ALC-Policy Making

Been updated over not from what you have here I'm metes was wanting to have the final part of their invoicing done prior to coming here to present in the bureau was not comfortable with that the members agreed so we've now agreed with them that we will pay fifty percent of that amount upon execution of the contract forty percent will be paid once they deliver the report's **** and then the remaining ten percent will be after they come here to make the presentation. M. the contract term would begin immediately upon approval by the Legislative Council which is hopefully tomorrow and and then it'll run through the end of this year. There are a couple of issues that are still outstanding and one is and I believe the executive subcommittee has fixed this or adopted it is that they will metes is very busy and this is a very short time frame and so they've asked to be able to have a mutually agreed upon date for the presentation and we at first told them that that was very difficult due to the Legislative scheduling they wanted three weeks notice right now we're just gonna agree mutually agreed upon time in the contract and so if they're not available obviously they can't come. The bigger issue that still outstanding here's the governing law provision in the contract they currently are asking that the governing law and be the state of New York we obviously is the state of Arkansas don't wanna sit met ourselves to the jurisdiction of another state we've asked that they include foreign language regarding bringing any claims against us through the claims commission which is what we do under Arkansas law and that include a provision stating that we're not waiting the sovereign immunity of the bureau or the lead or the legislature so I'm just waiting to hear back from them on that. Am I do want to clarify that there is a nother and budgeting and revenue consultants issue that's out there I know that was brought up in executive this morning the bureau put out an RFP in June for a long term consultant that will work with you all through your upcoming session and next year proposals are due on that at the end of August that contract won't be in until January this contract will be for your preparation for any special session you have this year I'll take any questions. Are there any questions. A representative or senator Chesterfield you're recognized thank you a million would you explain once again the issue of sovereignty between that of New York and then of Arkansas. Sure at most companies in their standard contracts want to say that the state that they are principally and established in is where you would bring lawsuits against them as a state entity we don't enter contracts that say anything other than that Arkansas is the governing law and so we sent them that I think are and we've now told them our primary concern is stating that any claims they might bring against us would be brought through the claims commission which is what's provided for by Arkansas law and also ensuring that we're not waiting or sovereign immunity and. Have they been sued because of a report. How often have dealt Mr the company Binsted moody's I'm not sure because there seems to be a huge interest in making sure that this the that a close The New York so I'm just wondering if they had a background or something to say people which initially selling them because of the report that they gave away I'm not sure I think that's is pretty standard practice for companies. Senator Hickey before we go to any more questions do you want to add to I'm so sorry about that that I get recognized no no that's fine I'll just going to of course appreciate the bureau further detail in this and if we don't get these contingencies worked out of this contract of course we're not looking to move forward the reason for this and of course I usually don't like time constraints but what this all what this is all about is as you all know we're supposed to come back into session because we're in the extended recess right now in the fall to do redistricting and the intent is that of course as you heard that will go into a special called session by the governor which you'll have to do that to consider tax cuts so to do that what we've uh been looking at for probably the last six to eight weeks is that we need to we'll have to come up with a number you know before we can move forward with exactly what we're going to do. As you all know because of COVID we're in a time that we've had some revenue numbers of course that have been skewed those been skewed of course by a multiple multiple things the PPP loans that you all do it within the session you know we've already addressed some of the tax issues we had there of course that had an effect on our revenue all the individual stimulus payments to come from the federal government straight to the individuals out there that showed up in the mailbox. Those were or a portion of those and that's what we don't know or put back into the economy your constituents when bought products with those and then that created sales tax revenue in the in is most of you know that turns within the car within the economy. So what we're looking to hire moody's four is to go in and calculate that would should I think everybody here probably knows who moody's is to try to get us a correct number so that we can extrapolate out of what all of those and I will McCollum one time monies but actually you know this could occur for two or three years because that money's going to continue to continue to flow so that's something that we're going to be prudent own from time to time but for what we're doing for this tax cut those are one