INDEPENDENT CITIZENS COMMISSION Committee Meeting

For counsel for the auditor's office to introduce himself. Hello thank you tear Tucker my name is TJ phalarope The New legal counsel for the auditor's office and I'll be assisting Donna moving forward with this committee thank you and of course Donald Kerr who's been are steady rock. Through of several iterations of so thank you so much for coming in today and I'd like to the first point out for to our people who are present when you do speak say who you are so the people on the phones will know who's speaking. And also please use your microphone turn it on so that everyone can hear and it'll be properly recorded. What I'd like to turn to them for the draft minutes from our last meeting which was here yeah. I need to call the roll so okay. To clear okay I'd like to call the roll and I will start senate Fletcher your vice chair Tommy may. Annabel amber talk here Franklin. H. air Jonathan Rogers. J. M. Zimmerman. Care Clark Smith. I declare a quorum thank you very much and now we'll go to the minutes and they are in your packet of November eighteen. And that was the meeting at which we reviewed the judicial of salaries and of. And approved that and then we. Put of postponed the what we're. For today what we're doing today which is the salary review of constitutional officers and General Assembly matters are there is there a motion to approve the minutes. It may. We've approve minutes. A second chance. Okay jamming seconded. Any discussion. I would ask that all who approve I would ask all who approve to say yes. Yes yes yes yes. I will declare the minutes approved. And now we of I would like to call on Mr Robert brass from the DO Senay he has provided us with the handout which I found very helpful actually thank you as opposed to a bunch of paper. One piece of paper that of with pie charts explains revenues of for the fiscal year two thousand twenty three and if you will be again with your economic review of the state revenue and budget please Mr Brecht thank you Sir. My name's Robert bracken with the FAM of in the office of the budget so I'm not economic forecaster but I do work with the doctor shown that the closely and he's provided some information as well of the one sheet that I did hand out we find that that is pretty helpful just to show how the money comes in and then how the money is distributed through the revenue stabilization act in an in the revolution revenue stabilization act as depicted on the bottom so a lot of times you'll see you'll hear about the state budget being six million dollars that's true but there are a lot of other phones this was actually an estimate of eight point three two five right now I think we're going to be a real close to that and and I think Right doctors told told me yesterday we think we're going to have that pretty closely so when you look at some of the salaries that you're responsible for specifically the constitutional officers in the legislators that would come out of the constitutional officers fund and you'll see that first line so what happens all the revenue comes in of that eight point three two five billion dollars. Three percent or three point one percent of that goes to the Central Services Fund in the constitutional officers fund approximately one third two point one goes to Central Services one percent goes to the constitutional officers so you get about a third of the two hundred and fifty eight million That's more than what you're spending I'll just tell you that there is room in the in the budget if you want to increase salaries of course depends on how much you want increase hours but you put in a difficult position I had to come up here and tell you that we could not afford to give a raise to the governor or the legislators a the I'm thankful that we can do that if you so choose to do. what happens in the constitutional officer fund there's actually money turned back every year and there you're you're not allowed to carry that money forward and so at the end of the year a lot of that money is swept into some of its you can retain of a some of it has to be swept into the Central Services Fund Central Services Fund of funds my salary in a lot of other salaries within state government that provide services throughout the state but within the constitutional officers when there is room for salary increases and just so just so you know. Question. Commission. Question. Right from. But. Share I would like to. As quite the gross here or revenue estimate was in fiscal year twenty twenty two and twenty twenty two the the estimate of. Was actually low we actually came in much higher. There are different revenue forecast throughout the year of the last revenue forecast I can't remember the exact amount but we actually came in one point six to eight billion dollars over what was needed for the revenue stabilization act so we were we were above I can tell you for twenty to the actual number was around eight point seven seven billion is what we took in the. Those that the actual number we took in FY twenty two that we do anticipate that FY twenty three will be less of for two for two main reasons the legislature passed to pay tax decreases the retroactive back to January of twenty twenty two one was a hundred and sixty five million dollar a low income tax credit would which obviously that's going to be a hit and it but could not occur because I didn't pass until later in the year and and actually passed in FY twenty three but was retroactive to January twenty two so. You have that going and we also lowered the accelerated the tax decreases down to four point nine percent also effective January first twenty twenty two and so that's why we've we think the revenues less the less than last year but