – (From left) State Rep. Travis Boyd ofPiggott provides an explanation to State Chamber/AIA Vice Presidentof Governmental Affairs Kenny Hall and Director of InternationalTrade Angela DeLille during a break in the action during the 85thGeneral Assembly. (continued on page 4)

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the Arkansas Poultry Federation and aformer Senator, served as our negotiatorswith DFA.

Initially, we thought we could get anagreement on a rebate and definition of asingle transaction. But a national SSTPmeeting in Atlanta resulted in confusion atthe national level and it became obviousthat trying to find solutions for problemsthat might be different in the future wasfutile. Therefore, we agreed with DFA todelay implementation of the ArkansasSSTP laws until July 1, 2007.

Unitary Combined Income Tax Reporting

During the 2003 legislative session, Rep.Phil Jackson (R-Berryville) ran a bill onunitary combined income tax reporting.Although it was defeated, everyoneexpected him to bring the issue up duringthe 2005 session while he was serving aschairman of the House Revenue andTaxation Committee.

Jackson kept the issue active in theinterim and the State Chamber/AIAbrought in experts to speak about the issueat our annual meeting last October. TheState Chamber/AIA Tax Committeeconsidered the unitary combined corporateincome tax reporting issue in meetings lastfall and adopted the position to opposesuch a change in Arkansas tax law. Some ofthe key reasons the committee voted tooppose the unitary tax issue were: It wouldcreate corporate tax winners and tax losers;there was no guarantee of a revenue gainfor the state; it would put the greatest stresson home-based Arkansas corporations –some of which could decide to relocatetheir home offices out of Arkansas; itwould close the door on attracting anybusiness to choose Arkansas as its homeoffice location, and it would not shift thetax burden from small to large businessesbecause most small businesses do not payC-Corp. income taxes.

Jackson finally filed his bill, HB 2686,on March 7, which was the last day of billfiling, but the bill was only a “shell” bill.On February 28, a professor from NewYork City addressed a joint meeting of theRevenue and Taxation Committees. Hediscussed radical changes in tax philosophywith which a vast majority of the Arkansasbusiness community disagreed. The StateChamber/AIA brought in Jim Eads, anative Arkansan and president of the NewMexico Tax Institute, and Doug Lindholm,president of the Council on State Taxation,to speak to a joint meeting of the Houseand Senate Tax Committees on March 8.

HB 2686 was brought up in the HouseRevenue and Taxation Committee on April5. It was immediately amended as Jacksonpresented the bill. When it was time forpublic debate, the committee limited it toone minute per side and then defeated the

partnerships, S corps., etc.) to withholdincome taxes of out-of-state owners. Thiswould have required withholdings of taxesthat were never due or passive earnings thatnever became cash earnings. In respect forour concerns, Hill did not run the bill untilafter several business interests directlyaffected by the bill helped craft anamendment. The amendment limits therequired withholding to identified out-of-state owners who fail to pay taxes owed tothe state of Arkansas.

Loss of Deductions and CreditsSB 446 by Sen. Paul Miller (D-

Melbourne) was a bill that might havewiped out the state’s primary industrialdevelopment deductions and tax credits.The State Chamber/AIA’s oppositionhelped Miller decide not to run the bill.

Attempts To Increase TaxesSeveral of the bills filed would have

increased taxes. The State Chamber/AIAwas on guard to battle any that came up.Fortunately, the legislature adjournedwithout passing any of these tax increaseplans.

HB 1320 (now Act 2022) contains theArkansas Department of EnvironmentalQuality’s budget for the next biennium.When the revenue stabilization bill cameout, it was revealed that ADEQ would loseits $3.5 million of state general revenue.

An amendment was proposed to allowADEQ to increase user fees to make upthe lost state revenue. These fee increaseswould have resulted in significant increasesto businesses. The State Chamber/AIAjoined the Arkansas EnvironmentalFederation, Arkansas Farm Bureau, thePoultry Federation and several otherbusiness interests to oppose the feeincreases.

Eventually Governor Huckabee told theADEQ director the fee increases weretantamount to a tax increase and he wouldnot allow it to happen. Finally ADEQ wasauthorized to receive a potential $2.5million that the state could save throughthe merger of the state Health Departmentinto the state Department of HumanServices.

SB 147 by Sen. Jerry Bookout (D-Jonesboro) was an attempt to increaseoriginal corporate registration fees from$25 to $100 and renewal fees from $10 to$100. The State Chamber/AIA blocked thisveiled attempt to increase taxes on business.

HB 2406 by Rep. Preston Scroggin (D-Vilonia) would have increased corporatefiling fees. The bill was pulled down afterthe State Chamber/AIA expressedopposition.

HB 1419 by Rep. Johnnie Bolin (D-Crossett) would have applied the grossreceipts tax to the sale of advertising spaceand time in newspaper, television, radio andbillboards. The State Chamber/AIA andseveral business interests opposed the billand it was never brought up for

bill on a voice vote – a culmination of theState Chamber/AIA-led lobbying effortthat began last fall.

Income Tax SurchargeSB 38 (now Act 63) by Sen. Percy

Malone (D-Arkadelphia) and Rep. ChrisThyer (D-Jonesboro) repealed the threepercent income tax surcharge, which was apriority issue of the State Chamber/AIATax Committee.

Food Tax RepealFor 40 years, the State Chamber/AIA

was a key part of groups that successfullyblocked attempts to repeal the sales tax onfood because it would eventually create atax shift to business and those it wasintended to help – the poor.

SB 277 (now Act 647) by Sen. TerrySmith (D-Hot Springs) was a scheme thatquickly became a runaway train. Due toterm limits, few legislators had beenthrough the legislative and ballot battlesover this issue.

We went to several leading legislators toseek their help in blocking this bill only tofind that they were co-sponsors of theproposed legislation. The bill will removethe state (not local) sales tax on food whenthe state’s revenue from SSTP exceeds 150percent of the revenue generated by thestate tax on food for six consecutivemonths. Legislators saw this as a politicalgoldmine. We saw it as bad governmentcommitting future legislatures and futurerevenue without any knowledge of whatthe needs of the state might be when thismeasure kicks in.

Pass Through EntitiesSB 509 (now Act 1982) by Sen. Jim Hill

(D-Nashville) and Rep. Phil Jackson (R-Berryville) is a bill that we provided grassroots warnings about from the time the billwas filed until it became law. As originallyfiled, it would have required pass throughtype entities (LLCs, partnerships, limited

OUR MAN AT THE STATE CAPITOL – StateChamber/AIA Vice President of GovernmentalAffairs Kenny Hall prepares for another day oflobbying at the State Capitol during the 85thGeneral Assembly.

85TH GENERAL ASSEMBLY(continued from page 3)

(continued on page 21)4

National Issues Remain Major Focus

For StateChamber/AIA

The State Chamber/AIA’s governmentalaffairs team lobbied members of Arkansas’congressional delegation on a variety ofnational issues this year. One of our mostsignificant achievements was the passage ofthe Class Action Fairness Act of 2005. Thisbill will ensure a simpler, fairer, and fasterlegal system by helping move large, multi-state class action lawsuits from state tofederal court, preventing widespread venueshopping by trial lawyers. It will also limitsettlements in which class members actuallylose money to pay attorneys’ fees andensure the fair and even distribution ofdamage awards to all plaintiffs.

Another important victory came withthe passage of the U.S.-DominicanRepublic-Central America Free TradeAgreement (DR-CAFTA) by the U.S.Congress. The Emergency Committee forAmerican Trade reports that “for Arkansas’manufacturers, the DR-CAFTAimmediately eliminates tariffs on 80 percentof U.S. exports and eliminates all tariffswithin 10 years, including the up-to-15percent tariffs on Arkansas’ exports ofelectrical equipment, machinerymanufactures, paper products, plastics andrubber, processed foods and transportationequipment. For Arkansas’ agriculturalproducers, DR-CAFTA will eliminate tariffson 50 percent of U.S. exports immediately,and most remaining duties within 15years…” This will benefit Arkansas’ rice,beef, poultry, soybeans, cotton and textileproducers.

The State Chamber/AIA is committed tofinding workable solutions that protect theenvironment, while also encouragingeconomic growth. For this reason, wesupported the Clear Skies Act of 2005,which would enact the largest power plantemissions reduction program ever – a 70percent cut in sulfur dioxide, nitrogen oxide,and mercury. In addition, Clear Skies wouldallow the nation to continue to burn coalwithout increasing our reliance on naturalgas. Because coal is our nation’s mostabundant and cheapest energy source,manufacturers and businesses depend on itslow cost to stay competitive. Unlike otherproposals, Clear Skies would notdramatically reduce coal-based generation orforce an over-reliance on natural gas, whichwould dramatically increase demand andresult in crippling economic costs forArkansas’ businesses and consumers.

For years, the State Chamber/AIA hassupported full and permanent repeal of the

amounts to a savings of $5,000. Wesupport this bill that would give Americansmore control over their retirement andempower them to maintain their standardof living.

We also support another legal reformmeasure, the Personal Responsibility inFood Consumption Act, which wouldprevent frivolous obesity-related lawsuitsthat hold food companies liable for anindividual’s obesity or obesity-related healthailments. The bill still allows appropriatelitigation against food suppliers if they failto comply with applicable statutory andregulatory requirements, includingprohibitions on contaminated foods.Current law allows claims if food containssomething that does not belong there, doesnot meet health or safety regulations, orwhen a food seller makes false promises.

estate tax. This year was no exception as welobbied Arkansas’ congressional delegationto support The Death Tax RepealPermanency Act of 2005. The estate tax, ordeath tax as it is also known, depletes theestates of taxpayers who have savedthroughout their entire lives, often forcingsuccessful family businesses to curtailoperations, sell income-producing assets,borrow, or in extreme cases, liquidate topay the tax. The “Economic Growth andTax Relief Reconciliation Act of 2001,”signed into law by President Bush,gradually phases out the death tax until it iscompletely repealed in 2010. However, ifCongress does not act, in 2011 the fulldeath tax will again be reinstated.

This fall, the State Chamber/AIAsubmitted comments to the MineralsManagement Service on the new Five-YearOuter Continental Shelf (OCS) Oil andGas Leasing Program for 2007-2012,recommending the plan provide forexpanded OCS leasing, including providingflexibility for future inclusion of areaswhere development is currently prohibited.The U.S. cannot continue to rejectopportunities to develop our domesticoffshore energy resources or Americanconsumers and businesses will suffer theconsequences in terms of slower economicgrowth, higher energy prices, reducedcompetitiveness incomparison withoverseasmanufacturers andcontinued job losses.

Americans areliving longer andtraditional sourcesof retirementincome are nolonger adequate.The RetirementSecurity for Life Actof 2005 creates a taxincentive that wouldencourage people tochoose retirementvehicles, such as lifeannuities, thatprovide a guaranteedreturn duringretirement. Underthe bill, one-half ofincome from lifeannuity payments isexcluded fromfederal taxes. Theamount of incomeexcluded is cappedat $20,000 per year;for someone in the25 percent taxbracket, this

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SignificantAccomplishments

Racked Up ByState Chamber/AIA

During The Past YearBack Home Bash-SSmmaasshhiinngg SSuucccceessssMore than 400 people, including three

members of the Arkansas Congressionaldelegation and approximately 100Congressional delegation staff members,crowded into the Great Hall of the ClintonPresidential Center on Tuesday, August 23,for the State Chamber/AIA’s Back HomeBash.

The “Bash” event, presented by Wal-Mart, was our 46th Annual Salute to theArkansas Congressional Delegation andtheir staffs.

The evening began with a VIP tour ofthe Clinton Library, followed by a Meet andGreet Reception and self-guided tours ofthe Library. At 7 p.m., members of theArkansas delegation and staffrepresentatives in attendance – U.S. Sen.Mark Pryor; U.S. Rep. Mike Ross; U.S. Rep.John Boozman; Steve Patterson, Chief ofStaff for U.S. Sen. Blanche Lincoln; Ed Fry,Chief of Staff for U.S. Rep. Vic Snyder;and Leigh Fowler, District Director for U.S.Rep. Marion Berry – made short

and (b) eliminate the decal rules for lifts,cranes, etc. for warehouse or other insideuse.

