Support for Arkansas Week provided by the Arkansas Democrat-Gazette, the Arkansas Times and Little Rock Public Radio.

And hello again, everyone, and thanks very much for being with us.

The governor and the Arkansas Board of Correction, a showdown, state revenue, a wee bit of a slowdown and a demand that a crypto mines noise be turned down.

It's our first edition of a New Year.

And welcome to it.

And joining us for those stories and more, Josie Leonora of Little Rock Public Radio, independent journalist Steve Bronner and Dr. Jeremy Halford, all of the UK economics department.

And thanks to everybody for coming in.

Josie, we'll go to you first.

You were in court yesterday on one.

Would we be overstating this to say it's a constitutional crisis that may be a little bit overheated in terms of state government?

It was a debate about the Constitution, but in the main, it was a pretty technical legal discussion that happened throughout the day.

On one side, you have lawyers for the governor, and then on the other side you have lawyers for the Department of Correction or the Board of Corrections.

And they're simply saying that they can't add the prison beds that the governor wants for safety reasons.

So the conversation sort of focused on safety and sort of the constitutionality of the governor trying to influence things going on on the board.

Yeah.

And whereas this thing now is just pending.

No, the judge actually agreed with the board of corrections.

She has said in the past that she felt that there are security issues and safety issues at the prisons when it comes to adding more beds.

And on top of that, she agreed with them and felt like they had won the merits of their case and that constitutionally, the Board of Corrections should be allowed to govern themselves.

So that's it for now.

That's it, you know.

Joe poor Furey, who used to be on the Board of Corrections, is not allowed to go back to work.

He's been suspended.

Yes.

One of the most interesting parts of the case was when we learned that Joe Pro Ferry tried to add prison beds without the Board of Corrections knowledge.

He took one of the gyms at the Malvern Prison and just put 70 beds there, apparently, which, you know, according to Bernie Magnus, who's the chairman of the Board of Corrections, prisoners neither rec time.

So that really interfered with that.

And then he just decided to add the beds on his own accord.

And so that was kind of an interesting plot twist.

But in the main, the debate was really just about the legality of the Constitution and how it related to the prison beds and who gets to control the board.

This is the end of it for now.

No, because the attorney general wants to appeal the case.

And so we'll have to see what happens next.

Now, state, that's been going on for weeks now.

It's been gone for weeks.

It all started when with a back and forth between the Board of Corrections and the governor.

Water crisis being led by Vinnie Magnus, a Governor Huckabee appointee who is now at war with Sanders here.

And in fact, it goes back actually in 67 years going back to Orval Faubus, wanted to get rid of J. William Fulbright as the University of Arkansas president.

And so he basically replaced all the board members to UVA to try to get Fulbright out.

And in the process, basically, the voters gave the power over these different appointments to the boards, board of corrections and other thing other they said.

And in fact, there's numerous situations where gaming fish, how a department they're led by commissions where the governor might appoint the commissioners, but then the governor is out.

But the governor does have the power of the purse and the power of of the bully pulpit.

And and and she can use it and she has used it to try to get this to get this get her way on this one.

Well, we have a legislative session coming up.

So in terms of nobody disputes the fact that inmates are backed up in county jails, Well, what's new?

I mean, that's been an issue for 40 years or longer.

So what are we going to do about it?

Well, you know, the legislature passed the governor's prison reform package, which included building a lot of prison space and throwing more people in jail and keeping them there.

It was a major a major security piece of legislation.

But we still don't have the prisons built and we still don't have guards and we don't have the ability to make sure that these places are safe.

And that was the argument that Bernie Magnus, the Board of Correction chair, made, was that we I'm not just worried about the safety of the outside public.

I'm also worried about the safety of my guards and and the inmates.

And so right now, we don't have that ability.

This is not these not are not located necessarily in the most desirable places to attract talent.

So we have we have lots of issues here.

But so I guess then the next in the fiscal session, you know, we can throw some more money at it.

We can raise guards pay, we can we can take steps so that we will take something in addition to this constitutional crisis.

Because what happened was there was a two bills passed that basically attempted to override the Constitution and put the governor in charge of the prisons.

And right now, you know, there's still the cost to it.

The Constitution still trumps the law.

Should the governor.

Josie.

Steve, everybody should the governor not get the relief she's wanting at the appellate level?

It would seem there's no other choice if she to do what she wants to do.

And that's to go to the session and in the new well in this year now and get some more money.

