Arkansas Legislative Council (ALC)

I'd like to call the meeting of Arkansas Legislative Council to order reshoot you being here members and guests First up we are going to have is the minutes of the last meeting if you've had a chance to look at those. I have a motion and second to adopt. I have a motion and a second all in favor aye. Opposed thank you minutes are adopted next we'll have a or revenue report from Mister Kevin Anderson. Thank you simply recognize yourself in his or her record Kevin Anderson Arkansas bureau of legislative research I'm on item D. as chairman this is the revenue report as the end of March. And what this shows that on page one after adjustments general revenue year to date collections of approximately five point nine million have increased four hundred fifteen point two million. Above the five point five million collected last fiscal year. Well as you can see the detail of these collections on pages three through five. and they show the current collections as compared to last year's collection. The Page two. It's a little different this shows you the amount collected as compared to the forecast as opposed to last year. And you can see as the end of March we are four hundred and fifty six million above forecast with three months remaining. And now we also if you look at April we're probably going to have another three hundred million surplus in April. And then when you look at the forecast that has a built in collections you'll see we're gonna have a pretty hefty surplus. Chairman I'm happy to answer any questions. Thank you members any questions for distraction. Okay representative makes you're recognized thank you Mr do we have any idea what's causing that Such a high surplus at this point but over forecast. Well The sales tax and income tax or are a lot higher than last year there's a lot of talk you see a lot of articles of doc shall not could probably explain this being an icon is better than I but a lot of it is attributed to the federal dollars coming in the stimulus monies coming and going through the economy but our all of our collections are up across the board and Arkansas relies heavily on sales and income tax and those are both doing very well thank you thank you Sir. Thank you representative will you're recognized. Thank you Mr chairman Mr Henderson G. do you know how how much of this is due to the inflationary spiral is there any way to the judge to the mental when prices increase this is the tax increases so not only are the people having to pay higher prices but they're having to pay higher sales tax do we have any way to the U. qua the difference between what we would have been normal if if things if inflation had stated in the three percent range verses eight and a half percent do we have any way to judge what the increase is up from that right I I I could upon on that a little bit it might Mr chairman it might be the question for doctor shall nineteen I spoke with him this morning and he said he'd be here to answer any of those economic questions if if the chairman desires but I. Represent route New York Mister shall not come up yes if you would either have you come to mind Mister chairman I think that would be of like us for great interest particularly to the. To the folks that are facing this inflationary spiral. Thank you if you're recognized yourself. John shall not DFA. to answer your question there clearly is a contribution from inflation both and sales tax components but also perhaps in payroll withholding. Which is running well above forecast as well and sales tax we have a lot of other noise factors specially in monthly data. Last year in March we collected the sales tax from the prior month with that had a snow weekend at. So that's why you've got to thirty percent thirty five percent gain in sales tax for the month versus year ago. we did factor that in the forecast but In the background you have both inflation and the economy doing better than expected in the forecast so they're all mixed together. when we look at revising the forecast that we will release in may there is an inflation component throughout the forecast that will raise this year and succeeding years by a significant amount perhaps a couple of hundred million on an annual basis. inflation yesterday okay two hundred with two hundred million okay and we gave the three hundred we have a five hundred million dollar tax cut. Correct so two hundred million of that's going to be not by the inflation and eventually since we have a forecast going out FY twenty five though there will be some deceleration in real growth in the economy. underlying all of that so it's it's not free money. That's all I have Mister chairman thank you. Thank you. The representative ray you're recognized. We shop unknown again it didn't take. Thank you Mr chairman my question is. With the With the updated distribution forecasts with with the four hundred fifty six. Million dollar number there for March do you have a projected estimate for total surplus at the end of the fiscal year. we we discuss at this morning I want to make sure I was on the same page and we both say over a billion okay thank you. Representative Crawford you're recognized. Thank you What about the online sales tax is there I know it hasn't been separated from what I've heard so it's just all in sales tax but can you not go back to bill for twenty nineteen and look at the difference and what sales tax is with that give us a history of what's going on there. We've attempted that ourselves and talked with DFA Revenue Division there are a lot of technicalities in the rollout of online sales tax over time courses mixed always with economic changes and other factors but and and also COVID nineteen impact on buying more online verses on site. but the the technical problem deals with the influence of. Vendors that have both the stores and online mix together there are some subsets of the numbers that may give a. Better indication of terror out of state online sales but again they're subsets of what might be a larger internet sales tax number we're not comfortable. Using that in our work so we're just using total sales tax for the forecast. But the I think DFA Revenue Division has some estimates of Of online sales tax when you think we could see those numbers. I'll have to get with the division and discuss the thank you. Committee members the. Representative speaks you're recognized. Thank you Mr chair can you explain to me on that it's on the first page there were gross revenues the act claims and tax with that role was in. Erroneously paid for twenty twenty one. Twenty and twenty one. Those those are very suggest mints it's kind of across the board I can get you summary of all the adjustments you're you're talking about the thirty three. Thousan right there I was talking about the hundred sixty seven thousand hundred sixty eight yes ma'am but that's that's for a twenty one hundred sixty seven it was thirty three those are very suggestions that are made in. And it's pretty detail I can get you the detail on that I'd like to see it yes ma'am okay that the thank you thank you Mr. Senator Johnson Mark Johnson. Thank you Mr chairman a gentleman a representative Crawford question was along the lines of what I was asking of. Obviously we have a significant increase in revenue collecting from Amazon and other online only retailers Can we not request specifically that that be broken out so we can attribute what is simply. Revenue that came from and I realize a Walmart has stores in a Walmart has dot com I get that but it would not have some mechanism to clearly give us a number so we can plan around that I I believe it's frankly in a pandemic I think it saved us but I also would like to know how much it did and and if there's some flexibility that that we collectively can do when we have the actual figures that would do that and that's more of a is is possible question that it is a tell me how much money question. Again I will work with the DFA Revenue Division the get you those numbers. Thank you doctor show and I'll be patient thank you thank you Mr thank you the. Senator Hammer you're recognized thank you Mr is a glance over and I look at the percentages change there's some pretty big swings in there from like I'm looking at one that's three hundred sixty two percent up in five hundred and eighteen percent up in a hundred percent down. In the forecasting. DO keep those. Numbers from year to year to where you can compare the percentage of swings by categories and how does that all play into the forecasting given the magnitude of the swing on some of these things. Again some of those wings are for small items some of them are compared to differences and activity a year ago For example just for the entire fiscal year FY twenty