“DF&A has apparently accepted thecomments, will pull the draft Rule, andreissue with our proposed changes forconsideration by the Rules and RegulationsSubcommittee in November,” Parkerrecently noted. “This will substantiallyreduce the burden of the new decal lawand rule on manufacturers, andwholesale/retail businesses.”

“This is an excellent example of MikeParker’s great ability, tenacity and passion inlooking out for the health of Arkansas’business community,” said StateChamber/AIA President & CEO RonRussell.

It is also a classic example of how theState Chamber/AIA serves the businesscommunity and how vital it is for the StateChamber/AIA to have members who goabove and beyond the call of duty to limitunnecessary compliance costs and penaltyexposure for business and industry.

State Chamber/AIA ProvidesInteractive Hurricane Relief

Bulletin Board OnlineWith the help of Atherton Hiett and

Kelly Reed, two of our DINA partnersfrom UALR’s Institute for EconomicAdvancement (IEA), the StateChamber/AIA website hosts an interactiveDisaster Relief Bulletin Board.

This site was developed in response tothe Katrina disaster. It is used for posting

presentations. Dinner and music followed.State Chamber/AIA Accomplishes

Changes in Proposed DF&A RuleAs part of the mission of the Arkansas

State Chamber of Commerce/AssociatedIndustries of Arkansas, we are constantlyon guard against legislative and regulatoryissues that might inhibit the economicclimate in Arkansas.

A case in point occurred recently whenMike Parker, an attorney for the DoverDixon Horne law firm and legal counselfor the State Chamber/AIA’s TaxCommittee, used his expertise on behalf ofthe State Chamber/AIA to influencechanges in a new rule proposed by theArkansas Department of Finance andAdministration (DF&A) – Markup of Rule2005-4 “Sales of Heavy Equipment –Decals” that was filed on September 20, 2005.

The rules were being developed byDF&A to implement Act 1693 of 2005,which was originally filed as HB 2972 byRep. Bill Pritchard of Elkins. Thelegislation requires a decal to be placed oneach piece of heavy equipment when salesor use taxes are paid as proof that the taxeshave been paid. The intent of the law wasto level the playing field between taxpayerswho purchase equipment in Arkansas andpay the sales tax, and those who purchaseequipment out-of-state and potentiallyavoid paying Arkansas sales taxes.

Parker filed two rounds of commentson the proposed Rule designed to: (a)eliminate the decal rules for manufacturersbuying heavy equipment for use on site;

Accom

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State Chamber/AIAStaff Remains Busy

With Speeches,Conferences

and ActivitiesMembers of the State Chamber/AIA

staff welcome the opportunity to speak toour members and friends about issuesfacing the business community and thestate. Some of those opportunities arehighlighted below.

In Little Rock, Kenny Hall spoke to theGovernor’s Conference on WaterborneTransportation about the DominicanRepublic – Central America Free TradeAgreement (DR-CAFTA). The StateChamber/AIA took an active role in urgingArkansas’ Congressional Delegation tosupport DR-CAFTA’s implementinglegislation, which President Bush signed onAugust 2, 2005.

Hall was invited to Dallas, Texas, tospeak to the U.S. Chamber of CommerceRegional Public Affairs Meeting.Approximately 75 governmental affairsmanagers from various major corporationslistened to his presentation concerning the

have been active participants during the pastyear in various other conferences as well.

In Little Rock, Ron Russell attended theArkansas Economic Developers AnnualMeeting and the Arkansas Governor’sConference on Waterborne Transportation.

Kenny Hall traveled to Dallas, Texas, tonetwork and gain valuable information atthe U.S. Chamber of Commerce RegionalGovernmental Affairs Meeting. Hall alsotraveled to Hot Springs on two separateoccasions, once to attend the AnnualMeeting of the Arkansas Bar Associationand again for the Arkansas Society ofAssociation Executives Annual Meeting andTrade Show.

Angela DeLille attended the three-dayArkansas Worker’s CompensationCommission Conference in Little Rock.

Russell, Hall and DeLille alsoparticipated in “How To Win An Election”– a seminar in Little Rock that wassponsored by the Arkansas Farm Bureauand the State Chamber/AIA. The seminarwas geared to candidates, their spouses andtheir campaign managers.

Jeff Thatcher traveled to San Destin,Florida, to meet with a group of hiscounterparts at the Conference of StateManufacturing Associations.

85th Arkansas General Assembly legislativehighlights and 2006 key statewide elections.

In addition, Hall spoke to the ArkansasMortgage Bankers, the Arkansas Self-Insurers Association Annual Meeting and agroup of International Paper employeesand customers. In each speech, Hallprovided a brief description of the StateChamber/AIA and an overview of the2005 legislative session.

Speeches detailing the role of theArkansas State Chamber of Commerce andAssociated Industries of Arkansas, Inc.were given to the Boone County LeadershipGroup and the Harrison Leadership Groupby Angela DeLille. DeLille also addressedhighlights from the 2005 legislative sessionas well as the “hot topics” of elections,education reform and the factual details ofthe Highway and Higher Education Bondissues addressed during the December 13thspecial election.

Jeff Thatcher spoke to the ArkansasChamber of Commerce Executives at theirannual meeting in Hot Springs about his roleat the State Chamber AIA, membership plansand upcoming State Chamber/AIA events.

ConferencesIn addition to conferences hosted by the

State Chamber/AIA, members of the staff

(continued on page 7)

(continued on page 7)6

events and announcements relating to reliefor recovery efforts, as well as accessingother state-wide disaster information.

Our members have been encouraged toshare their activities here as well as readabout what others are doing.http://ascc.weknowarkansas.org/katrina/default.html.

Education Reform Efforts Paying OffThe Arkansas Department of Education

reported an abundance of good newsrelating to Arkansas public school students’test scores.

Students in grades K-9 took the IowaTest of Basic Skills, in which they arecompared with a national sample ofstudents in the same age range. All but oneset of scores were above the 50thpercentile, which is the national average,with a couple of grades scoring as high asthe 68th percentile.

End-of-course exams in algebra andgeometry also showed significant gains anda slight narrowing of the achievement gapbetween whites and African-Americans andbetween whites and Hispanics.

Participation in Advanced Placementcourses doubled last year over the previousone. Participation in AP courses is apredictor for success in college.

These successes can be traced to thestate’s reform efforts of the SecondExtraordinary Session, in which the StateChamber-AIA took a leading role in thecalls for reform and school accountability.

Small Business Awards Given at Luncheon in

North Little RockGoldie and Andrew G. (A.G.) Russell

III received the 2005 Small BusinessPersons of the Year Award at the 15thAnnual Arkansas Small Business AwardsLuncheon hosted by the StateChamber/AIA at the Wyndham Riverfrontin North Little Rock.

First Employment Law Roundtable a Hit

Participants learned howto avoid unexpected legalpitfalls with employeesduring the StateChamber/AIA’s firstEmployment LawRoundtable. Spencer F.Robinson, Esq., of RamsayBridgforth Harrelson &Starling in Pine Bluff, ledthe two-hour discussion,which was held at TheAlliance in Pine Bluff.

“The roundtable wasbeneficial for me. I learnedseveral things I did notknow,” one participantwrote to the StateChamber/AIA, adding,“(I’m) looking forward tojoining you guys again inthe future.”Second Employment Law

Roundtable a SuccessHow long do you keep resumes on file?

What do you write in a letter turning anapplicant down for a job? Mike Moore withFriday Eldredge Clark covered these issuesand many more as he took participantsthrough the steps of “hassle-free hiring” atthe State Chamber/AIA’s secondemployment law roundtable in Little Rock.

Nearly a dozen participants gleanedhelpful information during the two-hoursession.

Staff Activities/BiosRon Russell

As president and chief executive officerof the Arkansas State Chamber ofCommerce and Associated Industries ofArkansas, Ron Russell directs the operationof these organizations that serve as theforemost advocates for business andindustry in Arkansas. He is recognized as aleading spokesman for the state’s businesscommunity.

In addition to his duties at the StateChamber/AIA, Russell is involved innumerous other organizations including theArkansas Society of Association Executives,Arkansas Society of Professional Lobbyists,American Chamber of CommerceExecutives, National Association ofManufacturers Grassroots Lobbying, andCouncil of State Manufacturers.

Russell also serves on the ExecutiveCommittee of The Partnership, theEmployment Security Division AdvisoryCouncil, the U.S. Chamber of CommerceAdvisory Committee, and the Lyon CollegeBusiness Advisory Council. He is also a pastpresident of the Arkansas Chamber ofCommerce Executives and serves as a past

Angela DeLilleAngela DeLille is a member of the State

Chamber/AIA governmental affairs team.She works on state and national legislativeissues, while also working with StateChamber/AIA President & CEO RonRussell to develop a focus on internationaltrade.

In addition to her duties at the StateChamber/AIA, DeLille is a member of theArkansas Society of Association Executives,Arkansas Society of Professional Lobbyists,Coalition for Nursing Home Excellence andLittle Rock World Trade Club. She alsoserves on the advisory committee of theArkansas Governor’s Family FriendlyInitiative and the advisory board of theSalvation Army Central Arkansas AreaCommand.

Jeff ThatcherJeff Thatcher, director of

communications, events and marketing, isresponsible for developing, implementingand overseeing all State Chamber/AIAcommunications efforts, events, marketingand membership. He writes and editsBusiness Monthly, the State Chamber/AIAnewsletter, the State Chamber/AIA AnnualSummary, and all other organizationpublications.

president and current board member of theArkansas Economic Developers.

Kenny HallKenny Hall is the vice president for

governmental affairs of the StateChamber/AIA. He represents the positionsof the two organizations on issues relatedto, and focusing on, the enhancement of aquality business climate in Arkansas beforevarious government entities, including thelegislature, the governor’s office andassorted state agencies, committees andboards.

Hall helps develop and implement StateChamber/AIA legislative strategies and isresponsible for enlisting support for thesegoals. He coordinates the activities of theState Chamber/AIA legislative committees.

He serves as president of the ArkansasSociety of Professional Lobbyists, vicepresident of the non-profit scholarshiporganization Kids’ Chance and a boardmember of the Arkansas EnvironmentalFederation. He is an active member andformer board member of the ArkansasSociety of Association Executives, as well asa member of the Arkansas Chamber ofCommerce Executives, the Arkansas BarAssociation and a PAC Committee Officerfor the Committee to Save Arkansas Jobs.

SIGNIFICANT ACCOMPLISHMENTS(continued from page 6)

(continued on page 23)

STATE CHAMBER/AIA STAFF(continued from page 6)

(continued on page 24)7

SMALL BUSINESS PERSONS OF THE YEAR – Andrew G. (A.G.)Russell III (left) and his wife, Goldie Russell were named SmallBusiness Persons of the Year for 2005. Russell is the founder andGoldie Russell the president of The Knife Company, Inc. doingbusiness as A.G. Russell Knives of Lowell.

Building CommunitiesJust for the Kids Day

Held At VenuesThroughout Arkansas

Fifty-seven Arkansas schools served ashost locations for their communities in astatewide discussion on Tuesday, November15, to give parents and citizens moreinformation about student performancedata and discussing academic improvementstrategies in their respective communities.

Organizers called the launch for theinitiative: Building Communities Just forthe Kids Day. Forty-seven school districtsparticipated in the statewide discussion.

“Parents and citizens from around thestate gathered in their respectivecommunities to learn more about how theycan get involved with the process ofachieving high performing schools,” saidStacy Pittman, project director for Just forthe Kids, Arkansas and chairman of theState Chamber/AIA Education Committee.

The community-based initiative, entitledBuilding Communities Just for the Kids, isa national pilot program for Arkansas andthe first of its kind in the country. It is apartnership between Just for the Kids,Arkansas State Chamber ofCommerce/Associated Industries ofArkansas, Arkansas State Parent TeacherAssociation, Arkansas School BoardsAssociation, Arkansas Association ofEducational Administrators, ArkansasEducation Association, Arkansas RuralEducation Association, Arkansans forEducation Reform Foundation and theArkansas Department of Education.

