Support for Arkansas Week provided by the Arkansas Democrat-Gazette, The Arkansas Times and KUAR FM 89 after a six month study to prepare a plan addressing broadband access across the state, the broadband development group released its recommendations.

Joining me to discuss their findings as Secretary of Commerce, Mike Preston.

Hello, and thank you for joining me.

Thanks for having me today.

You know, to get started with this, I'm just wondering, you know, Arkansas has ranked low among other states when it comes to broadband.

Why is that?

You know, we've ranked low because part of it is just the challenge of our state and the makeup of our state.

We have so many areas that are very rural.

Some of the topography in the mountainous areas make it hard to deliver that last mile of broadband to the it goes to the consumer.

So there really just hasn't been the financial sense for companies to come in and do it on their own.

What we've seen is because we've had federal funds available through the CARES Act and into the ARPA funds and hopefully eventually through the infrastructure money that we now have funds that will help kind of alleviate that pressure to get companies to extend broadband to the last mile and get those underserved areas that we still have in our state.

So basically, what you're telling me is for many of these companies to come in and install the wiring, what's necessary to get broadband to everyone is very very costly and probably not cost effective for these companies.

That's exactly it.

It hasn't been cost effective.

It was cost effective, and the companies were able to you know, to not lose money on it.

They would have already done so.

And that's been part of the problem that we just never had the mechanism to help offset that.

And it didn't make financial sense for our company because it is very expensive to lay fiber.

And when you're going through mountainous terrain and you're you're taking it two or three miles to get it, the last person on the line, it just doesn't make financial sense to to recover that if you're only getting, you know, 30, $40 a month in return from the customer.

So what we've seen is that now that we've got a grant program in place and we're partnering with the Internet service providers, it gives them that little extra incentive that they need to help build it out that last mile or we've seen these underserved areas.

So when you when we look at the folks who are served, how many households would you say have adequate broadband?

You know, I, I think something you'll see from the report is that we've actually, you know, we maybe we're not getting enough credit from the FCC when they were doing their data, when the broadband development group did their analysis, they actually found some 47,000 additional households that were covered in Arkansas.

Now, the you know, the goalposts keeps moving a little bit, if you will, as it relates to broadband.

When we first started the broadband office, and that was just prior to the pandemic, you know, give the governor a lot of credit.

He had the foresight to say we have to do something about broadband now and I want to get it done.

At the time, we were looking at what was considered adequate broadband service as a 20 53 speed 25 download three upload that continues to move as the technology advances and these federal funds are put into place.

Now, the minimum speed is 120.

So 100 download speed 20 upload speed.

So you just see how significant that's gone in the last two years.

That's it said we still have, you know, a lot of great coverage across the state.

What the report finds is there about 210,000 households in Arkansas that are underserved that do not meet that 120 requirement of those 210,000, roughly 100,000 of them fall in what's called an off area.

That's a rural digital opportunity fund.

So that's a fund to the FCC that are already under contract for service to be done sometime in the next probably four to five years.

That leaves another 100,000 households in Arkansas that are not adequately served.

And that's where this report really focuses on how do we get those 100,000 last 100,000 households in Arkansas adequate service on broadband.

Well, let's talk about something the governor created, and that was the Arkansas Rule Connect Has that helped any in terms of laying the groundwork for this?

It really has.

And again, I gave the governor, governor, a ton of credit because he set that up prior to COVID.

So we had a program and a mechanism in place when it hit and everything just, you know, you know, exasperated that.

And it just went so much faster than we could have ever imagined.

And you had to have broadband service for for educational purposes, for work purposes, for telemedicine, you name it.

We had that mechanism in place to be able to do it.

And then we had federal funds coming in through the Cares Relief program and then through the ARPA funds that we could actually fund it.

So because we had that Rural Connect program, in place, we were able to provide broadband service to somewhere probably about 180,000 households in Arkansas that were underserved.

So because we had that program in place and we're able to do that, that's part of the reason why we saw so many more households actually covered in that study than was what previously thought, what was done by the work by the FCC.

So we were able to really help a lot of folks out during COVID and even after, but now we know exactly what's left to be done.

And we now have a path forward and how we're going to get there.

And I tell you what, when you talk about, you know, 100,000 households underserved, that is a lot.

But encompass listen to the number of households around the state.

That's really a small number.

It's smaller than what I was expecting.

It is it's still a significant number that we want to to tackle and overcome because, you know, we see broadband in this day and age.

If you don't have broadband, it's not like it's like not having, you know, running water or electricity.

Or phone service, you know, some 2050 and 100 years ago.