one we had to income tax filing due dates in the same fiscal year. So obviously things like that that the occurred in the past produce unusual comparisons to current year and that's even on annual basis on a monthly basis there are differences that take place in the small categories that can produce these these swings as I mentioned with the snow week a year ago and February showing up and sales tax collections the following month and now comparing to the Your you have an unusual comparison there. Follow up Mr. So I can let me just take one out I'll stop like the natural gas severance it's like a three hundred sixty two percent swing. Is that just due to the fact that accounts for the winter months or is there some significant that happened in that particular area that accounts for the uptick. For small items like that I would have to discuss it with the An administrator's tax administrators and the FAA to look at how the payments are made by companies for those those categories okay thank you Mr. Thank you I have three more on the board currently represented back you're recognized. Thank you Mr chair I'll be brief I want I don't want to drag us to far into the weeds on this the sales tax internet versus local sales tax but I just wanna emphasize and I may be preaching to the choir here a little bit but you know a lot of my cities have asked me for those numbers because it's more than just the revenue aspect of it it's also how they plan on as far as X. you know what they're doing in their communities and all that stuff like that so I would encourage you to definitely get that going and and actually share that information with the local cities because that it is very important data that they need as far as our planning thank you. Thank you senator Chesterfield you're recognized. Thank you Mr chairman is very simple on page one please tell me what the G. R. highway casino gaming ease. Senate general revenues. I've never heard of it. It is zero zero so I thought that was motion eight. Yeah yeah that that we won't see any of those monies until till the year end in that's. What I saw your your question is those are Cassini's you don't know what is G. R. highway casino gaming is that what we're supposed to be able to bet on March madness and that kind of thing or. Thank you Sir. so that is a transfer to a highway fund at the end of the year from gross collections from gaming above a certain cap. I thought it was a new casino that I hadn't heard of but that's not what it is thank you so much. Thank you representative Cavenaugh you're recognized thank you Mr chairman the way over here to the right I'm going to go back to the sales tax but in a different light. We have a policy where we have some businesses prepay their sales tax based on the amount of revenue what I would like to know is how many companies are having to do that pre payment of sales tax and how much sales tax their pre pay an. Versus how much they really old. I'm really want to know how much of our businesses moneys that you're putting in your pocket and keeping an able to use for for you for the state's business when the company is not able to use their own money for themselves. I can get that from DFA Revenue Division for you okay if you can send it to the committees or everyone could see it certainly thank you so much thank you have your senate style represent Ladyman you're recognized. Committee thank you Mr chair of I had a question on the I think I'm looking at the right line here motor fuels tax what what I was wondering about with the high price of gasoline. And the sales tax that we have of what's it what's the impact of the. How much growth is that is that a major part of the tax what's our growth based on inflation press gas. So that is a A volume based tax as opposed to a few other states in the country that have a value based tax such as Georgia where they do see a windfall from the price. Most of the other states have a volume tax so they don't see the windfall that way they actually see conservation and savings were shrinkage of the volume in response by consumers cutting back on extra trips. Well this line item that I'm looking and I'm not sure I'm looking at the right one but it's plus three million. Per month and plus fifteen million for the year to date. So it what what is that. I'd have to look at the details of that one okay and and motor fuel tax or specifics revenue that go to go to highway department it's not actually it's it's on this report after general revenue that's those are special revenues strictly for the department of transportation support general revenue yeah I understand that I'm just I've got questions about that answer other concerns thank you. A representative wouldn't you have another question the but the sales tax on gasoline increases by the price not by the volume product moves through the pipeline the sales tax is based on the cost of the product at the rack so it will be it will increase is that wholesale price goes up will it not. Is not based on the volume the the sales tax portion of the tax now the motor fuel tax is based on the number of gallons this punt the lessor is you have to be careful in convenience store business is because you can show a tremendous price enquiries but you're gallons may be Dale. The sales but the sales tax on a percentage basis will increase with inflation is that not true we don't have the sales tax on the the volume low. But but but but the but the sales tax I have a sense. All will increase proportionately to the prize that have sent those on the general economy it's not the motor. Sorry. Yes I want to administer. Do you like recognize yourself my name's Whitney McLaughlin with the department of finance discretion. The The New sales tax the wholesale sales tax on gasoline is converted to a price per gallon eight cent per gallon tax so at that point and it acts just like the other gasoline taxes a certain cents per gallon so it does not increase the price of gasoline. The tax is not in well. The taxes levied in Greece. That can't be right hello fine our way and this is it is it written in the law that was are we talking about the wholesale sales tax. Yeah I'm talking about the half cent sales tax the half cent sales tax directly at the pump on gasoline president will percentages will increase. Okay I think we're we might be mixing up a couple of a couple different taxes there's a half cent sales tax that is dedicated to the highway department that's like any other sales taxes on all races percentages by the prize if the prize goes from three dollars. But then it goes to four dollars then the prices that Gallic the price of that tax is going increase proportion that sales taxes not on gasoline. A general sales tax like that is that's as the general sales tax is not on gasoline but there is a half percent sales tax on gasoline. Now that I know I believe there's a half cent sales tax that's dedicated to the highway departments and then there is a on off realizes what I'm asking is does that have a cent increase proportionately with the price of the calls in other words if it's four dollars a gallon I have a set of I have a representative for all others is more than a half a percent of three dollars is right that is that's correct on on goods but the sales tax a general sales tax like that is not applied to gasoline prior purchases. Thank you Mr. Members we're going to learn as a reported we're going to change the use of the get some reports go back to representative Cavenaugh you're recognized thank you Mr chair. I'm back over here. But mine isn't dealing with the I'm good I'm not asking about that sales tax what I'm going to be asking about is uncollected checks in the F. T. reversals I see where we've gotten better at collecting those. Are we still outsourcing that are we actually doing that in. Side. Charter school. Mr chairman you want us to get that information provided to the committee. So it was savoring the and I okay. Is it what information we can. Representative Cavenaugh this is Charlie Collins the Commissioner revenue it definitely if if I understand your core your question correctly your are you talking about down in our collections section is that we're not outsourcing we're doing all that work in house there was a time years ago up until this past July when we were outsourcing the processing of paper tax returns we had a external contract to do that and we did not renew that contract last July and we're doing that work in house as well but that was to my knowledge the only significant outsource okay that what had on the report that we're looking at there's a in the gross general revenues there's uncollected checks and EFT reversals in twenty twenty one it was about fourteen million dollars but that in twenty twenty two it's