“Building Communities Just for TheKids is all about bringing educators,parents, community leaders and lawmakerstogether to analyze where we are,determine where we need to be anddevelop a plan of community cooperation

the national pilot program.”The Just for the Kids website

(www.just4kids.org) provides accessible,transparent data that is designed to buildhigh performing schools. It shows howevery Arkansas public school is performingon state tests in relation to five otherArkansas schools that have a comparablestudent population. All the data on thewebsite for Arkansas schools is provided byArkansas Department of Education and ispresented in an easy-to understand format.

The Texas-based Just for the Kidsorganization now has affiliates in 37 states.The group’s national sponsor is theNational Center for EducationalAccountability.

that can help shape the lives of ourchildren’s futures,” said Pittman. “Whencommunities become informed, inspiredand work together toward an agenda ofimprovement and success, our childrenhave a much better chance of broadeningtheir future opportunities.”

One of the highlights of the BuildingCommunities Just for the Kids Day was therelease of the parent consumer guide,entitled “Get Educated About Education:A Consumer Guide to Public Education,” atool for parents and citizens to betterunderstand the new laws - both state andfederal - that determine the laws andregulations now required by school districtsin Arkansas. It is available on the websitewww.just4kids.org.

Arkansas Parent Teacher Associationpresident Don Johnson said “the consumerguide will give parents a more thoroughunderstanding of how recent legislationand public policy initiatives affect theircommunity and how they can play a keyrole in helping to build high-performingschools.”

“We hope that with betterunderstanding schools and communitieswill work more closely to build highperforming schools,” said Dan Farley,Executive Director for the Arkansas SchoolBoards Association. “That’s good for kids,for our schools and for all of Arkansas. Itis important for all Arkansas communitiesto understand the challenges we face and towork together to create an educationsystem that is focused on what is best forkids.”

The national pilot program bringstogether a variety of key education andcommunity stakeholders, such as parents,teachers, school board members,superintendents and members of thebusiness community.

“This is a historic partnership for ourstate,” said Dr. Kellar Noggle, Executive

Director of the ArkansasAssociation of EducationalAdministrators. “The goal ofBuilding Communities Just for theKids and the consumer guide is tobridge the communications dividebetween the school community andthose who want to help themsucceed.”

“Just for the Kids choseArkansas for the national pilotprogram because of the synergybetween the state leadership,educational groups and the businesscommunity,” said Pittman. “Just forthe Kids encouraged us to continueour progress in improving studentachievement, and we are excitedabout Arkansas being chosen for

JUST FOR THE KIDS – Little Rock School DistrictSuperintendent Dr. Roy Brooks addresses a news conferencein Little Rock to announce Building Communities Just forthe Kids Day as (behind Brooks from left to right) DanFarley, Executive Director of the Arkansas School BoardsAssociation, Luke Gordy of Arkansans For EducationReform Foundation, Ron Russell, President and CEO of theState Chamber/AIA and Stacy Pittman, Project Director forJust for the Kids, Arkansas look on.

State Chamber/AIAWeighs In On Metro

2030 Long RangeTransportation Plan

For over a year, the State Chamber/AIAhas been involved in the Metro 2030 LongRange Transportation Plan proposed byMETROPLAN, the regional planningagency for central Arkansas.

METROPLAN is comprised of centralArkansas counties, cities, the CentralArkansas Transit Authority (CATA) and theArkansas State Highway and TransportationDepartment (AHTD). The federalgovernment mandates the development ofa long-range plan for federal transportationprogram funding.

The Metro 2030 plan directs thespending of transportation tax dollars fordeveloping and maintaining our freeways,arterials, transit system, bike and pedestrianfacilities and other travel modes.

The State Chamber/AIA was concernedthat aspects of the draft plan would be adetriment to commercial development andnotified local chamber executives, economicdevelopers and State Chamber/AIAmembers in Pulaski, Lonoke, Saline andFaulkner counties about the plan.

Along with local representatives, StateChamber/AIA staff members attendedpublic hearings and submitted commentsduring the public comment period. Inaddition, we worked with local chamberand business representatives to lobby theMETROPLAN board until changes weremade to the Metro 2030 plan that satisfiedour economic development concerns.

The State Chamber/AIA wouldespecially like to thank Jay Chesshir,Executive Director of the Metro LittleRock Alliance, who was instrumental indeveloping the strategies used throughoutthe debate.

8

2006 SeminarSchedule

Hot Springs, Arkansas

Beginner’s BasicMarch 27, 2006

September 11, 2006

Advanced Course & Case Study

March 28, 2006September 12, 2006

Registration:www.salesusetax.com

Contact:B.J. Pritchett

Pritchett Sales & Use Tax Consulting1 Fineza Way

Hot Springs National Park, Arkansas 71909

501-922-4327 Telephone/Faxbjpjch@ipa.net Email

Consulting:Refund ReviewsAudit Defense

Educational SeminarsPrivate Sales & Use Tax Consulting

Arkansas

Tax School

9

“50 Hottest Cities” -based on businessenvironment,workforce quality,operating costs,incentive programs,worker-trainingprograms and ease ofworking with localofficials, Beebe said.Only four states had more cities on the list.

Arkansas is proud of the fivehomegrown Fortune 500 companiesheadquartered here: ALLTEL, Dillard’s,Murphy Oil, Tyson Foods and Wal-Mart,Beebe said. Those companies are amongthe 112 Fortune 500 parent firms with morethan 310 facilities in Arkansas.

Many Arkansas companies are alsomaking headlines:

Acxiom Corporation was on Fortune’s listof 100 Best Companies to Work For in2003.

ALLTEL, Arkansas Best, J. B. HuntTransport, Murphy Oil, Tyson Foods andWal-Mart were on the 2004 Forbes PlatinumList of 400 companies, which listed J.B.Hunt first among transportation companies.

Diversity of industry is evident inArkansas, also, Beebe said. Just a few of therecent locations and expansions include:manufacturing: Hino Motors, DENSO,EAKAS, Superior Industries andChampion; food processing: Nestle (thelargest location announcement in the nationin 2001), Frito-Lay, Gerber and PinnacleFoods; aeronautics: Lockheed Martin andRaytheon; distribution: Scholastic, InfinityIntermodal and Smith Wholesale Drugs;and information technology: GC Services,ARVEST, and IntelliTrans.

Employers give favorable ratings toArkansas workers for their work ethic, skills,productivity and low turnover rates, Beebesaid. Businesses report great success inrecruiting quality and reliable people.

The average cost of living for all ofArkansas’ MSAs is consistently below thenational average. Businesses also enjoy lowtax obligations through a variety ofincentives, exemptions, credits, and refunds.

Because of its central location, Arkansas

ArkansasState

Chamber/AIAAnnual Meeting

Chock Full ofTimely Information

Speeches by the two most prominentcandidates for governor – Attorney GeneralMike Beebe and former Congressman AsaHutchinson – as well as presentations onschool funding, highways, higher education,taxes, immigration reform, internationaltrade and disaster preparedness highlightedthe recent 77th Annual Meeting of theArkansas State Chamber ofCommerce/Associated Industries ofArkansas.

The two-day meeting drew well over 100people to the historic Arlington ResortHotel and Spa in Hot Springs.

“I think this year was probably one ofthe better programs in terms of overallcontent that we have had in quite a while,”said Ron Russell, president and CEO of theState Chamber/AIA.

Beebe, the favorite for the Democraticnomination, kicked off the TuesdayOpening Session. Hutchinson, the loneRepublican candidate for governor, spoke atthe Wednesday Closing Session. In betweenthose two speeches, a significant amount ofuseful information was provided toparticipants.

The Tuesday afternoon General Sessionstarted with an update by Price Marshall, aJonesboro attorney, on the Lake ViewSchool Funding case before the stateSupreme Court.

That was followed by a discussion of theDec. 13 ballot issue, a special election calledby Gov. Mike Huckabee to extend astatewide highway construction bondprogram and authorize the sale ofadditional bonds to benefit highereducation. Dan Flowers, director of theArkansas Highway and TransportationDepartment, addressed the proposed roadprogram, while David Leech, vice chairmanof the state Higher Education CoordinatorBoard, addressed the education program.

Tuesday’s General Session ended with apanel presentation on tax issues. The panelwas moderated by Tom Kennedy ofEntergy Arkansas and Chairman of theState Chamber/AIA Tax Committee andfeatured presentations by Warren Townsendof Wal-Mart on the Streamlined Sales TaxProject (SSTP), Dr. Matthew Pelkki of theUniversity of Arkansas at Monticello on aproposed Utility Sales Tax Exemption, andMike Parker of the Little Rock law firm ofDover Dixon Horne on State TaxRegulatory Issues.

Participants then adjourned to the

recent Trade Visit to Japan.Another panel discussion followed

covering Disaster Awareness, Preparationand Recovery. Moderated by HughMcDonald, President/CEO of EntergyArkansas, the panel included presentationsby McDonald, David Maxwell, DeputyDirector of the Arkansas Department ofEmergency Management, Robert J. Alvey,FEMA Disaster Assistance Employee andCo-Founder of Crisis and ConflictCommunication and Management LLC, andJohn Weston, Vice President Marketing &Sales for FedEx Freight.

confines of the Oaklawn Jockey Club for areception sponsored by Cranford JohnsonRobinson Woods and a dinner hosted andsponsored by Oaklawn Jockey Club.

Wednesday’s General Session kicked offwith a panel discussion moderated byArchie Schaffer of Tyson Foods. StevePatterson, Chief of Staff to U.S. SenatorBlanche Lincoln, provided a presentationon Immigration Reform. Randel Johnson ofthe U.S. Chamber of Commerce addressedLabor Issues, and David Boling of theLittle Rock law firm of Mitchell WilliamsSelig Gates & Woodyard discussed the

77th

Annual

Mee

ting

Mike Beebe

Beebe Makes FirstPublic Speech As

DemocraticGubernatorial

Candidate DuringOpening Day Luncheon

Arkansas Attorney General Mike Beebeused the Arkansas State Chamber ofCommerce/Associated Industries ofArkansas Annual Meeting in Hot Springs tomake his first public speech as aDemocratic candidate for governor in 2006since he announced his candidacy in June2005.

Beebe told more than 100 StateChamber/AIA members, staff and othersin the audience during the StateChamber/AIA Opening Day Luncheon onTuesday, October 25 at the ArlingtonResort Hotel and Spa that he wants to: keepArkansas jobs from going overseas; find away to aid businesses that provide healthinsurance for their employees; come upwith unique approaches to attract majorindustries; improve education frompreschool through college; and improveArkansas’ highway system.

“Promoting the development ofbusiness opportunities, while bringingtogether public and private business sectorsis a mission we must fulfill, if our state,region and country are going to continue togrow and prosper,” Beebe said. “It isessential that we all help this state andnation achieve equality and success not justeconomically, but socially, educationally andin so many ways.”

Arkansas has the Number 1 businessclimate in the South, according to SouthernBusiness and Development magazine, Beebesaid. And Business Facilities magazine saidArkansas has the lowest cost of doingbusiness of all Southern states: “We areamong the nation’s top “magnet” states,with new people moving into all parts ofthe Natural State.”

In 2003, Expansion Management magazinelisted three Arkansas MetropolitanStatistical Areas (MSAs) among the nation’s

(continued on page 11)10

capital in these industries inside ofArkansas,” Hutchinson said. “Too manybusinesses and entrepreneurs are leavingArkansas, or refusing to locate here, becauseour tax burden is too great compared tosurrounding states. We must make Arkansasan attractive place to do business, and thenwe will enjoy more jobs, better jobs andhigher paying jobs.”

Hutchinson emphasized two initial goalsfor tax reform related to job creation andhigher wages in Arkansas:

1) Creating a more business friendlyand competitive tax structure that wouldallow Arkansas to retain its in-state industriesand small business, as well as recruit andsupport new industries. To that end,Hutchinson said he would support anexemption on sales taxes on utilities forArkansas industry in order to reduce the costof doing business and to encourage businessexpansion and jobs growth.