the the those two combined road about of five hundred million dollar hit to the budget. Thank you very much. Any other questions. Thank you very much I don't have any and basically what you're telling us as I just to be sure I'm getting the correct information. That. Any decision we make on salaries comes out of constitutional officers that is lauded before you even get to total general revenue for two available for distribution yes Sir there are a number of things like all of those items in that triangle all of those items come off the top of in and that first line just happens to be of you know the fun that you're interested in this is this is a sheet that's put out by my office just to the really give a general depiction on how the money comes in how it's of what what monies are come on come off the top and then we distribute through there are a say and so I wish I would prevent provide this to you before because it is a really good depiction in an easy thing to understand thank you so much because I remember you saying this and the last hearing and I'm. Going okay so any decision we make does not impact Human Services department of higher ed and all of those big cities that are really of what I call. Discretionary no that's true all of the all when all these things come off the top of the in the the RSA is not a really a reflection of how much revenue we have as much as of what the legislature of budgeted prince's sister we we we're projecting a six hundred million dollars surplus on the RSA portion of it in a in in what's happened a lot of this obviously if you look at that at the top part of sales and use tax and income taxes are those are the largest contributors to the overall budget and overall revenues of both of those have seen substantial increases in the past sales sales and use tax have gone up appreciably Anna and an income tax has gone up as well now we are cutting income tax in there and and I expect they'll be another income tax proposal to cut even further but there's no immediate the harm to your budget that you're interested in or the state but is this okay I would presume sales taxes going up because we're now finally enforcing it online that a lot to do with it may have the to be honest had that not occurred before COVID hit could you can imagine when everybody quit going to the box stores that did make a tremendous impact if you look at the sales tax revenues from four five years ago were up appreciate that so that made a big difference great thank you thank you very much you're welcome Care Act I do have a. Question. Taught me may. Just just mention that to do we usually do not so Where the governor stands in water proposals. May be relative to the state income tax. So I'm guessing since we don't know that. You know it obviously isn't factored it to do this with any change there would actually. Come in the circuit court year twenty twenty four. The. It's possible I I don't know the really what's what's being contemplated what we did last year we made the tax decreases retroactive I think we did that to run the first of the first week of August that really kind of throws a unknown into when you start in retroactive taxes I think it was the right thing to do we had plenty revenue I don't know what's planned this time there are number of bills that have already been filed the particular one bill would lower it from four point nine four point five percent the there are a number of other attacks bills that have been filed if you add those all up we're going to have a significant impact I think the last the number I heard was two three hundred million dollars in just things that are filed already and we expect that the governor's package to you know obviously issues that made indications that she would like to lower the income taxes will I just don't know how that's going to to flush out in the end but it I don't think it's going to be enough where it's going to affect to the constitutional officers fund at this point. I can say that. So. So this is Senate bill amber Tucker what you're saying is this even with. The. Proposals that we know of at this time. The section of it that goes to constitutional officers won't be impacted that much right it will be impacted because what you're what you're getting is basically one percent of that top number right so obviously if that top number comes down five hundred million dollars say you know that would be a five million dollar hit. To to to the to the fund that you're looking at but I can tell you that the five million dollar it would not have an impact on salaries in leisure planning something really large you're planning something the like what you did before it's not an impact and say that thank you. Any questions from our commissioners on the conference call on online. Yes thank you there. Thank you. Okay I want to also point out of what we did last time was we have a legislative compensation of review of of states around us Arkansas Iowa Louisiana Missouri Oklahoma Tennessee now obviously these figures are over a year all of their two thousand twenty one they're not two thousand twenty two so I don't know how how useful they are other than we do have. That comparison to look at and so I I wanted to put that on the table So I'm I'm going to open this discussion up of for our consideration of the of the increase you'll notice that there was a letter that was sent to the commission vice of three senators and for the record it's a state senator from district one bill Gilmore state representative district sixty nine David Ray and of the state representative ninety five Howard Beatty junior and they basically stated their position that the they do not want us to raise legislative pay at this time obviously they represent three view