time funds that we need to figure out how we're going to back out you know where they are and what they've actually how much they've increased our proceeds that have come in. So that's what this is about the other part of the thing is whenever they are going to do it. There's been some talk down here for some time about us moving the cliffs and I'm honest over simplify that of some of you all don't know that but within our tax tables. A percentages is charged based upon a certain dollar amount of income so in other words if you make twenty five thousand dollars twenty five thousand dollars you just pay a percent I wish I knew what those or but you just pay a percent would you go to twenty five thousand dollars and a penny then you're going to jump up with that percentage so what we're going to ask them to do is is to look at that and see if there was some way to smooth those cliffs so that the impact on those individuals would not be as high as they go up that is just a small part of it the largest party is is what I told you first with all the stimulus payments. All right representative Dotson you're recognized. Thank you madam chair so. Is that the impact of services select personal income tax changes that you're. Talking about is regarding the cliffs or will they actually do dynamic scoring on any of the puzzles that we are going to be introducing for income tax rate reduction changes it would it would be that one because that is one that is one issue that we've had with them. And you know they've struggled about getting this done within the time within the time that we need because we had some we you know with a redistricting we're actually thinking the real get the numbers probably now at the end of September of course we've been told two or three different things if all that comes falls into the way it's supposed to then we would be October before we come in to do the redistricting and then do the special session after that. And of course we need to do whatever tax because we're going to do we need to get all of that in place of course for DF in a so that all those tables will be corrected get that information out to the CPA's financial planners and such so this will have a head of time just to. I guess when we're talking about this this morning I I didn't completely. I mean I I know this isn't the bill that we passed during the session which I was in support of to get dynamic scoring proposals that we're going to have how they're going to impact our economy and what the the potential outcome of a proposal might be but this particular one. We're going to have all these numbers and we're spending almost three hundred thousand dollars to get dynamic scoring but we're not going to find out. What any of the proposals that were we're going to propose for a potential special session. Might. Might be an act with this so not sure if. Right we are struggling with the value of three hundred thousand dollars on on something if we're not going to actually. B. identifying what the outcome or the in the dynamic scoring is on proposals during a special session might be. It is just pointing out I'm in their proposal says that they would that they would rely on proposed proposal provided by us but the only thing that we've been specific with them own mainly was the part with all the stimulus funds which is the meat of it and then that one particular thing I just even though that says that I hate to sit here and sit here and tell you this because they're struggling with the time to get all this done you know if we start for one six or eight different proposals and whether or not they could actually get that scoring done I'm gonna pull bill dress to include if if if you will so thank you. Mmhm. Representative right you're recognized. Thank you madam chair it Senator Hickey how how confident are you that there the that moody's analysis is going to be able to take into account some of the. Reading this proposal this is they're they're basically gonna attempt to back out the impact. Of the federal funds there's some there's quite a bit new wants to the impact of federal funds in the federal reserve put out a report for example is said that nearly forty percent of the stimulus checks were actually saved and not spend so some of that money was never even put back into the economy is just sitting in people's bank accounts there's a bunch of other factors like that do you do you have some sense of all that they're gonna take into account when they figure these this analysis is whenever well I say yes I mean we have to under we have to understand that you know there's gonna be some things that board's going to have to depend on them to get and that's probably the reason that we've used this particular company you know their experience in the past and and what they've done we actually start trying to look at this again I think the last meeting time gets away from me but probably six eight weeks ago and definitely figured out that you know we had to have some expertise on how to do it our finance department with the bureau has has been back and forth talking with them also along with the deal and Marty. But they've been in discussions with them with exactly what we won't explain to them everything you know and they're telling us that they that they can do that that is the reason that they're a little bit there are struggling a little bit with the time I mean because they wanna make sure that they have plenty of time so that they can go in and decide for it and get other information from other states you know because there's probably gonna be a bunch of states that we need a service like this so we're just trying to