2) Encouraging the investment of capitalin Arkansas to support, recruit and retainjobs in the state.

Hutchinson, a native of Gravette, is aformer U.S. Attorney for the Western Districtof Arkansas, Member of Congressrepresenting Arkansas' Third District, head ofthe U.S. Drug Enforcement Administrationand the first-ever Undersecretary ofHomeland Security. Hutchinson is CEO ofHutchinson Security Strategies, a Little Rockconsulting firm, and oversees the homelandsecurity division of Venable Law Firm.

Hutchinson: TaxReform Will Drive JobGrowth, Higher Wages

Job growth andhigher wages inArkansas will followif the state takes afresh approach to taxreform, AsaHutchinson, 2006Republican candidatefor Governor, said inaddressing the closing

luncheon of the Arkansas State Chamber ofCommerce/Associated Industries ofArkansas Annual Meeting at the ArlingtonResort Hotel and Spa in Hot Springs.

Hutchinson expanded upon themes hehas discussed recently, tying tax reform andtechnology expansion to economicdevelopment, jobs growth and higher wagesin the state.

Instead of focusing on new revenuesdriven by new tax increases, Hutchinsonsaid, we must look at reducing the state’s taxburden as a way to spur the economy,attract job-creating industries and boostwages. After creating a more economicallyvibrant environment in Arkansas, therevenue will flow from a broader and moreeconomically healthy tax base.

“Historically, when the state neededrevenue, we had a single answer – we raised

taxes,” Hutchinson said. “Today, we mustdo as Abraham Lincoln challenged theAmerican people to do: We must thinkanew and we must act anew.”

To illustrate how tax reform could leadto growth in state revenues, Hutchinsonpointed to the example of New Mexico,where Democratic Gov. Bill Richardson,elected in 2002, worked with theDemocratic-controlled legislature to cut thetop marginal tax rate from 8.2 percent to4.9 percent over a five-year period andreduced taxes on capital gains. Thereductions resulted in economic growth thatled to $216 million in new revenues in 2005.

Hutchinson also emphasized that thestate must adapt to the new global economythat is driven by the information, technologyand service industries. He pointed out thatthe state has lost some 38,000manufacturing jobs in the last five years.

“This isn’t anybody’s fault. It is a resultof the changing nature of the globaleconomy,” Hutchinson said. “And althoughwe in Arkansas have made some greatstrides, we must not be passive when itcomes to moving our economy forward.”

Hutchinson pointed out that manyArkansas industries already lead in thetechnology field — from retail totransportation to energy exploration – andthat Arkansas universities have producedsome of the nation’s cutting edgetechnology.

“The challenge is to retain investment

Asa Hutchinson

provides a valuable transportationadvantage, Beebe noted. Halfway betweenCanada and Mexico, the Carolinas andCalifornia, Arkansas is only a tank of gasaway from one-third of the nation’spopulation. A billion-dollar program toimprove approximately 380 miles ofinterstate highways will be completed in2005.

Many retirees are finding Arkansas agreat place to live, and as the baby boomersgrow older, the state will continue to attractthis population, Beebe said. The state ranksninth in the U. S. in both retiree relocationand retiree income.

In the U.S. News and World Report 2005list of America’s Best Graduate Schools, theUniversity of Arkansas for Medical Sciencesin Little Rock ranked No. 8, ahead of YaleUniversity. The UAMS geriatric clinical careprogram was cited as one of the best in thenation, and the university’s primary careprogram was listed as No. 52. The newsmagazine has named the UAMS MedicalCenter one of America’s Best Hospitals fornine consecutive years.

UAMS is also noted for medicalresearch, Beebe noted. Arkansas doctorshave announced major discoveries in

News and World Report in 2004. In 2003,three were named on the magazine’s list ofthe top 12 schools in the South, and twowere named among the top 10 best values.Five of the 25 fastest-growing two-yearcolleges in the country are in Arkansas.

Education at all levels is valued in thestate. Arkansas leads the nation inEnvironmental and Spatial Technology(EAST) Labs, a hands-on, advancedcomputer course that prepares students forthe high-tech workplace while they work onimportant community service projects.

“So all of this is what’s good about thefuture of Arkansas’ economic climate,”Beebe said. “I know this state well, and Iwant to take the shining examples I’vetalked about that I’ve seen in isolatedregions of Arkansas and replicate theseexamples from Batesville to Fayetteville,from Searcy to El Dorado, from the Deltato the Ozarks. Let’s make this truly ‘TheLand of Opportunity.’

“We have so much talent in this state –so many smart, innovative, creative minds –and we just have to harness their energyand provide community partnershipsbetween business and industry, betweenpublic and private projects that provideincentives, that create development, andthat expand existing industry.”

treating osteoporosis through boneregeneration. “Doctors at UAMS recentlyperformed the first liver transplant in thestate and the university’s Arkansas CancerResearch Center is internationally known inseveral specialty areas, such as multiplemyeloma. Arkansas Children’s Hospital isthe sixth largest pediatric hospital in thenation.”

The UAMS Biomedical BiotechnologyCenter houses the Arkansas BioVenturesincubator, Beebe added, which haspropelled a dozen new biotech companiesinto the marketplace - with another six inthe pipeline and three more anticipated eachyear. The Genesis Incubator at theUniversity of Arkansas in Fayetteville isanother platform for successful high-techcompanies.

In 2002, the University of Arkansasreceived $300 million from the WaltonFamily Foundation, the largest gift evermade to a public university, and in 2005 theUA will meet its fundraising target of $1billion. In 2004, the UA Walton College ofBusiness was ranked 50th among the Top200 economic departments in the world,according to the Journal of the EuropeanEconomic Association.

Of Arkansas’ 20 colleges anduniversities, five drew top honors from U.S.

BEEBE PUBLIC SPEECH(continued from page 10)

11

AHTDDirectorFlowers

Details Need For Interstate

Rehabilitation BondProposal

One of the ballotissues on tap for thescheduled December13, 2005 election wasArkansas’ ContinuedUse of Bonds forInterstateRehabilitation.

Dan Flowers, theDirector of theArkansas Highway

and Transportation Department addressedthe subject at the State Chamber/AIAAnnual Meeting in Hot Springs.

Besides the proposal for InterstateBonds, there was a separate proposal forHigher Education bonds on the sameballot, Flowers said. However, the proposalswere separate and independent and theAHTD program was for Interstates only.

The AHTD program would extendauthority to issue bonds for Interstaterehabilitation with the maximum amount ofbond debt remaining at $575 million. Nonew taxes would be levied; the existingrevenue stream would be used.

Each $1 million in highway work creates

Information and Construction Quality.Without the continuation of the

Interstate Bond Program, Flowers said thatwithin 10 years, 52 percent of theInterstates would be in good condition, 11percent in fair condition and 37 percent inpoor condition. By 2026, without thecontinuation of the program, 53 percent ofthe Interstates would be in fair condition,42 percent in poor condition and only 5percent in good condition.

Without the continuation of InterstateBonds, funds used to improve otherhighways may have to be redirected toInterstates and the redirection of fundscould lead to significant deterioration of theInterstate system, Flowers said.

The December 13th Interstate BondProposal, a continuation of the existingbond authority, would require no new taxesand would allow for cities and counties tocontinue to share, Flowers said. Themaximum bond debt would remain at $575million with short maturity bonds of 10 to12 years being issued.

Flowers summarized his presentation bynoting that Arkansas’ interstates have gonefrom being among the worst in the nationto among the best. However, needs stillexist and a funding mechanism is needed tomaintain the current conditions. TheInterstate bond proposal would provide amechanism to maintain the progress madeon our Interstates, make neededimprovements in a timelier manner, createjobs and boost economic activity.

47 jobs and generates $4.5 million ineconomic activity for the state, Flowers said.

Back in 1999 before the currentInterstate rehabilitation program wasstarted, 63 percent of Arkansas’ Interstatehighways were considered to be in poorcondition, with only 21 percent consideredto be in good condition and 16 percent infair condition.

Arkansas was the first state to completeoriginal Interstate mileage, Flowers said.The original Interstate was designed for56,820 pounds and 10-20 percent trucks.

The current weight limit is 80,000pounds and trucks now account for 60percent of total traffic on some sections asthe result of increases in freight movement.The old pay-as-you-go system for fundingInterstate construction and rehabilitation isnot sufficient.

After the 1999 Interstate RehabilitationProgram was approved, $575 million inbonds were issued to improve more than 50percent of our Interstate system. Theprogram was approved by voters by a four-to-one margin. The bonds were to be repaidwith federal interstate maintenance funds, astate match and a 4-cent state diesel tax.

Today, six years after passage andimplementation of the 1999 InterstateRehabilitation Program, 72 percent ofArkansas roads are considered to be ingood condition, 14 percent are consideredfair and 14 percent are considered poor. Inaddition, a significant portion of the letjobs are complete on Interstates 40, 55 and30. The Program racked up numerousawards for Work Zone Safety and Public

Dan Flowers

Voter Approval ofHigher Education BondProgram Would BenefitArkansas Colleges and

Universities

Passage of the proposed HigherEducation Bond Program by Arkansasvoters in the December 13 Special Electionwould provide funds for Arkansas’ collegesand universities, David Leech, President ofMayflower Foods and Vice Chairman ofthe Arkansas Higher EducationCoordinating Board, said during apresentation at the State Chamber/AIAAnnual Meeting.

The bonds would be used to upgradetechnology for research and instruction,finance critical maintenance and renovationneeds, and build new classrooms andlibraries. Colleges and universities wouldhave immediate access to funding if themeasure passed, Leech said.

With new technology and adequatefacilities, colleges and universities inArkansas would be able to attract morefederal and private funds, Leech added.

Higher Education Bonds at maturitymay be used for college tuition at anycollege or university or for any otherpurpose, Leach said. Investors’ incomefrom the bonds would be exempt fromboth federal and state income tax whetheror not the income was used for collegetuition.

In 2004, Arkansas public institutions ofhigher education documented needs ofmore than $110 million in criticalmaintenance, which will escalate by the timebond funds are available, Leech said. Thereare critical needs for upgrades in:instructional technology; technologyinfrastructure and research technology;nursing, medical technology, engineeringand education.

Since the last bond issue was passed inthe 1990s, higher education institutions haveexperienced a 34 percent increase inenrollment.

Act 1282 of 2005, known as the“Arkansas Higher Education Technologyand Facility Improvement Act of 2005,”was sponsored by Sen. Gilbert Baker andRep. Bruce Maloch. The Act authorized theDevelopment Finance Authority to: issuehigher education general obligation bonds

for technology and facility improvementsfor state institutions of higher education;refund certain outstanding bonds; andprovide for a statewide election of theissuance of bonds.

“This Higher Education Bond Proposalwould not require any new taxes and wouldnot require any additional annual debtservice,” Leech emphasized.

As far as the distribution of theproposed Bond Fund, Leech said that atotal of $250 million in bonds would beauthorized. The breakdown for that totalwould be $100 million for the restructuringof existing bonds, $10 million to connectuniversities to eCorridor, $90 million to bedistributed to universities and $50 million tobe distributed to colleges.

The eCorridor is a term coined toencompass the National LambdaRail(NLR), a high-speed, national computernetwork that runs over fiber-optic lines,Leech said. It will advance the research,clinical and educational goals of memberinstitutions by providing the resourcesdemanded by cutting-edge networkresearch.

The university distribution breakdown

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Lake View Case HasAttained AlmostLegendary Status

Even though theschool district thatspawned the LakeView Case is nolonger in existence,the case itself hasbecome almostlegendary – likeBrown versus Boardof Education or Bushversus Gore, Price

Marshall, an attorney with the law firmBarrett & Deacon of Jonesboro, toldattendees at the State Chamber/AIAAnnual Meeting in Hot Springs.

Marshall, who has represented the StateChamber/AIA in several filings pertainingto the case before the Supreme Court ofArkansas, noted that the original lawsuitstarted 13 years ago as the result of theLake View School District of PhillipsCounty not getting enough money from thestate to produce students who wereprepared for further education and life.