So this is just where we are and the digital revolution that you have to have broadband access to, you know, to do all the things we just talked about in terms of health care and working remote or educational opportunities, but taking a step further, most people's homes are run off of broadband, whether, you know, the Internet of things that might be your obviously your television and your smart TVs or your refrigerator or your air conditioning unit or all run through, you know, high speed Internet service and you don't have that.

You're missing out.

And what people often realize, too, is our take for granted is, well, I have access on my cell phone, so I don't necessarily need it.

Well, we want people to understand that it's more than just being able to pull up the Internet on your phone or, you know, download an app and be able to do something.

You want to have that high speed access and and know of a laptop computer to be able to, you know, keep pace with the technology.

So what's called is the digital equity is is a big piece of this component to make sure that people have proper access to that at a low cost speed so that they can actually utilize the broadband connectivity that hopefully everyone will soon have.

Yeah.

And you make a good point.

It's more than just being able to pull up the Internet on your phone because you're right, a lot of households I mean, you know, you look at the doorbells nowadays and and cameras.

I mean, there are so many things that run off the Internet and you really need that high speed access.

So that's a that's a very good point.

I do want to understand a little bit more.

I want to talk about cost, but I also want to talk about the recommendations, the specific recommendations that that the state received.

What stands out the most?

What makes the most sense to you?

So what makes the most sense is for us to really focus in on those 110,000 households that are underserved and utilizing our Rural Connect program?

I think something that the report points out is that the Rural Connect program was a success.

It served its purpose, and we were able to extend broadband well beyond whatever we we thought we could have before.

But now we need to take that program, make some tweaks to it, to mirrored what the federal legislation is in place and the rules that Treasury has put forward on how we utilize those funds.

And to this point, we've used it strictly as a grant program to build out that last mile.

What we're going to shift to going forward is more of a cost sharing model where it'll be a percentage of the overall cost, and then the other percent of that will be covered by the Internet service provider.

So that's one change that we'll begin working on making and making a rule changes that will bring the legislature here sometime in the coming weeks to accommodate that.

And that makes a lot of sense because it puts more skin in the game for the Internet service provider, but also still gives the funding opportunity to help them offset that, that large cost to build out that last mile in that rough terrain that they have to be able to to do so.

Right.

And then in terms of costs that you bring up the estimated cost to get fiber.

So again, this is just focused on fiber, not counting, you know, fixed wireless or other assets that we might be able to to utilize going forward for.

But the fiber cost is estimated about $500 million so it is a significant cost.

But the good news is that there are funds available again through ARPA, through the infrastructure bill they will have from the federal government coming into Arkansas.

That will help us pay for those so that $500 million to close that gap.

Okay.

So all right.

And I totally get that.

I understand the state, you know pitching in and the actual companies that do the installation and all of that.

But once everything is installed where we're talking about rural Arkansas will Arkansans be able to afford broadband?

Because in some places, myself included, I think it costs too much and that's certainly a concern.

And that's where I go back to the digital equity piece.

Within the infrastructure bill, there are funds specifically to address the digital equity to make sure that it is at a, you know, a cost that is at a price point that most Americans, most Arkansans are able to afford.

So that will be something that we look at as we're developing these proposals and working with Internet service providers.

And some of it's going to be competition.

And I think competition will help drive down the price in some areas.

But yeah, we want to make sure that the digital equity is is available to people so that they're tapping into those funds to allow them to help pay for service that doesn't break the bank or so it is a concern, but something we'll take into account as we do develop the new rules and regulations for the program.

And you mentioned competition and I know in some areas of Little Rock in terms of cable, there's only one service provider.

Same thing for, you know, Pine Bluff.

There's only one cable service provider.

Granted, people are able to now, you know, get access, you know, via Internet and that sort of thing.

But how do you increase competition when it seems like one company, you know, is at the helm of everything and doesn't really allow other companies to to come in Well, and that's where, you know, a company is going to say, where's the price point?

That makes sense for us to go into a community to serve it.

I think what you'll see in some of those areas, too, where there's you know, only maybe one provider that maybe the access isn't as as fast as people would like.

And it doesn't actually hit the now definition of broadband speed, which as I said before, previously it was 20 53 just a couple of years ago it was ten.

One is now 120.

So if you're not meeting that, then that opens up an area to be eligible to receive one of these grants or for a company to to go in and put a proposal together to partner with the state to increase service in that area.

So maybe there's some service, but in our eyes or in the eyes of the federal government is, is to start with broadband as defined.

Now it's underserved.

So there is an opportunity for more companies to come in and increase competition, which will ultimately increase the, you know, the level of speeds in the area, but then also hopefully maybe drive down the cost for the consumer.