going to be a lot closer to nine million dollars so we've done a much better job collecting that then what we had in the past and so I was just trying to find out is that something that we're doing internally yes ma'am we're our collection shop actually one of the things that I'm doing representative is I'm I'm working to get our units to integrate more so for example we have an internal collection shop which is our main collection shop they're working multiple shifts I think many of the representatives of heard about that is part of recommendations from different groups that started several years ago we're also increasing in working to increase our ability to a fact people that are not paying their taxes in other states we're we need to do things like filed liens on property in other states and things of that nature we also have other groups like the tax problems and resolutions group so once you go to the entire tax prices if you've got financial. Difficulty we've got a group that will work with people that group is also doing a better job of integrating with our traditional collection shop I think a lot of these different factors as well as coming out of the pandemic are all contributing to the better collection efforts the last thing that I would mention on that score is we're doing a better job of integrating with our legal team as well as a national association legal team that does things like deal with new economy companies for example there's a lot of big internet companies how did they tax and how where the tax state to state and some of those things are helping so there's a confluence of factors is we work across the board to be as efficient as possible so that the laws that you passed are applied evenly and that we're collecting the money that's due to the people of Arkansas I just have to know as we're doing much better than we had especially on returned checks and even if the reversals but a return check coming this down drastically and I know that we get three years had millions of dollars worth of but returned checks that we weren't collecting so I just wanted to commend you for that. Thank you ma'am and and representative wouldn't if I might I think you were talking about a value based tax on gasoline the legislature did pass one it's a wholesale excise tax is designed to be very insensitive to inflation changes it is technically based on value as you describe it is not a sales tax but it's very similar and that tax is relatively fixed in its in its annualized adjustment and that will not be affected in the interim but later on I don't foresee that changing in a market way because of the way that the legislature of the formula. Thank you thank you representative Cavenaugh thanks I've got up the Senator Clark. Thank you senator garner Senator Clark place Senator Garner recognized thank you Mr yeah I guess I'm confused too so I know what two thousand two we had that issue one which is half cent sales tax on pretty much everything excluding food and a couple other categories. That is now permanently in our constitution and could not be changed but as legislator less we did another constitutional amendment and it's my understanding that this permanent tech gas this purpose tax that will affect our kids into perpetuity is based on inflation numbers as well as supply chains and inflation and other issues rise as people have to pay more out of their pocket orange do you as a state collected more since that half cent sales tax applies to everything so for those flu if you exclude categories and isn't that kind of contributing to this overall windfall of state government having taxpayer money and my misunderstanding that concept. There is some tax collection taking place because of inflation on general sales of course there are large exemptions at the state level for for food and other items prescription drugs and so forth okay maybe I'll just explain to simply to me if last year I paid five dollars for ex private and I collected a half cent sales tax iniciar is ten dollars for X. product and you collect a half cent sales tax are you collecting double the revenue and tax collection offer that is that a concept I've got wrong. We are collecting more if the demand stays the same. Okay well thank you. Thank you a representative eleven you're recognized. Thank you Mr Stancil star page four. About half way down the line items DFA fines penalties and court costs we're seeing a nine month over nine month increase of one point one million dollars. Can you explain. What that drastic increase is or. Is that one point three million for twenty one twenty two consistent with previous years before code. Yes I'm I'm sorry I that's a detail I'm gonna have to get for you I apologize I don't have that right offenses that doesn't seem like a drastic increase in fines levied by the FNA over the last nine months. About get you the detail find out okay this is an also on page three. looking at A. B. C. permit violations that may be a question for the agency. But we're seeing a hundred and fifty thousand dollar increase year over year and. Permit violations for ABC do we have any type of explanation for that. What what's causing such an increase in that. Please recognize yourself in the. Peter Peter but again put early channeler director of ABC I can say that we have had a substantial increase up host COVID of sales to minors we're having continuous issues a permit holders selling to minors those first offense violations are five hundred dollar funds thousand dollars or second and so forth and we have had those increase that's the major increase we have had and bonds and sales to minors. It is there any consistency to that in the rule verses the urban areas. I have not run the the the the severity of it we do see I can tell you that what I have seen increases in the college towns those towns and areas that do have colleges were saying a substantial increase in sales to minors in those locations okay Mr thank you thank you Mr. Thank you for coming forward I'm not saying any more questions member that that it appreciate questions and we could spend a lot of time on this I would remind us of that we need to be thinking about these things the. Coming up in the next month we may want to check for this inflation's with us in is not going to back all the way up and we need to look at this is the the taxes come in and and what adjustment and also will continue to the conversation Senator Irvin and recognize you I thank you for a personal privilege. Yes thank you Mr chair members of the of members I just wanted to point out and there are a couple of Arkansas teams that made it to the world's robotics in Houston Texas and so I just want to recognize these two teams they are the rocky Balboa bot from Boonville Arkansas and the mechanically challenged a team from by a law Arkansas which is in my district and so I just wish them congratulations for making it to the world robotics competition in Houston Texas and hopefully people are listening out there but that's pretty dag I'm awesome so I think they need a round of applause. I hope we can cheer for them and that they do great and make Arkansas proud thank you Mr chair thank you for that we're always proud to hear about our are you think sailing members we are now to the executive subcommittee report co chair representative Dotson give that. Thank you Mr chair. The executive subcommittee met on March seventh twenty twenty two and propose changes they'll see rules were wrecked recommended for adoption by the full ale C. and subcommittee move the date of April A. L. C. meeting several emergency actions were also taken finally the executive subcommittee met yesterday and authorized the bureau to issue an RFP to engage a consultant to provide fiscal impact services for legislation pertaining to state and teach health insurance programs teacher health insurance programs The adoption of the rules frail C. require separate votes of both the house and the Senate so I'll take a motion from House member for adoption for the amendment to adopt the rules motion I have a second. I have a second all in favor aye. Any opposed. Mr Kochhar and for separate vote for the Senate the I have a motion. Motion the second all in favor aye. Those thank you for adopting and finally Mister chair I move to adopt the report. I have a motion to adopt the exact subcommittee report I have a second. Second all in favor aye. Posed thank you for the adoption next we have the standing committees Senator Hammer you're recognized for administration rules. Thank you Mr chairman the administrative rules subcommittee met on Wednesday April twentieth the subcommittee adopted report of the executive subcommittee concerning disapproval of an emergency rule the subcommittee reviewed and filed the