The case initially centered on “equity”and “adequacy” issues, Marshall said: “Howbig is my slice of the pie and how good isthe pie?”

In 2001, then-Chancery Judge CollinsKilgore took the case a step further by

David Newbern and Brad Jesson – toexamine and evaluate the work of therecent General Assembly.

The Special Masters raised the followingquestions: Has the Legislature retreatedfrom reform? Is there enough money forfunding per student (foundation funding)for the current biennium? Did theLegislature do right on facilities funding?

The State Chamber/AIA then filed afriend-of-the-Court brief with the Masterson some of the compliance issues:Arkansas’ obligation to make fundingeducation the state’s priority, the state’saccountability reforms, and the efficiency/consolidation issue.

Hearings on the case were held duringJuly, August and September, Marshall said.On October 3rd, the Special Masters filed areport finding that the Legislature hadretreated, foundation funding was notadequate and facilities were not adequate.The deadline to file a response was October24th.

As friends of the Court and steadfastsupporters of education reform inArkansas, the State Chamber/AIA filed anadditional brief to assist the Court inevaluating the Masters’ new report. Thebrief urged the Court to reject the SpecialMasters’ overall conclusions. Anotherhearing was held on November 17th. (Nodecision had been rendered in regard to thelast hearing when this article was beingwritten.)

Despite the filing of that brief, Marshallsaid he felt that the four votes on the Courtto adopt the Special Masters’ Report willhold and the Court will retain jurisdiction.What that means is that a Special LegislativeSession will probably be held to address theissues raised by the Special Masters.

“The State Chamber and AIA need tomaintain dialogue,” Marshall said. ArticleXIV of the State Constitution mandates agood system of public schools. Efficiencyneeds to be raised overall in regard to thenumber of superintendents and how theschool districts are being managed.Accountability needs to be evaluated aswell.”

Price Marshall

declaring that Arkansas’ system of fundingpublic schools violated the StateConstitution’s promise that “the State shallever maintain a general, suitable andefficient system of free public schools andshall adopt all suitable means to secure tothe people the advantages and opportunitiesof education.”

“The State Chamber/AIA was the onlyparty that said Kilgore had it right,”Marshall said. “The system was broken andneeded to be fixed. That was a watershedevent in our history.”

In 2004, the Arkansas Legislatureprovided $400 million in funding to putinto the public school system and placed amajor refocus on accountability andefficiency in regard to how school districtswere performing, Marshall said: “TheSupreme Court said that was great,”declined the request of several parties toexercise its continuing jurisdiction over thecase and released its mandate.

During the 2005 Legislative Session, theArkansas Legislature put $20 million in earlychildhood education, adjusted the TeacherCrisis Fund and added an additional $400million in general funding for schools,Marshall said. The Legislature also addednew accountability measures that includedconsolidating some of the school districtsthat were not complying with the newmeasures into school districts that were.

“The Legislature did not abandon anyaccountability reforms,” Marshall said.

Despite thosemeasures and theinitial ruling by theSupreme Court thatthe reform measureswere acceptable, theRogers SchoolDistrict and morethan 40 other districtsin the state filed suitagain soon after the85th GeneralAssembly adjournedin April 2005, askingthe Supreme Court toreopen the case.

“The StateChamber/AIA (fileda brief and) said no,”Marshall said.“Reopening the casewould be a badprecedent. What theLegislature did wasgood.”

However, by a 4 to3 vote, the SupremeCourt disagreed withthe StateChamber/AIA’sposition andreappointed the twoSpecial Masters –

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including for eCorridor would provide: $9million for Arkansas State University atJonesboro; $7.5 million for Arkansas TechUniversity at Russellville; $4 million toHenderson State University at Arkadelphia;$3.5 million to Southern ArkansasUniversity; $63 million to the U of ASystem; and $13 million to the University ofCentral Arkansas. The college distribution isbroken down among 22 separate colleges inthe state.

In regard to actual projects to be funded,Leech said that the Higher Education

VOTER APPROVAL(continued from page 12)

(continued on page 14)

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Exempting Utility SalesTax For CertainManufacturers

Worth Exploring, UAM Professor Says

Exempting thesales tax charged byutilities on certainmanufacturers inArkansas is an issueworth exploringbecause industrialelectricity rates haveincreased by 23percent andindustrial natural gasrates have increased

by 128 percent since the first quarter of2004, according to Dr. Matthew Pelkki ofthe University of Arkansas-MonticelloSchool of Forest Resources.

Pelkki appeared as part of a Tax IssuesPanel at the State Chamber/AIA AnnualMeeting in Hot Springs.

“Such spikes are disastrous becausemost industry in Arkansas is energy-intensive,” Pelkki said. Such industriesinclude food processing, pulp and papermills, petrochemicals, petroleum refining,transportation equipment, woodprocessing, iron and steel forging and farmequipment.

In the 2005 Legislative Session, HouseBill 2103: An Act to Provide for theContinued Economic Development of theState of Arkansas’ Natural ResourceManufacturing Base was introduced.

The Act, which would have beenphased in over a three-year period, wouldhave exempted natural gas, electricity andsolid wood waste from sales taxes, Pelkkisaid. The exemption would cover sawmillsand wood preservation; veneer, plywoodand engineered wood products; pulp,paper and paperboard mills; convertedpaper product manufacturing, and limeand gypsum product manufacturing.

Compared to other neighboring states,Arkansas is 35th in electrical energy costsand 32nd in natural gas energy costs,according to data for 2000 supplied by the

14

SSTPProjectWould

SimplifySales and Use Tax

ReportingNationwide

Streamlining the sales taxes on Internetsales would simplify sales and use taxreporting nationwide, according to WarrenTownsend of Wal-Mart Stores Inc. duringa Tax Issues Panel presentation during theState Chamber/AIA Annual Meeting.

The Streamlined Sales Tax Project(SSTP) actually got its start in March 2000,Townsend said. A group of ImplementingStates was subsequently organized in 2001.In November 2003, a Streamlined SalesUse Tax (SSUT) agreement was approved.That was subsequently amended inNovember 2003, November 2004 andApril 2005.

Also in 2003, 2004 and 2005,definitions, uniform procedures, issuepapers and technology implementationwere all developed, Townsend said. Thosesame years, state conforming legislationwas enacted. In 2004, Conforming Stateswere organized. Certificates ofCompliance were reviewed June 30through July 1, 2005.

Full members of the Governing Boardenacted on October 1, 2005 include thestates of Indiana, Iowa, Kansas, Kentucky,Michigan, Minnesota, Nebraska, NorthCarolina, Oklahoma, South Dakota andWest Virginia, all effective on July 1, 2005,and New Jersey and North Dakota,effective on October 1, 2005.

Associate members enacted by theGoverning Board on October 1, 2005have until the dates noted: Nevada,January 1, 2006; Utah, July 1, 2006;Tennessee, July 1, 2007 and Ohio, January1, 2008. Arkansas and Wyoming were alsoselected as Associate Members, but neitherstate has implemented an effective dateyet.

Townsend said that to date, 44 statesplus the District of Columbia haveestablished State and Local AdvisoryCouncils and there are currently 39implementing states plus the District ofColumbia.

Additionally, 18 conforming states werepart of the Governing Board on October1, 2005 and Nevada is to become a part ofthe Governing Board on January 1, 2006.Other entities involved include localgovernments, business communities andtechnology providers.

Agreement provisions for SSTP includestate level administration of local taxes;common state and local tax bases withinstates after January 1, 2005; uniform

The 108th Congress introduced H.R.3184 and S. 1736, both federal sales taxsimplification bills, and the 109thCongress was expected to introducesimilar legislation in November 2005,Townsend said.

In regard to Arkansas’ future tax issues,a deadline of July 1, 2007 has been set toimplement no caps and thresholds(rebates); destination sourcing – a shift inlocal taxes, and one tax base per state(Texarkana), Townsend said.

sourcing rules that are destination based; amenu of uniform definitions; a simplifiedexemption administration process; ratesimplification with databases, and no capsand thresholds after December 2005.

Additional agreement provisionsinclude limited scope audits andcertification standards; hold harmlessprovision if using databases; uniformreturns; sales tax holiday definitions andguidelines; one rounding rule; statefunding of technology; and amnesty.

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Arkansas Department of EconomicDevelopment (ADED).

However, when the state’s sales tax rateof 6 percent on utilities is added into themix, the situation becomes morecomplicated, Pelkki said. Currently,Missouri, Oklahoma, Texas and Tennesseehave no sales tax on utilities andLouisiana’s sales tax on utilities is only 4percent. Mississippi, with a sales tax of 7percent on utilities, is the only neighboringstate with a higher rate.

In 2004, Arkansas’ state sales taxrevenue from utilities on manufacturersamounted to $55 million.

If a sales tax waiver on utilities formanufacturers were implemented, therewould be a significant potential for addedemployment, Pelkki said. Such areinvestment into the currentmanufacturing matrix could result in $243million in increased output for the state,1,000 new jobs and $40 million inemployee compensation. However, a lossof state jobs might mean only a minor netgain. Yet such a waiver could potentiallyattract new industries.

Pelkki ended his presentation by urgingstatewide business planning to considersuch a waiver.

Coordinating Board approved thedistribution of funds in July. Colleges anduniversities determined the projects basedon available funding. The CoordinatingBoard approved specific projects onNovember 4. Projects include constructionof classrooms, technology upgrades andrenovations to existing classroom space.Routine maintenance is ineligible.

“While bond buyers are investing in thefuture of their children and grandchildren,they’ll be allowing our colleges anduniversities to meet critical technology andfacility needs,” according to ArkansasGovernor Mike Huckabee, who endorsedboth the Highway Bond and HigherEducation Bond issues. “We want all of ourinstitutions of higher learning in Arkansasto have cutting-edge technology. Theeconomy of the new century demands it.”

VOTER APPROVAL(continued from page 13)

15

Immigration ReformTakes Center Stage

At State Chamber/AIAAnnual Meeting

In a recent poll,three-fourths ofAmerican voterssurveyed supportedcomprehensiveimmigration reformthat combinestoughness, fairness, aguest worker programand an earned path to

legal residency for undocumentedimmigrants who are already here, StevePatterson, Chief of Staff for U.S. SenatorBlanche Lincoln, said during a panelpresentation at the State Chamber/AIAAnnual Meeting in Hot Springs.

Many studies have shown thatenforcement alone will not work and thatmass deportation of all undocumentedworkers is cost prohibitive, Patterson added.Thus, it’s vital to find a fair, practical wayfor undocumented workers to earn legalstatus.

Mexico and all of Central America aredeveloping countries. Their citizens migratenorthward into the United States becausethe same opportunities do not exist in theirhome countries, according to Patterson.There are other factors as well. TheMexican economy depends on theremittances of its citizens who are living inthe United States.

The Federal Reserve Bank of Dallasreported than in 2003 Mexican workers sentabout $13 billion to family members inMexico, making remittance Mexico’s secondmost important revenue source, behind onlypetroleum, Patterson said.

The U.S. government has erectedmassive fences topped with concertina wireand installed motion detectors, ground-pressure sensors and night-to-day lightingsystems along miles of border near popularurban crossing points. Thousands of newborder patrol officers have been added tothe government payroll.

Despite these efforts, the policy of“enforcement through deterrence” has beenan utter failure, Patterson said. There is noevidence that increased technology andmanpower has substantially reduced theflow of migrant crossings.

Instead, migrants have simply moved tomore remote crossing areas in the desertand on desolate ranches in New Mexico,Texas and Arizona. This has increased thedeath rate among migrants and, accordingto a Princeton study, increased the cost ofborder enforcement even more.

Harsher enforcement policies mayactually be contributing to illegal

U.S. Chamber ofCommerce SupportsImmigration Reform

The U.S. Chamberof Commercesupports legislationproposed by SenatorsJohn McCain and TedKennedy to establisha six-year path topermanent residencyfor illegal alienscurrently working in

the United States, Randel Johnson, VicePresident of Labor, Immigration andEmployee Benefits for the Chamber, saidduring a panel presentation on ImmigrationReform and Labor Issues at the StateChamber/AIA Annual Meeting in HotSprings.