Yeah.

And I felt like one of the big unsaid conversations going on during the hearing was how do we get more people to be prison guards?

There had been a suicide at one of the prisons and the prisoner was left alone for an hour and a half in seclusion because there wasn't enough guards to go and check on him.

And I don't know how you fix that problem of wanting more people to be prison guards.

I think that's probably a pretty tough job.

And so that was one.

The big things they brought up over and over again is, you know, we can't just put these beds in the gym because you don't have enough people to staff the beds in the gym.

Well, staffing has been again, and this year, just as much as overcrowding has been moving on a proposed amendment to the Arkansas Constitution regarding abortion, Steve is kicked back again.

The attorney general who has to approve the language on that has said no again.

Yes, but he said it was close.

The Arkansas abortion amendment, that's his new name based on John Griffin's recommendations, it would basically make abortions legal up to 18 weeks, even longer, if it's in case of rape or incest or if the mother's physical health is in danger.

The original amendment had health and that is a broad term.

And Griffin said so and said that's that's too broad a term.

So the supporters of the amendment came back with and they they changed the name.

They did basically everything he asked them to do except on health.

And I defined health as physical, not mental, not not emotional, best physical.

But if you look at the way the the the the term is defined, it actually sounds like they're saying that bad health is good health.

I mean, it is an odd.

It is a typographical error.

At least that's Griffin's argument.

And if so, quite surprising that that mistake would be made.

But he's kicked it back to them that I think they'll need to redefine what health means, as in terms of this is this is what bad health is.

We don't want bad health.

This is good health.

And now after that happens, if they've done that and they will have satisfied his requirements and if he passes it on that, they can start collecting signatures.

Yeah.

Josie.

It's interesting because the Arkansas poll comes out every year and they look at people's public opinions on abortion.

And in Arkansas it is somewhat split, but we're also consistently ranked to be one of the most pro-life states.

So this is a Constitution amendment.

You'll need 90,000 signatures from all across the state.

You know, even if the attorney general does approve it, it's hard to imagine that is such a conservative pro-life state like Arkansas.

People are going to sign off to put this bill on on the ballot.

Yeah.

Yeah.

And the Arkansas poll, only 38% wanted to make it easier for women to obtain abortions, 25% wanted no change and 10% want to make it harder for women to get abortions.

So that clear majority would not make it easier to get abortions, which is what this amendment would do.

Well, correct me if I'm wrong, but in the same survey, there was also a significant majority for at least a majority for exceptions for rape and incest.

And if you're.

I'm sure you're right.

Sure.

I think in the Arkansas poll that did reflect we'll go on anyway.

Revenue and tax.

Jeremy Hospital all the state continues to do well although we exceeded expectations in the last revenue report last month of collections although it was a bit lower than the year previous.

Right.

We've been continuing to see that that same refrain over the past few months this year that the revenue is coming in above the forecast, which is what the budget is based on, but still less than last year.

And that's mostly showing up on the income tax side.

Sales taxes are higher, sales tax collections are higher than they were a year ago.

So there's a number of things going into that.

One is the tax cuts which have been phasing in.

Another is the fact that we had so much inflation over the past two years that raised income and prices.

And then now we're seeing the inflation adjustments kick in to the tax brackets.

So that factor to that is is lowering collections right now a little bit.

But still, this is much more than the legislature made their budget based on the forecast.

And so so that's kind of what really matters in terms of budgetary matters.

Looking to the broader economy, though, the numbers would seem to suggest that if Arkansas is in fact a piece of the United States where we're headed for a soft landing, the numbers are pretty good.

The latest numbers, anyway, are better than what a lot of people projected.

Right.

We've got the latest numbers this week on the national unemployment rate.

It's it's still below 4%.

It's been below four, 4% for two years now.

That's that's highly unusual.

Arkansas is even lower, although our unemployment rate in Arkansas has ticked up a bit from the summer.

But still, those sub 4% numbers are historically low.

What we're seeing now, you know, if we look at the broader indicators, inflation continues to slow down, but still not where quite where the Fed wants it to be.

But I think the Fed has been saying it's on the right trajectory now or we don't need to do anything more.

At least we'll wait and see.

GDP growth has been looking good.

Of course, we're up 5% in the third quarter.

The fourth quarter numbers aren't out yet, but they're looking like they'll be two or 3%.

That feeds into that revenue report.