quarterly reports submitted by the department corrections and parole board subcommittee reviewed three agency rules recommending and expedited process for occupational licensure pursuant to act one thirty five of twenty twenty one subcommittee filed the February March and April monthly written agency updates pursuant to act five ninety five of twenty twenty one at the state agency's request one rule by the Division of elementary and secondary education and one rule by the State Insurance Department were pulled from consideration at a meeting with the agency's agreement one role by the Division of Arkansas state police was held for further discussion between the agency in the legislative sponsor all of the rules were reviewed and approved Mr chairman I move for adoption of the report and point of personal privilege upon approval of the report please. Thank you I have a motion and a second. Second on favor I. Opposed you're recognized personal printer Senator Hammer thank you Mr chairman all of our staff works extremely hard but representatives and I want to recognize the rule staff of they put together three months worth of rules because of the fiscal session were not able to meet they worked extremely hard if you're in the committee meeting you saw the mountains of paperwork they had to prepare for the meeting and we just want to recognize the rule staff for helping out this get us caught up on the rules thank you. Thank you and we do greatly appreciate them a. We appreciate all our staff and and specially those in these marathon. Session next we have a Senator Mark Johnson given terrible terrible appealing correctional institution. Thank you Mr chairman the charitable penal and correctional institution subcommittee met jointly with the house and Senate judiciary committees on Monday March twenty eight twenty twenty two at one PM in big mac a representative from the department of corrections provided testimony on prison populations recidivism rates and reentry programs when the where from JFA associates presented an updated prison population projection for the next ten years and ruby Welsh Duke discussed practical solutions for reducing recidivism Mr chairman I move the adoption this report the motion Dobson a second. Tekanan favor I. Post thank you. Next have higher ed Center English. Thank you Mr chairman the higher education subcommittee met on Monday April eighteenth twenty twenty two subcommittee heard testimony regarding the following items education to workforce alignment on cyber security at the University of Arkansas at little rock I also heard about the the Arkansas teachers collaborating to build a better workforce as internships for teachers program for teachers at UA little rock hi there be heard back K. through twelve postsecondary stem and computer science continuum I ensuring a highly skilled future workforce Arkansas department of education. I move to approve. Senator English motion I have a second. Helton number I. Thank you the. Next the representative Baltz gonna give report of the peer far representing Great. The pair subcommittee met on Tuesday April the nineteenth the subcommittee reviewed received reports reviewed request and approved the following items various temporary appropriation increases American rescue plan appropriation increases infrastructure appropriation increases fund transfers reallocation of resources restricted reserve fund transfers and rainy day fund transfers and I move adoption of the report. The motion to have second. Thank you all in favor aye. Post thanks for the adoption next up for a review Senator Scott Flippo. Thanks chairman review subcommittee met on Tuesday and reviewed but the finance construction projects discretionary grants and services contracts no items were held in a move adoption report. I have a second second second own favor I. Post. A. Personnel representative Hillman. Thank you Mr chairman personnel committee met on Wednesday April twentieth of the committee reviewed items one through twenty six in your packet along with reports listed in Adams twenty eight through thirty two the committee also approved Adams twenty seven a through twenty seven eighty four the A. B. D. Adam twenty seven F. was a report of emergency action taken on behalf of the B. D. in March any questions I'll be happy to take those questions otherwise Mr chairman I moved for approval of this report. Thank god a motion and a second our favourite. Post. Thank you for that the. The only Highway Commission review an advisory of BladeCenter Johnson told me that representive McNair going to give that report yes go ahead the Highway Commission review an advisory subcommittee met Thursday April twenty first Arkansas department transportation reported on the second quarter twenty twenty two highway construction project of ten million dollars or more subcommittee review the April twenty twenty two monthly update the ALC efficiency study recommendation rules for implementation. I move the adoption of the report. I have a motion second all in favor aye. Lows thank you for that thanks members we have Some things it will require motion I only if the any others that do not require your feel free to bring up this is in a review of communications again item H.. If there's anything. In that that is the. It's H. three is the public employee retirement system there's any questions. If not I have a motion to follows review. I have a motion and a second on favourites. Post thank you next up for the for the teacher retirement system. The questions. Not a commotion. Motion second all in favor aye. Post. This also on for B. is the review of investment summaries again for the teacher retirement system there's any questions I have a motion and second. Second all in favor aye. Post. And the only. The department of commerce Arkansas development finance authority. One seven a the any questions. Not seeing any questions don't take a motion. Motion the second second on favor I. Post. The only be we have Arkansas Economic Development Commission division rule services. Any questions. Thank you motion motion second all player I. Post thank you. Been members as you go for your lasting thing else the you can bring up. The New. Business we're gonna recognize Mister jim Hudson from department commerce come up and give us an overview. on the Arkansas broadband. master plan executive summary. Members I expect there will be Some other meeting only yes so we have asked for a. The higher level that but you're welcome to ask any questions. Senator Chesterfield what's your question. This report is it possible to batch the remainder and vote on them as a total. Then be in order. Match the remainder of the reports unless the individual wants to pull one out and Section and and move those is that possible after this report on the ISPs yes Sir yes thank you so much that would be my motion. If I can get a second order. All right members for center just for a request because you recommend to batch all the eyes please. This time go ahead and if I have a second to that and second on favor I. Post. Okay the patches like Senator Chesterfield got that either way. Now. Mr Hudson if you're recognized yourself will let you personally. Thank you Mr chairman jim Hudson chief of staff for the Parma commerce stars out in the lobby of conversation pro Bryant said no we already made it this far in the agenda I just really want to give you an overview today on the report for broadband the broadband master plan that that we start the work on last fall in past six months the consultant Lou McAllister broadband development group has been traveling four corners the state having lots of conversations getting lots information lot technical review has been done and he's so use that information to produce this report public released last Monday been made available to members as well I'm not going to go into the detailed analysis report that's not my competency and we'll give you an overview and also give you an update is just kinda where we're at in the process of definitely working well we work with leadership to schedule appropriate committee meetings for Mister McAllister come in and give you the more detailed presentation the findings in the report and to be able to answer technical questions so hope to be able to do that over the course of the next month sometime but the highlights with essentially be this the report found that we have proximity hundred ten thousand households in Arkansas that currently lack broadband services that's actually a little bit better off than what we thought we were compared to the FCC published date about forty thousand more Kansans are covered by broadband according to Mr accountant casters analysis compared to the FCC. Of the under served or un served households about a