“That legislation does not call fordeporting illegal aliens,” Johnson said.“Rather, they would be required to pay afine. We are in support of permanentresidency.”

However, Republicans, who hold amajority in both the U.S. Senate and theHouse of Representatives, are “very split onthis,” Johnson said. “House Republicans arebehind more enforcement. It’s gearing up tobe a nasty fight. We don’t think the Senatewill take up any Immigration Reform untilFebruary.”

In regard to labor issues, Johnsoncautioned his audience not to count laborunions out as there is more of an effort atorganizing – even though there is disarrayon Capitol Hill.

“There are two union movements nowand Democrats and unions are pushing forthe Employee Free Choice Act – collectivebargaining without a secret ballot.”

Johnson suggested that those interestedin that issue go to the website:secretballotprotection.com. He also notedthat California recently enacted a PaycheckProtection Act.

Other items that businesses should beaware of include FMLA Labor Reform, theAmericans with Disabilities Act, theGenetic Discrimination Act and theWorkplace Freedom in Religion Act,Johnson said.

State Trade Mission toJapan Reaps Benefits

for Participants

An Arkansasdelegation consistingof representativesfrom the ArkansasDepartment ofEconomicDevelopment; theArkansas StateChamber ofCommerce/

Associated Industries of Arkansas; theArkansas Farm Bureau; the Forrest City,Marion, Paragould and Wynne Chambers ofCommerce or Economic DevelopmentOffices; Entergy; Isbell Farms, and Mid-South Community College participated inthe Arkansas Trade Mission to Japan onSeptember 5-12, 2005, according to DavidBoling of Mitchell, Williams, Selig, Gates &Woodyard, PLLC during a presentation atthe State Chamber/AIA Annual Meeting.

Boling said that Japan and Arkansasalready had much in common with thenumber of Japanese facilities in the stateincluding Nucor-Yamato in Blytheville;Tokusen in Conway; Sanyo in Forrest City;Arkansas Steel Associates of Newport, ajoint venture of Sumitomo and Yamato;Hino Motors in Marion; Denso Corp. inOsceola, and Sakae Riken (EAKAS) inWynne.

During the Arkansas Trade Mission toJapan, one of the events participants tookin was the Aichi Expo/World’s Fair, whichwas held in Nagoya, “Japan’s Detroit,”Toyota, “whose presence was huge,” andthe U.S. Pavilion, which featured an“Arkansas Weekend,” Boling said. The eventalso included an Arkansas Reception, whichfamilies of Japanese companies based inArkansas or interested in Arkansasattended. Duck calls and Arkansas-grownrice were featured.

Another event was the Sakae RikenTour, which included a tour of the plant,headquarters and technical center, saidBoling. Sakae Riken, a family-owned andworldwide business, is based in Nagoya withties to Toyota. The company is currentlyconstructing an automobile parts facility inWynne.

Another event the delegationparticipated in was a visit to Tokyo and atour of Hino Motors there, Boling said.Tokyo is Japan’s political, economic andcultural center. Hino, a subsidiary ofToyota, is currently constructing anautomobile parts facility in Marion andreportedly planning to build a truckmanufacturing facility nearby. Hino is also asupplier to Toyota’s facility in San Antonioand well-known in Japan and Asia formanufacturing heavy-duty trucks.

Steve Patterson

Randel Johnson

David Boling

(continued on page 24)

The delegation also participated in a tourof the Hino Technical High School, Bolingsaid. Hino Motors has its own high schoolon the grounds of its Tokyo plant. Mid-South Community College in WestMemphis is seeking to coordinate itscurriculum to provide trained workers forthe Hino plant in Marion, something thatBoling called “visionary on the part of Mid-South Community College.”

Additionally, the delegation participated(continued on page 16)

16

Crisis CommunicationPlanning For Private

Industry Makes Sense,Reduces Risk

Crisiscommunication isn’texclusive togovernment agenciesor natural disasters,attendees at theAnnual StateChamber/AIAMeeting were told byRobert Alvey during apanel discussion onDisaster Preparedness.

Alvey, co-founder of Crisis & ConflictCommunications and a crisiscommunications expert, detailed hisdeployment to Baton Rouge immediatelyfollowing Hurricane Katrina and the workthat he did while there for Louisiana StateUniversity (LSU) and the largest fieldhospital in U.S. history.

“LSU quickly learned some basic crisiscommunication principles and was able toturn the corner on effective crisiscommunication,” Alvey said. “While webrought them up to speed fairly quicklybecause of their leadership and teamcommitment to the mission, others in southLouisiana failed on so many levels whencommunicating with the media, partnersand the public.”

Much of the bad press and delayedresponse to media requests could have beenavoided with some investment in acomprehensive crisis communication plan,Alvey said. Knowing your partners beforethe disaster and not airing complaintsthrough the national media are two basictenets.

“You don’t want to be handing outbusiness cards during a disaster,” Alveystressed to attendees. “Before a crisis, youneed to know who your partners will be,what they are capable of doing, what isexpected of each partner, what theyperceive as critical, and how to reach themwhen normal lines of communication fail.”

Another weakness that was realizedduring the recovery effort was crisisplanning by private industries, Alvey said.Given that 90 percent of a crisis response iscommunicating, even those who had theforesight to develop crisis plans more oftenthan not failed to see the importance ofcommunicating.

He provided a “grocery list” for

ContingencyPlanning Vital

For DisasterPreparedness,ADEM DeputyDirector Says

All disasters arelocal, David Maxwell,Deputy Director ofthe ArkansasDepartment ofEmergencyManagement, saidduring a panelpresentation onDisaster Preparednessat the State

Chamber/AIA Annual Meeting in HotSprings.

Maxwell, part of a state agency that isnot based in Little Rock but instead isheadquartered in Conway, said the ADEM’srole is to support the 84 local emergencymanagement coordinators in Arkansas.

“Each county has one,” he said. “Theycoordinate the emergency response.Anything the state or federal governmentdoes supports local governments.”

Maxwell said he has seen his share ofdisasters including severe storms, icestorms, flooding, etc.

“The 2000 ice storm was a $200 milliondisaster,” he said. “We have the potential forearthquakes in the New Madrid Fault Zone.We’re also facing other possible problemsincluding an avian flu pandemic, hazardousmaterial spills and terrorism. Disasters arealways in the back of our minds, forexample, the recent train derailment inTexarkana.”

ADEM, which consists of 77 employees,is the state agency that interfaces with theFederal Department of Homeland Security,Maxwell said.

“Preparedness makes good sense. Inorder for continuity of government,planning is one of the most importantthings you can do. It’s vital to get all peopleinvolved.

“Since small businesses account for 99percent of all companies, it’s vital for themto get to know their local emergencymanagement coordinator.”

Vital parts of contingency effortsbetween small businesses and emergencymanagement coordinators include planningfor utility problems, insurance andemergency planning for employees, Maxwellsaid: “The emergency managementcoordinators work with employers to dofamily protection planning as well – so theemployees know where their families havegone in the event of a disaster.”

Once contingency planning has been

done by a business, it’s vital that the plannot just sit on a shelf, Maxwell said: “Makesure that they work. You need to thinkthrough everything. Anything you do inregard to investing in planning is notwasted.”

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companies and agencies to better preparefor crises:

1. Prepare a crisis plan by identifyingyour three worst business nightmares.

2. Identify your external partners.3. Know your audience(s).4. Develop a crisis communication plan

based on comprehensive message mappingtechniques.

5. Select and train at least threespokespersons.

6. Identify and train a crisis communicationteam.

7. Get to know your media.8. Ensure coordinated responses.9. Realize that the quickest path to

“business as usual” is through a well-thought-out plan executed in a timelymanner.

You can’t prepare for everything, Alveyadmitted. However, you can learn from themistakes of others and avoid somecommon pitfalls. One area that is frequentlyoverlooked or ignored is the media. Themedia are not as unpredictable as you wouldthink. Ignoring them doesn’t work andtrying to manage them will complicatematters further.

“So often you watch as companiesaccept the fallacy that the media will goaway if you ignore them,” he said. Anothermistake is the attempt to “manage themedia.” Research shows that neitherapproach works frequently enough to takesuch a risk.

How you behave in front of the media isa wholly different problem, realized duringand after Hurricane Katrina, Alvey said.“Considerable research shows the mediawill usually provide a ‘grace period’ at thestart of any disaster. “The behavior of somany leaders in south Louisiana in front ofthe cameras pretty much negated thatcritical period of time when spokespersonscan communicate key information to targetaudiences.”

Robert Alvey

in an Arkansas Reception at the TokyoImperial Hotel. “It’s a very famous hotelnear Tokyo’s business district,” Boling said,that was designed by Frank Lloyd Wright.The reception was for Japanese companiesbased in Arkansas or interested in Arkansasand attended by Hino’s Chairman of theBoard.

“There is significant momentum withthe siting of the Denso, Hino and SakaeRiken facilities in Northeast Arkansas,”Boling said in his concluding remarks. “Wehave an automobile parts corridor in themaking and Hino’s long-term view is tomanufacture heavy-duty trucks in Marion.”

However, there are some challengesfacing the state, Boling added, includingworkforce training, maintaining the existingmomentum and taking that momentum tothe next level.

STATE TRADE MISSION TO JAPAN(continued from page 15)

FedEx FreightProvides Certainty

In An Uncertain World

When you’re aworld class shippingoperation averaging 6million shipmentsper day, thedifference betweenweathering disasterslike hurricanes andstruggling to getthrough them lies inbeing prepared.

Such is the casefor FedEx Freight, according to JohnWeston, Vice President of Sales &Marketing for the Memphis-basedcompany. Weston appeared as part of apanel presentation on DisasterPreparedness at the State Chamber/AIAAnnual Meeting.

Standard operating procedures (SOPs)at FedEx Freight provide consistency andreliability, Weston said. But SOPs can workin both normal and abnormal conditions ifyou’re prepared.

Normal for FedEx Freight is 6 millionshipments per day, Weston said. Thecompany maintains that level ofconsistency via highly engineered systems,communications, information systems andcontingency plans. “Information is asimportant as shipment delivery.”

Contingency planning covers suchitems as local events,technology/communication disruptions,changes in the competitive landscape,inclement weather, natural disasters andterrorist attacks, Weston said.

For FedEx, a corporate approach todealing with disasters or potential disastersis very important. The company utilizesvarious approaches including flex capacityand proactive measures to overcomeproblems. And they rarely make the samemistake twice; they learn from experience.

“In 2004, we responded to 37 tropicalstorms worldwide,” Weston said. “Thisyear, we have already responded to morethan 30.”

FedEx has the world’s second largestairline: “We shipped tons of emergencysupplies prior to Katrina,” Weston said.

A major lesson learned after Katrinawas not to rely on cell phone or land linesfor phones.

“You need satellite phones,” Westonsaid. “Land lines and cell phones go out.We also set up temporary housing inadvance for our workers.”

When Hurricane Katrina hit, its initialimpact was on Florida, Weston said. Its

subsequent landfall impacted the GulfCoast. In the aftermath of that landfall,FedEx Freight’s people, customers andfacilities were all impacted.

As a result of the lessons learned fromKatrina, the company was better preparedto deal with subsequent hurricanesincluding Rita and Wilma.

“For Hurricane Rita, we positioned our

equipment better, got more customershipments out of the storm’s path earlierand pre-positioned our people, customersand facilities.”

Even when people are faced withdisasters on the magnitudes of hurricanesor terrorist attacks, Weston said it’s the jobof FedEx Freight to “provide certainty inan uncertain world.”

Entergy Still StandingDespite Major

Hurricane Blows

Despite seeing hundreds of itsemployees become homeless overnight,the loss of its corporate headquarters andthe bankruptcy of a subsidiary, Entergy

came through the Hurricane Katrina andRita disasters in fairly good shape, HughMcDonald, President and CEO ofEntergy Arkansas, said during apresentation on Disaster Preparedness atthe State Chamber/AIA Annual Meetingin Hot Springs.