Okay.

Secretary Preston, we have 30 seconds.

What's the timetable on on getting this done and being able to get broadband to all Arkansans?

You know, we want to move as quickly as we can.

So we hope to have a big stakeholder meeting here in the next couple of weeks to get feedback from the Internet service providers update the rules to the program in the next couple of weeks, working with our legislative partners.

And then as soon as the ARPA funds and infrastructure funds are available for draw down we'll start writing these grants and getting this fiber into the ground so people can have better Internet access.

I'm sure people will appreciate that.

Secretary, Commerce Secretary, Mike Preston, thank you so very much for joining me.

And stay with us.

We'll be right back.

Arkansas economy is continuing to exceed monthly forecasts despite high gas prices and inflation.

Officials say the state is on track to have a general revenue surplus of $1 billion by the end of this fiscal year.

Joining me to talk about some of the options on how to spend this extra money are State Representative Joe Jet of Success Arkansas and Senator Keith Ingram of West Memphis, who both serve on the joint budget and the Revenue and Taxation Committees.

And I want to thank you, gentlemen, for joining me to talk about this.

First of all, how how did the state end up in this position when, you know, there's so much talk about inflation and everything else that Arkansans are dealing with?

How do we have so much money left over Well, I think I think what we're seeing is a byproduct of all the federal federal dollars stimulus money flowing through the economy today.

Well, the Fed has pumped out a lot of a lot of money.

And I think it's there's a certain extent it's kind of a false economy.

What we're seeing, although it's good I do know that Bill R in Little Rock is taking a look at other states and other states and the same the same issue with inside their their budget process.

Well, okay.

So, Senator Ingram, I'm sure you agree with that, right?

Yeah, I think that's exactly, exactly the stimulus money, the impact that it's had.

Our revenue is not only in the state are holding strong, but of our local cities and counties.

Revenues are strong.

So I think, you know, you have to be prudent with this money.

We've been very fortunate in Arkansas in that our governor has been very conservative in budgeting.

We've had a chairman of revenue and tax in the House just yet.

That is business.

Mad that that has been very conservative in budgeting and in Jimmy Carter, who is president pro tem of the Senate, is a fiscal conservative.

So I think that you have to give all of these people credit for putting Arkansas in a position that it's never been before.

Fiscally.

Okay.

So one of my immediate thoughts when I read that there would be $1,000,000,000 surplus by the by the end of this fiscal year is maybe taxes, sales taxes, income taxes are too high.

But if you're saying that part of the reason we're projected to come out ahead so far is because of stimulus money, then maybe taxes really aren't too high.

Maybe we're on point Well, I think the average Arkansans are their average.

Oh, yeah.

Yeah.

I'm sorry, Joe.

I think we all are conditioned to say that taxes are too high of this legislature under this administration has cut taxes in a very responsible manner.

We can't forget that once we cut an income tax, it takes two, three quarters majority to raise it.

If we ever run into tough times.

And history says that these are cycles in that we will experience a real downturn at some point or I would like to think that we could do with the money is, yes, some form of rebate.

There's a lot of different avenues to go that way.

But it's the one time Arkansas can look at a big picture and and do something to benefit, not just for the next election a year away.

I don't know about Joe, but after a session where we cut taxes, I don't get a lot of calls when I come home saying, hey, thanks for cutting our taxes.

I think we need to look at something extraordinary for the state.

I would say take $250 million and put it into the trust and use that money, the interest income off that money to fund teacher salaries to fund teachers in rural areas.

Any school that has to employ waivers in order to meet certain criteria in education, put money into our two year schools to teach trades, whether it be whatever we decide.

That's the most important thing that we need to push our economic agenda forward, whether it's in robotics or welding or nursing.

You know, for about $180 million, we could make our two year schools tuition free.

Okay.

Well, Senator Ingram, you make a very good point.

And one of the things the governor spoke about was giving some of that money back to taxpayers.

When I hear that, I think I'm going to be getting a check in the mail.

So, Representative Jett, is, is that what we're talking about here, or is there a different dynamic Well, I think everything's on the table.

I think we're taking a look at some type of tax credit.

The rebate issue is a very complicated issue.

We're not sure that if any and actually implement that program, just a straight rebate.

And then you have some people does not pay income taxes, but they pay a lot of sales taxes, whatever ground, to make it back across the board.

So we're working through behind the scenes right now and all those dynamics.

But I would like to say you know, we still have three months to go on this fiscal fiscal year.

The billion dollar is not a slam dunk.