hundred thousand hundred thousand at two hundred south turned ten thousand are covered by an FCC rule digital opportunity fund grant meaning that there is specific federal funds and federal programs that have been awarded to cover that geographic area that's outside of the state run Ark program those properties will be getting should be getting service delivered them over time subject to the FCC's timelines over not timelines that we control it could take up to six years there is some concern there's a potential that some of those awards may never make by that I mean the I. S. P. that may have been on that work may conclude that the business case is no longer there for it to undertake the build out and they may choose to abandon that in which case I think the state would have some responsible to go back and assess that and see what we can do to pick up the slack but there is that category of a hundred thousand households that are being addressed being addressed by the federal art off program which leaves us about a hundred ten thousand house. That in the executive summary that was provided in the report included in also in today's agenda as well you'll see a map of the very end of the executive summary on that map you'll see red areas throughout the state it is the red areas that are the hundred and ten thousand households I just referenced those are the areas that we can target using the ark program the rule connect program that we have here in the state Mr McAlester's estimating that we can attack that area get those properties provided service within about a three year time frame. Here's an important data point to to keep in mind it'll take about five hundred million dollars he's estimating to bridge that gap I think we can all probably guests with inflation being what is that number may very well go up over time of that five hundred million three hundred million of it could go toward about a hundred thousand households. Two hundred million will go to ten thousand households. Said another way about forty percent of the cost would go to less than one percent of households in Arkansas. Those the most expensive parts there's a reason why those have not quite gotten service yet they're expensive because of topography and they're expensive because of lack of density and and that is just what the math is on that so that's something we'll have to look at what to talk about what is the best way to address that population. The good news is that uh BDG is is not recommending some wholesale re creation of a new program they do believe that the existing our grant program is the basic bones is the infrastructure that we can use to go into this next phase of the program with some modifications the recommending that we add into the program a competitive bidding component on the way the program currently structured as currently structured a single ISP typically will come to us make a proposal to bring service to particular area what do reviews on that technical reviews and if at all kind of map south and will prove that grant they're recommending that we you know have an opportunity for multiple bidders to come into an area and give us proposals and then we select the most advantageous proposal both financially and technically to be able to bring service to that area. BG is also recommending that we modify the program to add a cost sharing component presently we're funding under percent of the build out in the current structure of the art program they're recommending just bring some some modifications that potentially potentially looking at a seventy five twenty five split but in some way to be able to kind of share the financial burden for that build up that's on the run need to be exploring and looking at as well there are plenty of maps that are in the study age as you flip through it do know that we have Callie maps that have been made available to be L. R. I. think BLR is in the process of disturbing those two members and I believe that indicate they should be done by the end of the day today so if you want to go look at your county you'll be able to see their the areas that are presently covered through existing broadband service areas that are expected to be covered by the art off grant program and in that area that we're looking to address with the arc program so that's a real quick high level overview of what the findings were in the BDG study again I will make Mr McAllister available to you over the course of the next month or whatever it is you'd like to have been here for him to answer more technical questions only give you a quick update on what the immediate next steps are now that we've procured the study we have the findings back what are we going to do with that the first thing we do is we get feedback we we all need to be reading the report out encourage you please take the time to read it it is very educational if you don't have a background in technology it helps bridge that knowledge gap a little bit so encourage your by take time to go through that we do want to get feedback from stakeholders from the eyes peas from the cable companies from community representatives from the co ops all the folks who've been involved the broadband issue for all this time we want them to come and tell us what they're seeing in the report any recommendations they have may have about the report. And so the Department conversely hosting a public forum on may sixteenth the morning of may sixteenth of the Benevento's and in Benton sorry probably at nine AM we're just finishing putting the touches on the the plan for that those been opportunity for the state cover to show up and just give us some basic information and I'll see when you have your committee meeting meetings will be able to do that then as well. And based on the feedback that we hear from stakeholders the feedback we get from you the feedback obviously when we get from the governor I will move into a rule drafting phase and begin to modify the terms of the art program and obviously they will come back to you for final review and for final approval as well consistent with your rules I think we're or estimating you know July first sort of timeline to be able to have that proposed rule set back to you I was able run those initially as emergency rules and bring them back later as permanent rules will fall that process with the goal would be around July first on that I'm working on significantly and I would be wanna emphasize significantly enhancing the staffing in the broadband office. We've already talked to our technical adviser which is you a mess there institute for additional health innovation to give us a proposed budget to handle the increased workload I'm going back to that you know hundred ten thousand households that translates into roughly one thousand six hundred census block groups a geographic area within the state they'll probably translate into three hundred to five hundred grant projects. And with a competitive bidding process that's going to be a lot of transactions and certainly to have more hands the plow to help us to be able to get that work done so you a mess is working a proposal to increase the staffing for that I think most importantly we need to be hiring a director for the state broadband office that's actually the governor's very very insistent on that wants to get on that it has to be a priority and we're already working on that this person will have to be a thought leader you know so far what we've done with the arc program is really be a processor of grants and I believe judge porch in his team and it's a small team have been incredibly efficient and effective in getting a lot of grants process to moved out the door now because all the policy implications are coming into play all the different pots of money we need somebody as a thought leader both in technology and in policy and so we're gonna begin that process of looking for individual we will be back here I'm believing in may going to personnel to ask for a position for that so you'll be a part of that process as well will be able to circulate that proposed job description to you. And always actions or require more money now that I think the good news that we can say here is there is ample money available primarily from federal sources this is not going to be an issue of lack of funds I don't believe between a remaining funding that's available through the American rescue plan that can be used for broadband two significant amounts may be coming to us through the recently passed federal infrastructure bill that also has a broadband component so we need to figure out which funding stream makes the most sense at which point in time will come back to you like in the early summer with an appropriation funny request just to take care some these