That revenue report is based on the budget forecast, assuming we'll only get 1% growth of GDP.

It's been five now, maybe 3%.

That's that's where you're seeing revenue coming above forecast because the economy is doing much better than people thought it would do when forecasts like this were made, which was back last spring.

Interesting, though, these numbers are mostly positive, including mortgage money, too.

That's right.

Those rates have started to come down a little bit even before the Fed to start cutting rates, perhaps in anticipation of the Fed cutting rates.

But, you know, all those indicators are looking good, including big things, people that like the price of gasoline.

Nationally, we're getting close to a $3 per gallon average and Arkansas is well below that.

These are these are all good numbers yet, I think is, as we've talked about before and as Lenore and I have talked about on the radio before, people are still pessimistic about the economy despite kind of all this good news.

Well, play psychologist a little bit.

Consumer confidence is just not Walker where the numbers suggest it ought to be.

And that's what is political implications.

I have friends that are a psychologist, so I'll leave that to them.

But, you know, I will say that the consumer confidence numbers have started to come back in the past couple of months.

So they were really low.

You know, a year and a half ago.

They were still pretty low a couple of months ago.

But the November and December numbers are starting to come up.

So perhaps people are starting to see, well, my pay is going up.

Price prices are either slowing or starting to go down like gas prices are down compared to what they were a year ago.

Eggs way down from where they were a year ago.

Those are those are just small parts of the overall basket.

But there are things that people focus on.

So perhaps people's optimism over the next year will continue to improve as it has over the past few months.

Yeah, I think around the corner it was a bit under two and a half per gallon, you know, which is, yeah, you know, that's not that not bad compared to almost four.

Steve Bronner, we've got a session coming up and you've got a General Assembly is going to have to factor in tax cuts, the state of the economy, everything, and plus whatever the governor wants.

Well, they will they will cut taxes if they can.

If they if there's any kind of agreement at all about this time, I don't know.

But it's coming because the governor has said that she wants to phase down the income tax to nothing responsibly.

And she's always said that for four years now she has said that that's our plan to do it responsibly.

She's never said we're going to slash the income tax regardless of what happens.

And we don't want to follow the example of Kansas which did that and it illogical times.

We're going to cut taxes because, of course, revenues will go up.

Well, I didn't go up and Kansas had to significantly cut its services, education, other things.

And so Arkansas has moved slowly and responsibly to cut income taxes.

But as long as there are these surpluses and as long as we keep getting money from the federal government like we are, yes, income taxes cuts will continue.

Well, can that federal spigot be expected to continue, though.

And till it.

Depends what happens in November.

Maybe until it can't, though, there's no incentive for it to completely be shut off because politicians aren't penalized for fiscal responsibility.

But so at some point it will stop because what cannot continue forever will stop.

Yeah, but when it happens politically, the incentive is to keep is to keep the spigot.

Gillick And that's what, that's what we've seen for the past really well past 200 years, but especially for the past 25.

Geremek business, consumers, everybody and you mentioned it earlier, the Fed is taking a wait and see, at least for the time being.

That's right.

Interest rates so crucial to business and.

Right that they definitely said no more raising of rates for the for the meantime because they think they've probably done enough to to slow down the rate of of inflation.

You know I think I would agree with Steve on the tax cuts that there's probably going be something else coming on soon.

The big reason is not only is there a lot of political appetite for it, but all the tax cuts that have been passed are now phased in for the past few years have been, well, this one's phasing in, this one's going to drop.

They're all phased in now.

There's nothing new coming in.

So starting January one this year, the top personal income tax rate went down to 4.4%.

So there's nothing more that'll come unless they pass some new laws.

So that's, I think, going to make possibly they'll talk about the fiscal session, but that's usually a big change or something they leave to a special session or the next full session.

But I think that, you know, people will start seeing this a little bit in their paychecks with with the cuts.

But one thing that people will probably notice as they're filing their taxes is last year there was passed a $150 tax credit for for most people under $90,000 of income.

And the people haven't got that yet.

They didn't put into the table.

So you'll actually get that when you file your taxes.

There's a specific line on the form.

You'll see where most people will be getting that in addition to the the rates that are a little bit lower than last year.

Would you expect to see the consumer savings on income tax, state income tax continue to maintain retail spending?

Will that show up in retail, do you think?

It will to some extent, I think, you know, that's probably not a big enough number where people are going to go out and buy something with 150 bucks.