And then we already have $250 million of that earmarked for law enforcement that go on that 150 million going back to restrict the reserve fund by state statute.

And $50 million going to the highways.

And that $50 million going to the highways that goes to the federal government.

And the federal government in turn matches back to 200 million so that $200 million already earmarked.

So the billion is potentially $1,000,000,000 is maybe a little bit disingenuous when we tell the people of Arkansas that there's going to be $50 billion surplus that some of it has already been spent.

Well I will say this even if it's 750 million in surplus that that's still that's still sizable.

And I have to wonder though when you look at the big picture, you know we are where we are right now in inflation has hit Arkansans extremely hard.

So do we really need to spend this money or do we need to come together and figure out ways to spend it, or should we just save it and keep it for the next governor I think, you know, I think there's a bumpy path forward.

I think the stimulus money is going to stop.

It's been the first time since the pandemic hits were the U.S. economy has shrank in the first quarter.

So I think there's a bumpy path forward.

We have tax cuts on the books until 20, 25.

That's going to be implemented down to 4.9.

Right.

But I'm all for giving taxpayers money back if we can do it a responsible manner to where we can garner the process across the board.

But also, you know, there's other things that we can do.

We can actually informed a lot of the federal tax codes, if you will, right now, though.

So like depreciation schedules, farmers and businessmen, they use federal restrictions, go to jail for on the federal side and a different one based out we can form that on the cost.

$300 million on a front end to do that.

But it would all equal out over five or seven year period.

So there's a lot of things out there floating around that we can do to help the businesses and state parks or.

But I'm concerned right now that when the money starts flowing, the federal dollars won't.

I think that we have a bumpy path forward.

And I think this is you know, I think I don't see the horse get the horse, get out the arms.

Yeah.

I totally follow you on that.

Senator Ingram, do you agree with that?

Yeah, I agree with Joe.

I mean, we started this conversation.

Was it predicated that there would be $1,000,000,000 surplus now that would be on top of $1.2 billion?

That is in the catastrophic fund.

It's, you know, it's very important from a business aspect to make sure that we prepare for times that are going to be laid and as Joe said, we still have three months left in the in the year.

And I think that whatever comes out of there will be a push for, you know, tax cuts, some some short form, whether the governor calls us in for that or not.

But I think if we have the surplus, a combination of fiscally responsible cuts along with some big picture ideas that we've never had the opportunity to do, that Arkansas, that could make a difference for generations.

We should we should factor that into the mix as well.

So with that said, do you feel there is a need for a special session for you all to come together and decide what should be done with this extra, extra money?

I don't.

I mean, right now where I said, no, ma'am, I think we need to sit down and have just a clear path forward of what we're going to do is to have a special session.

And then we bring people in and then we start dealing with all the social issues.

People you know, we're in campaign season right now.

And I know it's hard to believe, but my colleagues sometimes they want to campaign, you know, on social issue bills.

And until we get, you know, a policy roadmap blueprint, whatever you want to call it mapped out, I would not be for it, but.

Okay.

Let's just let's just say, because we've talked about, you know, keeping keeping the money, not spending and keeping it for like a rainy day, if you will.

But let's just talk about some options.

If if if you guys were to come to together.

What about tax relief, broadband expansion and public school facilities?

And just so you know, we have about a minute left to discuss this.

Broadband is one thing that is universal.

It doesn't matter whether you're a Democrat or Republican.

I think that was a high priority for the legislature.

And certainly, you know, when I go drive by a community in another state, I always judge your school systems rightly or wrongly by the curb appeal and how their facilities look that sense.

You agree with that?

Yes, ma'am.

Yeah.

But typically, Keith and I would probably agree a little bit too much sometimes, I guess.

But I can't I can't I can't think of a better person to agree with but yes, I think you were saying that the senator said today, I'm totally in agreement with the end of the day, you know, we have issues out there and public education.

What would address some of this money and and to shore up our fiscal policy to help hardworking Arkansans?

It should be what our goal should be with it.

Well, I will tell you, a lot of people would say that it's great to see that, you know, that the state is doing so well especially in these tough economic times.

I believe we have run out of time.

But one of the things I will say, I love that the two of you agree.

It is nice to be able to see that, you know, it's something we don't always see.

So.

So thank you for that.

And I want to thank you both.

State Senator Ingram and state rep yet for joining me for this episode of Arkansas Week.

And I also want to thank you for joining us as well.

I'm Donna Terrell and I will see you next time on Arkansas Week.

Take care, everybody.

Support for Arkansas Week provided by the Arkansas Democrat-Gazette, The Arkansas Times and KUAR FM 89.