“We had thousands of inquiries fromthe media plus all types of humanresources related issues,” McDonald said.“There wereover 9,000megawatts ofdamage,72,000 milesof lines ofdistributionout ofservice in thetwo storms,29,000 polesdamaged ordestroyed,19,000employeesevacuated,48,200 radio

John Weston

ads aired, more than 15,000 TV ads airedand an approximate total cost of between$1.1 billion and $1.6 billion.”

On the plus side, “we also started aProject Hope Fund that brought in $3.7million in donations,” he added.

Having to deal with the two stormsemphasizes the need for businesscontingency plans, McDonald said.

“Whathappenswhen youremployeescannot returnto theirhomes? Whathappens toyourcustomers?Whathappens toyour creditrating?”McDonaldasked.

At thetime of hisappearance,

120,000 Entergy customers were stillwithout power. But he noted it would beextremely difficult to restore power inmany instances since many homes were nolonger standing or had been inundatedwith so much water damage.

“It’s a house-by-house situation,” hesaid. “We’re also dealing with a backflowof billing issues.”

REMNANTS OF HURRICANE KATRINA – St. John’s Baptist Church in Lakeshore,Mississippi was reduced to rubble by Hurricane Katrina’s winds and tidal surge.

17

KATRINA’S DESTRUCTIVE SWATH – This Lakeshore, Mississippi beachfront homewas destroyed by Hurricane Katrina.

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19

PINNACLE MembersWe wish to express special thanks to our PINNACLE investors, the respected Arkansas companies that

support the State Chamber/AIA at the highest annual dues levels. This level of financial support enables usto effectively serve the needs of Arkansas business in the public policy arena throughout the year.

We appreciate all that they do for us.

AEP/Southwestern Electric Power Co. (Crown)Alltel (Apex)

American Greetings Corp. (Crown)Arkansas Blue Cross and Blue Shield (Crown)

ARVEST Bank (Peak)AT&T Arkansas (Peak)

Beverly Enterprises (Crown)CenterPoint Energy Arkla (Crown)

Electric Cooperatives of Arkansas (Peak)Entergy Arkansas (Apex)

FedEx Freight East (Peak)International Paper Co. (Crown)

Kimberly-Clark Corporation (Crown)Nucor-Yamato Steel (Crown)Oaklawn Jockey Club (Peak)

OG+E (Crown)Rheem Air Conditioning Division (Crown)

Riceland Foods, Inc. (Crown)Signature Bank of Arkansas (Crown)

Southland Greyhound Park (Peak)Stephens (Crown)

The Trane Company (Crown)Tyson Foods, Inc. (Peak)

Wal-Mart Stores, Inc. (Apex)Weyerhaeuser (Crown)

20

Not a State Chamber/AIA Member?Join Today!

Why be a member of the State Chamber/AIA? Because we need each other!

The State Chamber/AIA is working to make Arkansas a better place to do business. We do that through ourpresence in the halls of the state Capitol as business-related bills are being debated, where we serve as botha voice and ears for our members. We do that through training opportunities for businesses large and small.And we do that through providing networking opportunities among business men and women and local andstate policy players.

We want to help you help your business. Of course, we need the financial support of our membership dues,but even more we need our members to voice their concerns, serve on our policy-guiding committees andlead the way to a better business climate in Arkansas.

Here’s how to join. Fill our the application below and mail it to State Chamber/AIA (Membership), P.O. Box3645, Little Rock, AR 72203-3645, or go to the Membership Center on our website: www.ascc-aia.org.

STATE CHAMBER/AIA MEMBERSHIP APPLICATION

Company Name ____________________________________________________________

Contact Name _____________________________________________________________ Title ______________________________________________________________________

Mailing Address ____________________________________________________________

City ________________________________________State______ Zip ________________

Phone ______________________________Fax __________________________________

E-Mail ____________________________________________________________________

Type of Business ____________________________

SIC _________________ Number of Arkansas Employees __________________________

Please check if you are interested in service on committees that deal with any of the following issues:____ AR Small Business Council ____ Unemployment Compensation ____ Tax____ Education ____ Workers’ Compensation

GENERAL PROGRAM MEMBERSHIP ANNUAL DUESEmployees: Dues: Employees: Dues:1-10 $300 51-75 $1,25011-25 $500 76-100 $1,50026-35 $750 100-plus $2,50036-50 $1,000

PINNACLE ProgramStep up today as a PINNACLE member and take your place as a leading power in Arkansas’ business andindustry community.

$35,000 and up APEX Member$25,000 SUMMIT Member$10,000 PEAK Member$5,000 CROWN Member

21

consideration.HB 2392 by Rep. Jay Bradford (D-Pine

Bluff) would have reinstated a state estatetax. The State Chamber/AIA keptgrassroots pressure on this bill from thetime it was filed until it was defeated in theHouse Revenue and Taxation Committee.

Several tax and fee increase measureswere filed the last day of bill filing. TheState Chamber/AIA was prepared to fightall of them, but fortunately none of thesemeasures were ever considered.

The bills included: SB 1064 by Sen. PaulMiller (D-Melbourne) to create a beveragecontainer fee; HB 2602 by Rep. KenCowling (D-Foreman) to increase the liquortax and create a retail beer tax; HB 2638 byRep. Steve Harrelson (D-Texarkana) toauthorize a local beer, liquor and wine tax;HB 2649 by Rep. Phil Jackson (R-Berryville) to create a tax on bottled water;HB 2669 by Rep. Phil Jackson (R-Berryville) to reinstate the 3 percentincome tax surcharge; HB 2683 by Rep.Sam Ledbetter (D-Little Rock) to increasethe state sales tax by 1/8 cent; HB 2692 byRep. Lindsley Smith (D-Fayetteville) toraise the bottle tax; HB 2711 by Rep.Johnnie Bolin (D-Crossett) to increasemotor vehicle registration fees; HB 2829 byRep. Denny Sumpter (D-West Memphis) totax mortgages, deeds of trust and otherinstruments; HB 2838 by Rep. Phil Jackson(R-Berryville) to levy a 5 cent fee each timea customer used a debit, credit or gift cardto purchase fuel at the pump; HB 2882 byRep. Jodie Mahony (D-El Dorado) andHouse Speaker Bill Stovall (D-Quitman) tolevy a new severance tax on natural gas; HB2902 by Rep. Preston Scroggin (D-Vilonia)to levy a sales tax on mobile and modularhome sales; HB 2924 by Rep. JohnVerkamp (R-Greenwood) to eliminate the“come to rest” provision or “becomecommingled with property in the state”provision in order to be subject to use tax;and HB 2934 by Rep. Randy Rankin (D-Eudora) to tax direct satellite broadcastproviders.

Workers Compensation &Unemployment Insurance

The State Chamber/AIA continued itsrole as the “guard dog” of workers’compensation and unemploymentinsurance issues, which are extremelyimportant bottom line issues for business.

Until several years ago, approximately 50unemployment insurance bills were filedeach session by representatives on bothsides of the issue. Now, the StateChamber/AIA and labor leaders participatein an advisory council to the stateEmployment Security Department. Thiseffort produces a department bill eachsession.

Likewise the State Chamber/AIA and

Arkansas AFL-CIO have negotiatedchanges to the workers’ compensation lawssince 1995, following the reforms passed bya State Chamber/AIA led coalition in 1993.These negotiations have resulted in agreedbill(s) each session. Time and term limitshave eroded the memory of just howdifficult legislative sessions were before theState Chamber/AIA took control of thesetwo issues.

Workers’ Compensation:An agreement was reached between the

State Chamber/AIA and AFL-CIO onMarch 7, which was the bill filing deadline.Before the agreement was completed,several workers’ compensation bills wereintroduced, three of which eventuallybecame part of the agreement.

The three bills that became part of theagreement were HB 1011 by Rep. LindsleySmith (D-Fayetteville) SB 489 and SB 941both by Sen. Dave Bisbee (R-Rogers). Thefinal bill, HB 2917 by Rep. Mike Burris (D-Malvern), was filed as a shell on the finalday of bill filing and amended to representthe agreement.

HB 1011 (now Act 1250) made changesin compensable neck and back injuries notcaused by specific accidents. We originallyopposed this bill, but through negotiationsgot it amended and agreed to it as one ofthe two bills that labor wanted.

HB 2917 (now Act 1692) was the otherrequest from labor that made changes tothe definition for objective evidencenecessary to prove permanent hearing lossdisability. The estimated cost factor of bothbills combined is a one percent or lessincrease. Management needed help infixing a problem in certain constructioncases related to the use of certificates ofnon-coverage. SB 489 (now Act 1711)requires contractors to show proof ofcoverage when applying for a new orrenewal contractors’ license. SB 941 (nowAct 1917) prohibits the issuance of acertificate of non-coverage to asubcontractor who does not have workers’compensation coverage.

There were six bills filed that theagreement stopped without a fight.

HB 1101 by Rep. Robert Thompson (D-Paragould) was one of two bills we weremost concerned about. It would have madesignificant changes in the “going andcoming” rule. Thompson notified us ofplans to run the bill in committee beforethe agreement and we brought in severalpeople to testify against the measure. Butanother issue took up all the time that dayand Thompson eventually pulled the billdown after management and labor reachedan agreement.

SB 47 by Sen. Jimmy Jeffress (D-Crossett) was the other bill we were mostconcerned about. It would have appliedattorneys’ fees to medical treatment awards.Jeffress was contacted immediately after the

bill was filed and he cooperated by holdingthe bill until an agreement was reached.Later he formally withdrew the bill fromfurther consideration.

HB 1174 by Rep. John Verkamp (R-Greenwood) would have done away withcommission hearings on joint petitions forfinal settlement when all parties arerepresented by counsel. It received a “dopass” recommendation from the HouseInsurance and Commerce Committee butwas defeated on the House floor by a 53 to35 vote (all workers’ comp bills require asupermajority to pass because the originallaw was an initiated act).

SB 1144 by Sen. Steve Higginbothom(D-Marianna) was filed on the last day ofbill filings. It would have exempted acertain group from filing initialmembership financial reports. Members ofthe group were directed to the commissionfor assistance with their problem andHigginbothom agreed to honor theagreement and pulled the bill fromconsideration.

SB 159 by Sen. Ed Wilkinson (D-Greenwood) would have allowedreinstatement of an expired certificate ofnon-coverage without payment ofpremium. Wilkinson held the bill andeventually formally withdrew it fromfurther consideration after the agreementwas reached.

HB 1688 (now Act 1436) by Rep. ChrisThyer (D-Jonesboro) was not a workers’compensation bill, but we had concernsthat its impact might apply to workers’comp cases. Thyer honored the StateChamber/AIA’s request to amend the billin a way to remove all doubt about itsimpact on workers’ comp. The bill changedthe law regarding exchange of medicalinformation in civil cases.

We also got involved in a couple ofattempts to hamper the commission’soperation. SB 82 by the Joint BudgetCommittee was the commission’s budgetfor the next two years. There were twoattempts to place substantive amendmentson this budget bill.

First, Rep. Charles Ormond (D-Morrilton) tried to reduce the salary ofworkers’ compensation commissionersfrom just over $100,000 to $24,000. TheState Chamber/AIA went after this“ludicrous” proposal hard and it wasdefeated.

The other attempt was by Rep. SamLedbetter (D-Little Rock), who wanted tochange the status of administrative lawjudges from employees-at-will to the samestandard as commissioners. The StateChamber/AIA encouraged stronggrassroots opposition to this proposal andfollowing testimony from twocommissioners, the language was rejectedby the joint budget committee.

SB 368 (now Act 505) by Sen. Denny

85TH GENERAL ASSEMBLY(continued from page 4)

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23

A.G. Russell III is founder and GoldieRussell is president of the Knife Company,Inc., in Lowell. The company boasts threemarketing catalogs, 46 employees and $16million in annual sales.

Roby Brock, host of the weeklytelevision show, Talk Business, offered thekeynote address. Ron Russell, president andCEO of the State Chamber/AIA, andLinda Nelson, district director of the SmallBusiness Administration in Arkansas, alsomade remarks congratulating the 2005winners.