points out of committee at the legislature and are I wanted to put their view points on the record but I also have to acknowledge that of there may be other viewpoints that have not been expressed to us And sole to say that they represent the entire legislature would be an accurate. so I I just wanted to put that on the record of so I'm opening it up to my fellow commissioners on of going back to what we did the last time if Donna would Restate for us I think we had it in our minutes approval of minutes from the last time where we approved of the increase for the of judicial officers and I believe we did it based upon their request for a certain amount is that right yeah. And it had to do with inflation. Thank you. Of what we did was I believe what we did was we. based upon their request of. Two percent Cola. And then of five percent really for inflation. and so that was the requested that time obviously we don't have that request here. But we do know that inflation is still here. Fortunately. It's reducing right her driver's. Yep. I would point out I I I think the two I mentioned the two in the five percent the last time I was here that's what was given to state employees or was two percent coal of in February of last year than a five percent a merit increase at the end of the fiscal year June thirtieth and so I I don't know what that they may have asked for the same amount but but that is that was the amount that was given to state employees just okay thank you now. I don't have the figures exactly but I think inflation is not. Going up as fast is that correct that's correct the last couple of months it has dropped but still above seven percent I think the last number I saw was around eight point five perhaps okay eight point five was it. The drug treatment options it would drop in the sevens of. Last month at the drop of from a year ago. Was a six something yes. Six two. I just I just knew that it it has dropped and I couldn't remember. Because of fuel costs yeah so we right I think there's been a reduction reduction in the price of fuel which is made that happen. Come in may There is a. A. It obviously active effort by the federal reserve. To move that that number South six point. Three or the six point four. So I would think that. We obviously hit the peak. Obviously I believe that that's what most forecasters believe we hit peak. Those numbers will likely go down. Below that six point two percent I don't know it would what categories that would be but to. it would just you know we're a a state and others that. Inflationary numbers and so forth or. Very volatile. It thank you moved for a lot of different reasons but. Belief is that those numbers will continue to to go back. Any further discussion any further comments. Hearing none I would like to entertain a motion and of a proposal. on the legislature salaries salary of increase and of have that up for discussion. Let your Google cloud numbers over the years and the representative changed our government spending assault the the National debt is two hundred thousand dollars. You can person is attacked by. So that's going on some time down the road that's going to catch up with this and And everybody's going to play you know everybody so. You know. My recommendation would be to more between five and six percent. Okay so is that a motion to motion okay do you wanna make it five or you want to make it six. Trouble. We we did seven right. A utility for. Try to do the right thing and unlike most of six percent okay the motion is for an increase for constitutional officers and legislate tors of six percent do I hear a second. Eight. That's James Simmons second. and now the motion is open for discussion. Does anyone on the phone want to discuss. If not I will tender it to vice chair may. Thank. Object to round two again it within the banking industry and several other groups. It obviously it's all over the board. most of the. Thank you and discreet or they're going to be looking at. Page three to four percent. But just. Eighty. Eight major changes from that would be a matter. increase and that will be it obviously so merit increase based on performance but. It's a particular rule I see that number of. More into three to four percent range. Thank you any any further input. Of course which is legislators salaries merit raises don't really fit in the picture. Unfortunately but that's because they are elected by the people and if the people decide they're not doing their job they are not a re elected or so that that is the way we deal with merit. In in the in the political field of it's all in the eye of the beholder so what I'm going to do is call for a vote if there's no objection. All in favor of the motion as made by Mr Fletcher M. as seconded by ms Zimmerman police say aye and say your name. I feel left. I can send them in. Has. Who who voted online other than ms Zimmerman. Are you going in all sorts okay so both of them I Vice chair. Okay well I'm going to vote for it and I know that vice chair may has is is our conscience and he will. Follows his conscience. I'm going to a to vote no. Okay we'll come in okay all right of head. again. I'm looking at the numbers and I'm trying to. Articulate. That. It. It should change the number one number two we have to look at where people are within their range compared to others which we did and I don't believe that we're looking at six percent plus increases in those other. State which would be the the. Benchmarks that we did look at. Well our problem here and I'll tell you I'll share this this glitch because we're meeting during the session the Legislative bureau did not have time to get us the figures the more recent figures and so I don't know what other legislator or legislative legislator salaries