But I think, you know, people will feel that along with their paychecks being a little bit bigger and people have been paying down debt during the pandemic.

So I think a lot of it will probably go more likely to spending than to paying down debt.

Yeah.

As an economist, what are you looking for in the next in this quarter?

I mean, looking to see if the labor market continues to be as hot as it has been.

I mean, when we talk about things with the you know, with the present situation, I mean, I'm sure it's always hard to hire prison guards.

It's especially hard right now because the labor market so tight because you have to increase pay.

And for state government and for for universities, it's been really hard with their budget constraint to increase pay, which makes it harder for them to compete with the private sector where wages are going up a lot.

So, you know, that's what I look for.

You know that that's of course, tough for employers.

It's tough for it's tough for the Board of Corrections, but it's great for worker's rights of if workers pay keeps going up, worker pay on average is up over 4% in the past year.

That's much more than inflation was in the past year.

If that continues to show that relationship and those those are all good signs to me.

Okay.

On to another issue, and that is the relatively new enterprise of crypto mining.

And it has became a very real issue legally and politically.

So first of all, crypto mines are just giant supercomputers that are designed to mine for crypto and they take up large amounts of space.

And in order to keep them cold, you have to use fans and these fans like loud, high pitched noises.

It sounds like some like Philip Glass opera.

It's just constant high pitched whining sound and they're often built these real areas.

So a crypto mine was built by the company New RES LLC, and it was built on the border of Damascus and Greenbrier in the Bono community area.

And the neighbors are all complaining.

You have Gladys Anderson, who lives in.

Faulkner County.

And you have Gladys Anderson, who is right next to the crypto mine.

And I've been to her, I've been in her house, I've been near her house, and you can hear it pretty loudly.

It sounds like this conversation noise just right next to house.

And sometimes it gets as loud as it's 290 decibels and that's the sound of a hairdryer.

So she's hearing this constant high pitched noise just in her house.

She says she can't barbecue.

Her son has autism.

And she says it makes it really difficult for him to be able to live his life or go outside.

And then just all the neighboring houses are all complaining.

There's a lot of cows in that area and there's a lot of gardening and farming that goes on near this crypto mine.

So you have one man in his complaint to the court who talked about how he loved to hear the cows mooing during the day and he can't just sit on his porch anymore because the sound is so loud and people talk about how they can't go out and garden like they used to, and they can't just sit on the porch and have a conversation with their wife like they used to because the sound is so loud.

So currently they're suing right now.

They want both punitive damages and they just want to raise LLC to stop.

And we need to mention that we are preparing this broadcast at midmorning on Friday.

There's some litigation to be heard today.

Yes.

It's just one of the preliminary hearings.

They're asking for a jury trial.

What's interesting is they're also asking that the jury be brought to the crypto mines, which, you know, that'll be interesting to see because those mines are really loud.

And once the jury hears that and imagines what that would be like to live next to, I'm curious to see what their reaction would be.

Yeah, this involves some legislation in the past year or so.

It got passed in the past session that made it easier for this to happen and it's growing.

And there is some concern even among school districts, it's not a huge issue.

They've had plenty else to worry about in the past few years, but it's growing and concern about what it might do to property values and ultimately property taxes.

What do you where's this going, Jose?

I mean, crypto mining is obviously with us in this kind of high tech stuff, which involves a lot of heat and also a lot of electricity.

What's interesting, first of all, some crypto mines and.

Not to mention the noise.

Yeah, definitely.

Some crypto miners have opted to use liquid coolant, which that cuts back on the fan noise and isn't as much of a problem.

What's interesting is that law that passed in legislature, it passed with almost no controversy or no discussion, and it was almost passed unanimously and the law was basically just deregulating crypto mines.

I think people just didn't know as much about crypto mines as we now know.

And so after it's been passed, there's been a poll like Senator Brian King from Northwest Arkansas is pushing to have a special session to repeal it.

The big one of the big argument you hear for crypto mines is that they create jobs.

They carried about three or four jobs per crypto mine.

The one that they canceled in Vilonia was going to outsource all those jobs from Little Rock.

So that's kind of the one.

The one big argument for is that it creates jobs.

Go to the company side of this.

The companies side of this.

I talked to the guy who created crypto mining.

He called me fake news and over the phone.

So I don't know exactly, but they are being represented by.

Right.

Lindsey Jennings, the law firm.

And they say that basically this is an unprecedented lawsuit and that it should be thrown out.