administrative expenses for standing up a strengthened and enlarged broadband office. That's a very quick report but that's kind of where things stand today were in process is looking like to be a busy summer and we're gonna be on this and with that I'll have to take any questions that the members may have. We do have some questions one thing I hope we'll have ins in the on going meeting unless the concern that regionally all the money was paid up front. Concerned own projects that they get completed who owns. Product if they don't get completed. And the making sure that they're the signal and the end result is what it is supposed to be yes it is a big thing so things we are I know we're going to be question No representative make sure at first. Thank you Mr chairman about fifty pages into the report and as you said it's a. Highly detailed but but very readable so thank you for your work on this well done he did a good job yes definitely of the first off I must say I'm very glad to hear that the governor's going to take action on getting a broadband manager that's been one of my complaints for the last several years is that we haven't had that point person or these project managers to be able to to manage his levels of Complication to get all this stuff down so I'm very encouraged to hear that my one question this may be more of a loop question but as you can at least get it to him as as I read through the report and was looking at the cost estimates I noticed in this formulations that he had Contact did the cost of the materials the the fiber and all that but I didn't see any estimates on labor costs included in those projections that I a miss those for that not included you know the answer to that well I and if not then yeah actually I do because I ask the exact question when I was reading through it and the capitalized cost for each the projects includes labor so if you when you see them out there for fiber optic includes the cost of installing the fiber optic as well okay all right but managers that question thank you Sir but I do think we have to serve on the feedback I think opportunities will have with all stakeholders is let's validate those those amounts you know they're they're the ones buying it so let them tell us as a reasonable estimate or not right and then of course labor shortage you mentioned that is all that's gonna be another issue is just getting the people to put the stuff and thank you services. Thank you Senator English you're recognized thank you very much Mr Hutcheon good morning good morning so I've been around legislator longtime. Some may think too low but one of the things that I've noticed is is that we have got a lot of studies we've contracted for a lot of things adequacy highways taxes healthcare all that and one of the things we always have happened is that whoever that consulting group is comes and makes a full presentation to the state to our legislative counsel to the legislature and I and I think we need at least that but we are going to have. Excuse me hearings and joint performance review committee probably within the next two weeks and so we can start that process because I think it's very important that report is lengthy it's detailed it is very good but it takes some time to think about it and I know there are maps out there I think there are supposedly interactive maps I haven't seen those I don't know what those look like but I think for people to have a better understanding what we're really talking about we need to have that full discussion and to see what should broadband office lookalike what are those kinds of things and one things that is important as part of this process is access affordability and education and making sure that folks out there understand how important broadband is internet connectivity is and that we make sure that they have the capability of looking up but also the equipment to be able to do that so it's it is an economic development thing which is right there where you are but it is a big thing so within the two weeks we will have J. P. R. will be meeting and we will have a presentation so that we all get a better understanding what is this report really be and not that there's anything critical about it it's just what are those recommendations and what are our thoughts about this process thank you yes ma'am you're you're central partners in your decision makers in this process of when the report came out to visit with the chairs they came out on Monday you know thinking was that's just not enough time for you all to be able to absorb the information us do a present a detailed presentation today but do know we are committed you know as often as you want to come over and talk to you and make and and definitely making Lou available because he's the one who wrote the report he's the one who has the expertise for you to hear directly from him will definitely be doing that on the map second dress that very quickly as a indicating that we have a county maps currently available and those are being circulated to you. We are in the process of taking his GIS data that you know it's all those different census block groups and building a more interactive map that you'll be able to go to the broadband website and just kind of zoom in and to the very very minute level and see the data depicted visually so that is part of what we're doing is just taking a little bit of time to get that completed so we know that it's right but it I would hope by the end of next week early for are the following week it should be up I appreciate that because I think that's really informative it is it affects everybody in this room and everybody across the state it is this is a really big deal and really important so it's important for all of us to understand what's happening in our own communities and where those glitches are and how we might be able to solve those problems and the solutions business I hope thank you yes ma'am. Thank you Senator English Senator Hammer you're recognized. Thank you Mr refresh my memory it seems like we put some of the grants on hold until we got the report out in my. Right in that or have all the grants been awarded that were and then we just stopped awarding grants until the report was it's that Senator Hammer of any any grant that was approved and you all approved grants the last time in November you know we've not approve any grants and simply not brought any grants to you for consideration sense and we've received a significant number of applications but we're gonna have to look at that how those applications fit in the the New World of the recommendations that we have so some of those will spend most of those what we resubmitted to conform with the requirements of revised program okay that's that was one thing I want to lead up to are you all in are you all prepared to take a position or do you want to far until we have the J. P. R. meeting as far as with a hundred ten thousand are they gonna get priority status as far as any future grants are awarded so we can make sure that everybody at least has something or you want to defer answer on that. As compared to the the grants that are kind of in the hopper yes the applications that are not yet the grants that are in the hopper don't take care of the ones that don't have anything are we just going to say time out for a back up and we're gonna look at at taking care of the hundred ten households hundred thousand ten households that don't have anything and if you need to formulate an opinion that's fine I'm just curious where I are I don't think we've done any sort of analysis this point comparing the coverage area of those applications to the coverage area that that lose identified something to that work first but we do need to form a position she's not quite time to do that yet I think all right last question is there's a lot of the debate a lot of we took a utility service several others took heat over the price of what we paid to get this done with the report being out now do you feel that we got the value for the amount of money that we spent in order to get this report do you all have a do you have an opinion on that it was a chunk of change what we got what I think is a good report you think we got value for what we spent we did Sir all right Larry satisfied report we think it's going to be helpful it gives us a template and really frankly kind of a gold for all us to agree on this is what we're shooting at and I think that's been part of the conversation is lack of agreement as to where we're trying to go we got a roll a roadway here we can follow to get someplace our thank you thank you Mr. Thank you and I would just say I appreciate Senator Hammer touching on because. We know some of the cities that didn't have more say up to grade up to federal