Others being honored at the luncheonwere:

William R. Hogg Jr. of MetropolitanNational Bank in Little Rock – 2005Minority Small Business Champion of theYear

Boris A. Dover of First CommunityBank in Batesville – 2005 Financial ServicesChampion of the Year

Samuel L. Holmes of SCORE in LittleRock – 2005 Veteran Small BusinessChampion of the Year

Bryan Martin of Martins DepartmentStore in Warren – 2005 Family-OwnedBusiness of the Year

Mildred Holley of the Arkansas SmallBusiness Development Center in LittleRock – 2005 District Director Award

Lonnie Jackson of the Arkansas SmallBusiness Development Center inArkadelphia – 2005 District DirectorAward

State Chamber/AIA’s Tracking Site Up and Running

If you haven’t already, please check outour web site – www.ascc-aia.org – where weoffer you one of the best places to keep upwith bills important to you and yourbusiness. Under our Governmental Affairssection, you can link to the LegislativeTracking site. At that point, click on “BillsBeing Tracked” to get to the regularlyupdated, fully searchable site.

The direct link to the tracking site, ifyou’d like to bookmark it, ishttp://tracking.weknowarkansas.org/default.php.

Once at the site, you can search for anybill being tracked by the StateChamber/AIA by category, bill number orsponsor. You will be able to easily connectto a summary of the bill, the entire text ofthe bill, its history as it progresses throughthe legislative system and any commentsthe State Chamber/AIA has made about it.

New Program Addresses Education of Arkansas’ Children

The State Chamber/AIA is proud toserve as the state affiliate for an excitingnational program designed to helpcommunities improve educationalopportunities for children.

Just for the Kids is a free web site thatallows educators, parents and the public tosee how their schools are doing on keyperformance indicators, and to see howtheir schools stack up with schools thathave similar or more challengingpopulations. You can find it atwww.just4kids.org.

But the web site goes further than justproviding a report card. Experts ineducation will visit high-performing schoolsto determine their “best practices.” Theseare placed on the web site so other schoolscan integrate them into their owneducational programs.

SIGNIFICANT ACCOMPLISHMENTS(continued from page 7)

Altes (R-Fort Smith) was a joint effort bythe Insurance Department and Workers’Compensation Commission to shiftworkers’ comp premium tax collectionsfrom the department to the commission.

Unemployment InsuranceThe benefit of “agreed upon” legislation

was even more apparent in the area ofunemployment insurance. SB 512 by Sen.Percy Malone (D-Arkadelphia) and Rep.Doug Matayo (R-Springdale) was the billdeveloped by the department with theassistance of the Advisory Council. It wasone of only two substantive unemploymentinsurance bills filed and it was easilyadopted. The State Chamber/AIAUnemployment Insurance Committeereviewed and agreed to the bill’s text priorto the session.

Health Care IssuesAny Willing Provider (AWP)

This is one of about three issues in thissession for which we did not achieve thedesired result. Due to the diverse opinionsamong our membership on AWP, we didnot change our position from “neutral” to“opposed” until about a week before theissue was considered in the Senate PublicHealth, Welfare and Labor Committee.

Extreme concerns about increasing thecost of healthcare eventually required us totake an “opposed” position to the measurethat would allow patients to see anymedical provider they choose. The twocompanion bills, SB 43 (now Act 490) andSB 44 (now Act 491) by Sen. Steve Faris(D-Malvern) flew out of the Senatecommittee and the Senate floor with littleopposition.

It was assumed that the measure’spopularity would allow success on theHouse floor, so the real battleground wasthe House Public Health, Welfare andLabor Committee. We went to bed thenight before the hearing thinking we hadthe measure beat but votes changed duringthe hearing. The legislature never paid anyattention to our concerns about increasingthe cost of healthcare while the medicalsociety ridiculed our arguments. Very littleconcern was ever discussed about thepotential destruction of rural hospitals.

Pharmacy Benefits Management (PBM)

HB 2845 by Rep. Johnny Key (R-Mountain Home) would have restricted theuse of PBMs in a way that concernedemployers that use PBMs to reduce thecost of pharmacy benefits. The StateChamber/AIA provided grass rootsinformation to employers about this bill,which was defeated in the House PublicHealth, Welfare and Labor Committee.

Legislative Review Of MandatesHB 1877 (now Act 1926) by Rep.

Johnny Key (R-Mountain Home) is a billthe State Chamber/AIA supported that will

require legislative review of any bill orinterim study proposing a mandated healthinsurance benefit or service. It also sets upan Advisory Commission on MandatedHealth Benefits and proscribes reviewguidelines.

Miscellaneous Bills Games Of Skill At Existing Locations

SB 999 (now Act 1151) by Sen. BobJohnson (D-Morrilton) will authorize citiesor counties, by local option election, toauthorize additional forms of electronicgames of skill at horse racing or greyhoundracing parks in their communities. TheState Chamber/AIA backed this plan.

Deceptive Trade PracticesHB 1105 by Rep. Will Bond (D-

Jacksonville) would have made transactionsabout which the Federal Trade Commissionor state regulatory agency rules are silentsubject to Arkansas deceptive trade practicelaw. The State Chamber/AIA was veryconcerned about this bill and led a groupof business interests to meet with staffmembers in the attorney general’s officethat were backing the bill. Following ourmeeting, the bill became inactive.

Environmental IssuesSB 12 (now Act 25) by Sen. Denny

Altes (R-Fort Smith) was designed toguarantee that the Landfill Post-ClosureTrust Fund be spent only on theenvironmental projects for which that fundwas created. It will stop legislative raidingof the fund and secure the fund for futureenvironmental obligations. The StateChamber/AIA assisted the ArkansasEnvironmental Federation in getting thisimportant measure passed.

SB 599 (now Act 1166) by Sen. ShawnWomack (R-Mountain Home) was abusiness-backed solution to a problemcreated by a lawsuit that threatened to shiftthe Arkansas Department ofEnvironmental Quality’s (ADEQ) authorityin the federal Resource Conservation &Recovery Act back to the federalEnvironmental Protection Agency (EPA).The State Chamber/AIA helped theArkansas Environmental Federation passthis legislation that was much preferredover competing legislation.

85TH GENERAL ASSEMBLY(continued from page 21)

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In addition to his responsibilities at theState Chamber/AIA, he is a former boardmember and active member of theArkansas Chapter of the InternationalAssociation of Business Communicators.He is also an active member of theArkansas Chapter of the Public RelationsSociety of America and the ArkansasSociety of Association Executives.

Deb MathisDeb Mathis, communications and events

coordinator, is responsible for registrationof participants and assisting the director ofcommunications and events with all aspectsof planning and implementation of StateChamber/AIA events and communications.She also serves as treasurer for the ArkansasChapter of the International Association ofBusiness Communicators.

Linda CurtisLinda Curtis is the State Chamber/AIA

financial coordinator with the responsibilityfor billing, payroll, accounts receivable,accounts payable and monitoring thebudget. She also serves as human resourcemanager, keeping up with payroll records,insurance, pension, vacations, sick leave, etc.

Kelly BowenKelly Bowen, administrative assistant,

covers the phones and the front office areaand lends administrative support to theState Chamber/AIA staff. Bowen is also apart-time student and an active American

Red Cross volunteer, serving as a disasterteam leader and a disaster public affairsvolunteer.

STATE CHAMBER/AIA STAFF(continued from page 7)

immigration into the United States,Patterson said. By making it more difficultto come into the country, we are alsomaking it more difficult for illegal workersto return home – so they stay here longer.

Contrary to popular belief, most aliensdo not cross the border illegally, but enterlegally and remain after their visa expires,Patterson said. Thus, building a wall at theborder, no matter how high, will not solvethe problem.

The Center for American Progressestimates the cost of mass deportation tobe at least $206 billion over five years. Thistakes into account the cost ofapprehension, detention, legal processingand transportation – amounting to a totalcost of $41.2 billion per year. That amountexceeds the cost of the entire HomelandSecurity budget — $34.2 billion — andmore than doubles the annual cost ofmilitary operations in Afghanistan — $16.8billion.

While it may appeal to some, massdeportation of undocumented workers isnot a practical solution. It also threatens toundermine existing American industries.One executive recently stated that if allundocumented workers were suddenlyremoved from the country, the Americaneconomy would suffer a dramaticdownturn. Industries such as agriculture,construction, landscaping, janitorial,restaurant and tourism, depend on theseundocumented workers. Finally, massdeportation would destabilize a Mexicaneconomy that cannot absorb 11 millionworkers immediately to our south.

Legal employees are more likely to buyhomes, create local savings accounts,consume goods and buy items such asinsurance, cars, etc., Patterson said.Numerous studies have shown thatimmigrants actually create more jobs thanthey fill.

Most jobs for immigrants will be open inagriculture, construction, warehousing,transportation, sales, customer service, foodpreparation/processing, cashiers, janitorsand cleaners, nurse aides, orderlies andattendants. Estimates are that more than 6million newly trained nurses and nursesaides will be needed to care for the babyboomer population as it advances intoelderly status.

President Bush recently urged Congressto adopt a temporary-worker program as heacknowledged the economic forces thatdrive immigration, Patterson said. Americanemployers need more workers and ourdemographics show that the situation isonly going to get worse.

IMMIGRATION REFORM(continued from page 15)

Earned legalization is not automaticcitizenship. A path to permanent residencymust force undocumented workers to firstregister with the government and pay asubstantial fine, then go to the back of theline behind those immigrants who played bythe rules to get here.

Some legislation in Washington proposesa fee of as much as $2,000 per immigrantvisa, Patterson said. If just one million visaswere issued, that would generate $2 billionin revenue to help pay for the system. Newtaxpayers would also make significantcontributions to our Social Security needs.

With an earned path to residency forundocumented workers who are alreadyliving here, employers can be assured thattheir workers have passed a criminalinvestigation. Employers prefer to promotefrom within so they prefer a system whereworkers have the choice to remain in theU.S.

A time limit on work in the U.S. will bedifficult to enforce and discouragesundocumented workers from registering. Bycreating a path to permanent residency, wecan separate the wheat from the chaff anddistinguish those who want to work fromthose who don’t.

Because he believes that Americanemployers are “addicted to cheap labor,”Colorado Congressman Tom Tancredowants to toughen enforcement onemployers and inflict substantial fines whenthey hire undocumented workers, Pattersonsaid. Tancredo and his supporters inCongress believe that frequent raids inplants are an efficient way to keep ournation safe, without consideration of thelabor impact on those businesses.

Many bills in Congress, includingTancredo’s, require employers to conductemployment eligibility verification eventhough there is no federal system in place.

How America deals with theundocumented worker issue largely dependson who prevails in Congress, Patterson said.There are the Tom Tancredos who advocateincreased border enforcement, repatriationof undocumented immigrants and punitivefines for employers who haveundocumented workers in the U.S. On theopposite side, there is a coalition ofmoderate Republicans and Democrats whosupport an earned path to residency forthose undocumented workers who arealready living here, reinvigorated guestworker programs and increased borderenforcement.

We have to dispel the myths such asimmigrants only come to the U.S. to getpublic benefits, Patterson said. Immigrantscontribute more than what they get. Sixty-six percent of undocumented workers paysocial security taxes and 62 percent payincome taxes. They receive nothing inreturn.

Most immigrants would return to theircountry if the economy were improved.

Related to this service is ArkansasCommunities for the Kids – a two-yearnational pilot program to encourage andempower parents and community leaders toadvocate for improved academicperformance and to support schools andeducators in realizing student improvementby providing access to current school data.State Chamber/AIA and Just for the Kidsstaff will be working with local chambers,PTAs and legislators to encouragecommunities to incorporate these twoservices into their communities.

State Chamber/AIA is committed toJust for the Kids and Communities for theKids because, as we all know, implicationsfor the state’s economy are enormouslypositive whenever education is improved.These programs come along at a time whenArkansas is making great strides to providean equitable and adequate education to allchildren.

“The State Chamber/AIA played a keyrole in advocating for education reformduring the past special session, and westrongly believe that this effort will furtherenhance what the state has started,” saidRon Russell, State Chamber/AIA Presidentand CEO.

SIGNIFICANT ACCOMPLISHMENTS(continued from page 23)

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