get ahead of the curve a little. From our standpoint like I said it last in the executive meeting. You know it's one of those things also that we. Basically had to wait till June thirtieth the end of our fiscal year because you know we have to have a full a full year of this anyway so it's not really like we're behind our says is just kind of the timing of it all words all come in and how it's come in and and again we're trying to be prudent to make sure that we don't overstep what we need to do in the fall. Follow up you're recognized thank you madam chair the the two hundred eighty eight thousand what this is just me speaking from ignorance but what what bucket of money does that come out of I don't I'm not aware legislator the legislature has a you know some funds that we use for consultants for the things of this nature that state Central Services where that would come out of and it's it's in the bureau's appropriation okay a PO does this with this through the pure as you heard the bill or expropriation okay thank you. Representative makes. The the main concern I can hear you reiterating overseas is the timing I'm assuming they've given your research as though that they can still complete this within the allotted time and is there anything within the contract that if something happens that they can't complete within the a lot of time that there is some provisions to be able to handle that so in other words my concern is running out of time so we just you know so these last few things together whereas I would rather them instead of maybe having it by September thirtieth maybe it's October seven five you not just on that out there but are there provisions within the contract to allow for that in case the time is not adequate. There's nothing specifically in the contract we set a hard deadline of September thirtieth however and if they came to us and said we need more time that would be something that would have to be done as an amendment to the agreement which would have to come back before this body and the Legislative Council to approve okay all right thank you. Senator Johnson you're recognized thank you madam chair Senator Hickey in July I'll just throw this out there in which all kind of insurance together first of all I like that moody's is doing this and just the word dynamic still scoring Senator Hickey as you know we sent revenue tax and we have to deal with the static scoring which is always been kind of a bird my saddle but I'll I'm glad to hear this are we what we really looking at here this is kind of a follow up on representative raise questions we're looking at information that lets us do our twenty twenty one special session income tax cut which I presume will be. Leister ones talking about a reduction of the five point nine and then we have a of. The next year maybe even a special session to go along with fiscal session where we can. Tweak it some more and then I realized we've got this this our money we've got things that are. Going into this pipeline for them to analyze that aren't quite all here yet and I'm I'm just dead is this a tiered approach or or a yeah he follow I'm saying yes Sir I do exactly and it's it's probably good to say actually actually this is this the way that I see this is this was B. for this tax cut only if if we decide or when we decide that we're going to do another one next time. We're probably going to have to do the trick the same type thing again the reason being of course as you all know with the rescue funds is a whole new pot of money is totally separate of course we don't know if there's going to be any other individual stimulus that would be dropped so we have to take into the account of how much that was is representative ray said It figure out how much they say do that how much was spent of that hold a whole other set of factors. This is the reason for this is because we just we're kind of in these extraordinary times were there something we haven't seen before when there's been this huge block of money this dropped out here that is the you know had an effect or skewed our skews are secure revenues. And I also think it is that we all especially you know as we roll in an office here we need to be very cognizant of the fact because as you all know a lot of times down here Will base things on trends will say well we don't want to take one year because that might be a spy Act or it might be a floor so what we normally do is we may take three or four years out there and try to figure averages we got it we will remember that we got to be very careful with even taking those averages because. The cares money that come in the stimulus but money coming in these rescue funds they're they're going to be over the next three years so not only is it going to be individual years we may have a we may have a trend right here that we've got to take into account is really not real within that some point that'll fall off the table so we just got to be cognizant of that fact as we go forward follow up madam chair you're recognized thank you up. Senator is recognized you know we enacted legislation is gonna give us some in house economic expertise in the bureau to over the long term we're we're we're not totally depend upon the FNA for their analysis on things will the movies. Will they be developing for lack of better word a baseline database that that. Officer person can work from to help go forward on other projection probably not in this in this situation that was what representative Dotson was alluding to the legislation that we passed what it did and that was representative Jett had brought that have brought that through as you know. And I think it was last