standards the reason they could get some of these grants that they did get they they had internet while just outside of the cities where there's still a pretty good population still doesn't have anything in that that is a concern that there's enough left to get those people something and to get people something that don't have anything right now since let's be in conversations we have as we zoom in on these maps. There's some stuff that shouldn't be that complicated in in not out in the totally rural areas that that we were really lacking L. depreciate the yes Sir and I think we're gonna need to have some help probably from Lou to help a sequence out you know what's the order to begin looking at these projects correct the biggest bang for the Buck of the early state thank you a representative back into Europe next. Thank you Mr chair of. And I apologize I haven't read to the the report yet but. My question is related to of. What I would call real time feedback related to some of the grants as you put them out there within report are within the the plan is there. Of. The ability to go and look and say okay this person is performing as they did on the previous grant so that we don't get into a situation because we have had some bad actors and in and in this arena and we've given money and they haven't done what they said in my in my fear is never gonna give a lot of money and I what I'm all in with your with robin Trust Heinz hall it was brought but I'm also want to see make sure that we have the proper of. Checks and balances in place to make sure that once someone receives a grant they are in fact doing and we don't have people going out there and just grabbing areas what I would call areas and and grants associated with them and then holding on and as you said they decided that well maybe it's not a good thing to do it right now it's the economic models not there so now we we've got an area that's in all thank my so I would encourage you to make sure if it's not already in there that we do have a real time feedback as to how people are perform companies are vendors are performing against these grants real time so that we don't keep grants to people who are performing we had a conversation yesterday Sir you know I think we we have the structures in place for monitoring I'm not sure we're taking advantage of it as much as we could be and so I think we do need to make sure that the citizens are aware if you have a frustration with a particular provider if they're not providing you the service and they should be in that footprint then here's the pathway you go to make us aware of that I had a conversation with and provider yesterday and I reiterated to that provider that these are discretionary grants and we will assess capability perform on the grant in terms of issuing future grants so it is it is a factor we will be looking at if somebody has struggled to execute on the money we've already given them they were gonna be reluctant to give them anymore money until they get that situation dressed thank you I appreciate your efforts. Thank you representative Wooten you're recognized. Thank you Mr chairman thank you Mr sins or the detail record I have a few questions first of all the Public announcmenet that you all made. Concerning the Senate Senate that kind of concern million it's been verified again this morning the of broadband development group would not be made available to the press on the day you all made the public announcmenet and then they're not here today what was why are they not here today. Yes as I indicated earlier today was really more about giving a very high level process please do not interpret their or not being present today as we're not going to make them available to you this is their report and we want you to be able to hear directly from them their findings and ask them questions about it it's really was is more about the convenience of y'all more than anything else to give you an opportunity to go to report you're gonna get a chance to talk to them absolutely what about the comment that was made by your communication person that they were not being made available that day for questioning by the media when the report was released I saw that you know report in the paper I don't know that was an accurate description of what was said to that person it may just be misunderstanding you know we were communicating on behalf of the department of commerce and just providing the basic information about we got the report and here's what's going to happen next but Mr McAllister has been engaged he's been answering questions I don't I'll be using the plan to hold him back so you thank you thank you communication officer made that decision on her own or the media and and tell the truth no I don't think it's that M. use either one of those I think could be misunderstanding I think we were communicating as a department of commerce about what the status of things were this week the opportunity to talk to Mister McAllister and his team and answer questions that's coming just weren't doing it yet okay you said I have a follow up Mr chairman you made a comment that the maps or being refined and down to the. Infinim ability to look at them very closely when you say we are you talking about the broadband group for the department of department is the department's doing then yes that was not part of the contract with the developer they've given us the data and they created sets of maps this additional tool if you want to call it it was not part of the scope but is something that we've been producing on a regular basis we just got to you know take the time to be able to do it it's not it's not going along in the process or on the seventy five twenty five split how's that how's that going to war the twenty five is coming from where an seventy five is coming from where is that apply to the five hundred and fifty million estimate which I think is for low but. Yes I think you and I are probably agreement about that being up in a low number what displaying C. out plays out the seventy five percent if that's where the percentage we end up and I think that's gonna be a part of the process what is the right percentage that the what the state provides using federal funding to cover the project cost and then the twenty five would be twelve five percent of the amount of the ISP brings to the table the five hundred million dollar numbers and that number of some that cost to the state seventy five percent complete so the seventy five will be provided to federal funds yes of the five hundred fifty million yes Sir. Have you heard the number four billion dollars from providers relative to the calls to complete broadband for the state. Is not over everything yeah I heard that I've not heard that number no Sir I have not have you heard more than five fifty. Well I think we've talked about more than five fifty here I think it's going to be more than five fifty but but again keep in mind we're focused on the you know a hundred and ten thousand households for that five fifty that's not the whole pie the need of state of Arkansas so there's a piece of that that's going to be covered by the federal art off program and I can't say what the number is on that that's their program how much have we invested so far. Roughly three hundred million. eighty six. Three hundred eighty six million three hundred ninety six so we're talking about the welfare of billion close to yes with the five fifty yes Sir thank you Mr chairman thank you Mr us yes Sir thank you and again you know and we looked at in meetings on this be getting your questions together as we get more in depth through this Senator Johnson your reflection in representive in thank you Mr chairman destruction of. I haven't read the whole obviously the full plan review summary On the hundred and ten thousand and obviously that's what you got a look at primarily a. Is the plan that that would be all or almost all served by fiber is there any plan to be done through cell towers and my final. Part of alcoholic triad is is any consideration even been factored in that something like starlink or one of the the US low orbit satellite systems like starlink if there's another one I'm not familiar with it but that would actually provide this service in a more cost effective manner has that been considered at all. Mr McAllister addresses all those modes of delivery in the report the relative strengths and weaknesses it is his recommendation that you know we emphasize what he calls future proofing. And so that you have infrastructure in place as. S. demands for speed increase and their increasing exponentially excuse me they're increasing exponentially two three years ago the standard would have been twenty five three FOR speeds twenty five download three megabits