Well, not anymore.

It's not steep.

Yeah, I've just been covering it, so I've got nothing to add to that.

What do you see a long is there a long term solution?

Is the solution going to be technology?

I mean, you've been covering this for a while.

I don't know exactly where it's going to go.

What's interesting to me is it seems there's almost this universal unpopularity of crypto minds when they tried to build that one of the lone year, the entire not the entire town, but a lot of members of the town came out and they asked the city, the city board, please, please do not build this crypto mine.

And they decided not to.

It it was it was pretty universal.

There was nobody standing there to support the mine.

There was one crypto mining professional who came and he said that he felt like if they used liquid coolant it wouldn't be such of a controversy.

And that was kind of the only argument I saw for it.

But there's just been a huge backlash to communities that are building these crypto lines.

Yeah, and we should mention, you know, that this this sort of controversy is not involved in crypto mining.

It's not unique to Faulkner County.

It's not unique to Arkansas.

This has happened elsewhere across the country.

There's one in DeWitt, there's one in northwest Arkansas.

And yeah, and hypothetically, they could keep building.

These are banned in China.

So it's one of those things where it's like, I think all these companies are starting to come to Arkansas and start building these crypto mines because they need a place to build them.

All right.

Steve, I think I can point to one thing is that the legislature considers 2000 bills a little bit less this time.

This was a slower session but didn't like that in her this past session.

But 2000 bills often in three months time and ends up passing more than a thousand of them, generally speaking.

And so this is another this turns out to have been a major change in Arkansas life that was barely considered and passed through very quickly.

If we have that on the session, if we have agenda and of course, planning for the sessions already well underway.

But if we have that on the agenda, if we have possibly some more tax legislation on the agenda, what else are we looking for.

In the fiscal?

Yeah, I would think the fiscal would be focused on fiscal policy, would be, you know, it'll be lighter because of the of the Super Tuesday primary.

It will be getting into the election season.

We'll be focused on on the on the presidential election will be focused on on the amendments that are going to be numerous and important.

And I think and there are people who are focused on their own races.

And so I think that that will be the fiscal session will be about fiscal matters.

Mostly, I would think, unless we have to come back and try to kind of tweak the Learning Act or something like that.

But I haven't seen anything to it.

But there could there could be the fiscal session has tended to grow a little bit since it was created, but surely you would think that mostly it would be about fiscal matters.

And until we get to the General Assembly next.

No overriding pressure to put in substantive matters as opposed to fiscal.

I haven't heard anything but fly learn is anything can come up is you know the things that that Arkansans are reacting to with these proposed amendments would indicate that, you know, perhaps the legislature would want to play some defense or some, you know, some, you know, preliminary offense.

But at this point, you know, fiscal sessions are generally about fiscal matters.

You mentioned the election, and we had an endorsement this week.

The junior senator from Arkansas made known his preference.

I don't think, Steve, it was a great surprise.

It was not it was noteworthy, Senator Cotton, in analysis, endorsement of President Trump.

He is the 19th senator to do this.

There is some momentum growing, obviously, there's some falling in line happening in Washington.

Many, many representatives have done it.

You just see a lot of Republicans looking at the polls and thinking that are get in line here before it's too late.

Same time, no other member of Arkansas, this congressional delegation has done it yet.

Senator Cotton was, you know, I think it's fair to say, was aware of the political situation and and we'll see what happens.

The other members of delegation will have an incentive to to support him if he is if it continues this huge lead that he has.

Trump is up 60% in the Real Clear Politics average.

Haley was 11% and the Sanders was getting 10.9%.

So and this is Trump's election to lose at this point, and there is an incentive for elected officials to endorse him.

Now, we should mention that he is still an active candidate and our former governor, he's somewhere down there in the polls.

Politico had a really interesting article about, you know, he's basically going down and her daughter is walking up to tables of two and asking, this is a gun rights.

Hutchinson asking him to force vote for their vote from airport to airport.

He's going to come in fourth in Iowa.

And basically he has his strategy is if I just hang around and everybody else quits and President Trump is convicted of something, maybe I'm hit and you can't win if you don't play well.

So he's playing.

All right.

We've got to end it there because our plays done for the day.

Joe, say Steve and Jeremy, thanks for coming in as always.

We thank you for watching and we'll see you next week.

Support for Arkansas Week provided by the Arkansas Democrat-Gazette, The Arkansas Times and Little Rock Public Radio.