month what we did is we did we did put out an RFP for for that so that we're looking for that consultant we had tried to get a little bit of head the legislation said the D. F. and a has to provide us certain information by January or they or they don't have to do it before January and there was a reason on some of that so that they would have everything in place so we have got that or AFP out of when was that supposed to be back was it sept August thirtieth so the any vendors that want to look at that they will be able to do that to always thirty so I would say that that's going to be totally separate from what we're doing here thank you senator yes Sir thank you madam chair. Senator garner you're recognized. Thank you madam chair Senator Hickey I think you kind of alluded to this but I guess one more definition it seems like by September thirtieth is drop dead date for getting the reports from movies is that correct that's what we give a minister in the contract goes till December thirty first of this year to the Committee you're basically. So that the if we if we because we have worked that worked the bill so that they would actually come and report to us and everything just to give us a little time as far as the reporting that that's great I understand you have to have a drop dead date is this isn't a gotcha question all seem like federal government every other months having another massive stimulus a number infrastructure package another trillion dollar thing on top of it say we come in September thirty forget that in October they pass another three or four trillion dollar X. program may not happen before you get special session is there any provision in there in the contract where the so do it quickly dissemination of that data or is that something we just gonna have to. That that would the way I see that that would be in our if in our next tax cut that we did that's why like I say this place will go through the June thirtieth so we'd be in the in the last fiscal year and anything that happens you know in the next fiscal year and things that we do in the future will have to have to use that extrapolated out for medical aid Russian. Representative what you're reading. Thank you chairman this is for either one of the bill might wanna answer I know is it you made the comment someone made the comment that They have experience in this type of research and type of develop your. If this is the first time we've had this stimulus money in this pandemic where did they get their experience on what model or they drawing I think I made that comment and whenever I say that experience I apologize I meant that I believe that we all knew that moody's had the experience any type of financial calculations and analytics an experience because that is our business so if I misspoke there I apologize. Follow up you're recognized. In revenue in taxes been pointed out we face the problem with D. F. of the relative to the fact that we finally got it element they never included any of this original stem this money nor have we had any budget hearings or anything we're any forecast is involved these funds now if I will be sure I understand what you're you're this contract is asking to analyze relative in a relationship to a tax cut and how that might impact the budget as a result because we could do a little income tax because nobody's paying income tax on that money. So it's basically the sales tax which brings us back to the question I want everyone to have have they given you any of the bill how they're going to be able to figure that out some of the money went savings some of us never history I mean it's. That me of Dave Dave told us that there are going to be able to get in there and do these do this analytics and be able to do that what we do know. Is that we can't do it it's it is a very complicated thing especially when have you taken to that taken to the site what percentage of the savings I mean they're going to have to go out and use some type of data I would assume to they're going to use some of the other states you know maybe what they're seeing with their increases us see how all those tied together to you know try to get some things of that nature of course are going to use the. Certain areas of the state and things to that again Which is just one of those things that we feel like we've got to have some expertise to get the to get to a number so that we know how to start so it's two prong one relative to the budget incoming members primarily looking toward is it what has moved to make an income tax cut yes Sir and I think I think everybody here knows that there's there's room to do an income tax could is just the trying to be prudent proactive to make sure that the we've looked at everything in. I haven't missed anything to do it so overall I mean I hate I spent any type of money like that but overall especially whenever you're sort of talk about income tax cut that's going to be basically factored in from now on percentage wise is going to be a nominal amount. Thank you Mr chairman thank you Sir thank you Sir. Senator hill you're recognized. Thank you madam chair I move that the policy making subcommittee recommend to the full AOC approval of a contract with moody's analytics with a scope of work presented day in the amount of two hundred eighty eight thousand dollars contingent of phone Green made by moody's to the pending revisions requested by the LR and the contract has not finalized. By Friday July the twenty third day C. chairs we give has already by LC to approve the final form of the contract that's a proper motion. Got a second all in favor say aye at opposed no. Motion passes were adjourned.