per second upload and married couple years the consensus is it's a hundred twenty hundred down twenty as more people start using broadband that just going to keep going up the fiber gives you the opportunity to scale up that need overtime and so his encouragement to us as we make spending decision is to spend for infrastructure that gives us the ability to scale up over time there's also a speed requirement that's imposed on us by the federal government respect to the funding sources for these grants they require a hundred twenty in a lot of settings it will be difficult for a wireless provider to consistently hit that number they can sometimes so if if we have a proposed solution from a wireless provider we need to make sure they can hit that speed because we're required to validate that speak. What about the satellites question. We are does to meet that speed requirements. I think I would probably do is deferred to Mister McAllister on given a technical assessment of that you know it is still a product that is in development you know once you talk about having hi number of users who may have needs for ensuring smooth handoff because as those satellites are orbiting the earth and as one satellite passes overhead another satellites coming behind it so you have to move that signal from one satellite to the next people who are using video conferencing or playing games things like that they will not want to have interruption that sent signal and so I think they're still work being done on increasing the reliability of that thank you addresses that you know pretty well his report I'd say ask him those questions now I'll look forward and asking those my understanding is the satellites are in in geosynchronous orbit which basically means they're moving at the same speed that the earth is moving so relative to a spot on earth they're standing still which would alleviate that problem course you have to have the constellation of satellites deployed even if the one right above your house is not there then Ewing got no service but if it's you know. Twenty miles down the road then you might have service but that that's the real question and I'm I'm sure there are people working on this as we speak but I just wanted to see how much of this plan at least thought about or considered that as a possibility especially for that that last one percent or ten percent that is going to be the most difficult and most expensive to serve three five or you should ask him his opinions on that if the if you look at the recommendations are and report he is recommending that we go with a a fiber optic solution okay and that we can consider other those others but that should be our primary way of resolving this would be my first choice but I'm also when you're sitting at or I am we're on a good day you might have five down and. Half of one up years these other sounds pretty good to you thank you Mr president thank you Mr Sir thank you represented in it you're recognized yes over here hi one quick question can you elaborate more on the meeting on may sixteenth. Yes thank you for a for bringing us back to that so it really is a a public forum for people maybe you're not him and been parties conversations directly for them to just give us some feedback on the report It's in bend yes ma'am. The. No it'll be it'll be live Nine o'clock I think the twelve o'clock is what we're looking at in the morning. Would you like him to send that information resented that. We will we've not seen any of that public information out yet in terms of the advice we will send it to staff make sure all of you get a copy of that that's finalized the details of the even today. Thank you Senator Irvin you're recognized. Thank you and thank you for being here and for the reports and after reading it I'm just incredibly excited that we have this master plan and the road map and I think it's really important for us to understand it in terms I think that we understand the department of transportation and here's the reason I say that. Primarily because there are areas in the state where it's really costly to build roads and bridges but people need those roads and those bridges and the state of Arkansas needs those roads and those private bridges no matter where we are in the State of Arkansas or no matter how costly they are to be built we need to think about that in the same way with this infrastructure of the twenty first century because those folks that live in those difficult to reach areas deserve the same opportunities economically. The other put people do in the other parts of the state of Arkansas so I I think as we're kind of having these kind of discussions about the proper in office and he needs to be brought on board really think it's important that we think about. Coordinating all those federal opportunities federal efforts all the opportunities at the state level and what's happening with all the I. S. P.'s but somebody as a coordination as such so that they can work themselves out of a job as quickly as possible that should be our goal we need somebody that can work them so that we can get this fully implemented but the the way I look at this is making sure you have all those expertise and available to us in a robust office that can handle just like we do with building the infrastructure of roads and bridges I think it's really really critical because this is the infrastructure for the twenty first century that's going to be the game changer for rule Arkansas in particular but it's important all across the state there are pockets and Sheridan Arkansas in Bryant and Benton and west Pulaski County and Northwest Arkansas or general metropolitan quote areas where there are pockets and holes and so we have to figure out how to cover all those holes fill in the holes of the Swiss cheese that we are and so I would of I'm excited I'm really excited about the partnership and I really want to thank you and Mister porch and the department of commerce and Mike Preston and farm bureau and all the people that engaged also the internet providers that engage on this really really grateful for their input question I've had some reach out to me that said we were too late getting our information in it for the report can they still submit that war how will that work if we have ongoing collection of information that might change post reports. Yeah that is that's a great question I think one of the charges that Mr Castricum gave us and the report was we need to have some way some method for continuing to update the report. Frankly I mean right now they're people laying fiber all over the state and so in some respects it's already out of date not significantly so right but every day that goes by pass last Monday Sir you know it's just going to about it so we have to have process something for continuing to gather information and that will be part of what the challenge for this new broadband office what will be for two two point on th on the funding streams and competency and in those areas that's why we can't just look for a technologist I think to be that broadband director he or she needs to be a technologist any understand technology specially merging technology but we also must be competent and I think policy issues as it relates to broadband both in state and and especially at the federal level and the ability to network with you know different nonprofits folks around the state who have an interest in this area we haven't touched on very much here today but affordability issues equity issues are quite significant the federal government is going to hold us accountable for those issues so we have to be addressing at the planned and that person's gonna need to be thinking about that a lot he or she will have you know a couple of deputies under them aspect you don't have one of them will be focused on technical stuff implementing the grants and when we focus more on the policy issue together working as a team I think that's a good plan and and leveraging every single asset available to us at the federal level but it's doable I mean I think that's very doable and and you know if we do it right to your point fiber if you do it right the first time we don't have to come back and do it you know repeat the efforts or spend more money upgrading and doing it that way so I appreciate it and look forward to being at the meeting time is the only scarce commodity we have on this issue that this one those unique things where money is frankly not the issue it's about time. Thank you for all the questions for should to mistrusting being interviewed over you look forward to more in depth things that we'll get into on the most important issue and with that saying no more business we are adjourned thank you members for being here thank you Committee thank you Mr.