really are in two thousand twenty two going into two thousand twenty three and so that that's one way that that figure is. It may be a little misleading yes I don't know yes ma'am. Up in the room information that we were was provided the. On the Legislative compensation. Legislative additional compensation retirement benefits the instance of fourth. The Legislative compensation if you write. Arkansas against I will lose it if Oklahoma Tennessee. We rate stacked over all in and that the compensation usually in an assumption. Sixty. Each one of those like a hundred and six dollars. Per day I'm sorry mon the. Apart to amber thank you see. The whole numbers that were added in here with the only assumption being how many days applicant plot. Arkansas rakes. Second with about fifty one thousand four hundred eighty eight. And. And the low would be twenty six thousand four. In the state sixty seven that. To us from a local in Arkansas. Right up there right and I I agree I mean it may maybe is seen ratio may it may you know may not have changed in terms of our position of number two. First I. We are usually at the very bottom every saying so this kind of pissed me heart that we have we have at least acknowledged. That there is merit in in paying our legislative orders more than a minimum wage and Also. It's awfully hard sometimes to compare. Different legislatures and how often they meet how how many committees there on all of those things. I have watched and I know all of you have watched as this job has become more full time. Than it ever was intended to be and because of. The complexity of. Government and life now I often say that I don't know how anybody who's not a lawyer. manages to work through issues as a business person and I'm just going to say that and I know that's that's prejudiced on my part but I will tell you. If you're not. If you don't have assistance in figuring out how to operate a business these days. If you're you have a lot of difficulties is just getting more complex and so I guess part of my eight my approaches these folks are in public service they suppose are supposed to have another job you know they're supposed to be this is supposed to be part time but we have to ignite alleged that that is becoming more difficult I have friends in the legislature who are lawyers and how they practice law and be a member of the legislature I don't know. On it it's difficult so I I hear your concerns I hear your viewpoint and. I don't disagree with that actually but I guess I'm looking at what we are faced with at this moment and and and looking at equity Of what we did for the judges versus what we're doing for the legislatures yes ma'am and you know I voted no on the judges so as to be you know be consistent right I understand that if the issues are there working and everything but really just simply want to say that the reason that I voted Natalie is not necessarily consistency with my previous vote but it was more relative just by an hours is. Aired to the other states that we have to respect everybody else's vote and I understand that thank you. Thank you for Phil let your I will be coming. If we have a correction I'll be the first one to correct correct next year okay and I want to say it out for purposes of the record that there are. We know one thing change will be happening. Through the next year and so we can look at what we've done and it's not automatic. And we will consider the circumstances next year. I don't know whether I'm hearing it correctly from national economists but they're expecting a recession. So that. I don't know how that will play out in Arkansas because Arkansas is always two or three years behind. Am I correct Mr Breck. It is true that Arkansas legs I can tell you Dr Shona believes that we'll be back to normal growth in twenty five sources predict an assistant current projections and and normal growth is around three percent okay. Okay. Thank you is of there are any other what at what we need to do now is has a. A resolution of our resolution prepared and then have one more meeting. To sign the resolution. Yes clear that has happened okay the ayes have it so there will be an increase to the constitutional officers and the No proposed legislative changes okay let legislatures I thought we included all of them when you repeated the motion said constitutional officer yes Sir. Yes yes what else. Yes it should be constitutional officers and legislators. And of the ayes have it on that motion. It yeah it is a proposal to raise but we will have to meet again. For the resolution. And what I propose is you get out your calendars. And we will put up a proposed resolution for approval and then meet and it will be on a Friday this curve you have a suggestion in terms of your time frame. Greater than ten greater than ten is reasonable less than forty five was constitutional okay so what I'd like to to propose is. February the server which is fourteen days. Okay all right of. Commissioner mazes okay how bout Mr Fletcher. Okay. No. Are you serious you're going to go for a part you're going for a trip. Okay all the on online that of is what are your cat what do your calendars look like for February this or. And doing here it's great for me Chand's MMN. We'll thank you Clark. Good for may we're put in a new POS system and stores and wait it's just gone crazy okay well as Frank thank you Frank we will schedule it for February three of Mr Fletcher can't be here we will under stand. We will wish him safe travels and a wonderful birthday. Respond or. Ten AM here in room one thirty. If you can get it I understand that's always a question mark on during a legislative session but if not you'll indicate which room will be in anything further. Any old business in a new business.