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Hello I'm Christina Munoz for Arkansas week.

The state legislature will be meeting in the weeks to come for a special session on how to spend the $1.6 billion surplus.

The largest general revenue the state has collected here to talk about what is and what is not on the upcoming agenda are House Speaker Matthew Shepard and Senate President Pro Tem Jimmy Hickey.

Thank you both for being here today.

Thanks for having us Christine.

Thank you absolutely very much.

Appreciate it.

I wanna start with you, a speaker Shepard a little bit about this surplus.

First, that's a large number.

Kind of how did we get here?

Obviously this is the fiscal year that closed on June 30th.

And so why are we kind of in this position with more than we expected?

Well, I think it's a combination of a lot of things.

I think between the legislative and legislature and the executive branch, we've been pretty conservative in our budgeting and then obviously the influx of a tremendous amount of federal monies over the past several years has LED us to the point where we did end up with a very significant.

Plus, and that's brought us to a position where we do have some options as to how do we spend those funds.

One thing that we've done historically in the past, we would have held on to those to surplus funds for the next year, and and ultimately that what is what became GIF funds.

We don't use that for GIF money anymore.

Over the past couple of years, we've gone ahead and tried to put surplus funds to use.

Whether it's in the catastrophic reserve fund or otherwise.

And so now we're looking as we approach a special session.

We've got some options.

As to how we spend those monies, very good, and so Senator Hickey, what does that say to you about our local economy?

Especially in the midst of coming off of a continuing pandemic?

As far as the all the federal money or all the surplus that we have, well, of course, that's a that's been created actually by a lot of that by the local economies, because, you know, as those federal funds have flowed through what they do is we call it churn.

They get out there in the economy, and they churn.

And what that does is that's increased the sales tax revenue.

You know, for the state that has come from, like the local level, be it you know somebody buying a TV, somebody buying an appliance, things of that nature.

Of course, we know that those funds are going to probably just be for a short term, of course, because a lot of that we know people had got in their mailbox a lot of the businesses had received additional money due to the COVID, so you know, we're we're.

We appreciate having it, but we're also guarding that, you know, from a cautious standpoint, absolutely.

So along those lines, go ahead and fill us in on these tax cuts.

This is something that was already approved already talked about, but the governor has said he wants to speed it up.

Because of we've got higher gas prices, inflation.

All the things that our Kansans are having to pay for right now, sure, and that's been a combination of discussion between the executive branch Governor Hutchinson, the House and the Senate.

The way that happens is we we kind of get behind closed doors and we discuss.

You know what we think the governor?

Of course, he has been very adamant.

You know that you know he thinks that we needed to provide some relief.

At one point, you know, we thought, well, do we send out checks?

We kind of.

Backed off of that.

Actually, Senator Dismang and representative Jet, just to name two.

They kind of come up with the idea that maybe we could accelerate.

As you said, the tax cuts that were already on the books.

So what we had done, we had.

We had already passed these tax cuts and they were going.

Coming in year over year out to 2026.

So what we're going to do is we're going to accelerate them, but also make make them make those retroactive back to January 1 of this year so that that benefit will be, you know, felt you know by the constituency and the patrons of the state of Arkansas, OK?

And so how will the average Arkansans see that money if it is retroactive?

Well, there's a.

There's a couple ways that the that Arkansas will see that first with regard to the individual income tax cuts that we passed back last year, was the largest tax cut in the history of the state.

And that was being phased in at the top rate was going to be phased in over several years because of our surplus.

We feel like we have the opportunity to move that cut forward.

We know what that estimated expense would be.

It's a.

It's a for a.

It's a set amount of money, and so with these one time funds, we feel like we can apply that towards this particular cut, but the the Arkansans will see it if they get a rate reduction at the top end then that could impact their withholding so they may see more money in their paycheck or ultimately when they go to file their state taxes next year that either decreases what they'll pay or potentially could lead to A to a refund and then the other piece of that Senator Dishman's talked about a a tax credit for those under I think.

27,000 again it would work in a similar way, although it would be, it would be non refundable, but it would still work to reduce ultimately the the amount owed by our Kansans, and so that's something that that they could see in their paycheck as they move forward, or ultimately when they go to file their taxes next spring, they'll get the benefit of that.

And it really seems to be wide support as far as getting this a pass improved something that will likely happen in that special session and will likely get passed.

Right, I would I think so.

I think that this has been a combination of a number of discussions over the last couple of months.

As Senator Hickey referenced, there have been some different ideas, but this is something that seems to have pretty strong consensus because we've already we had already taken a very close look at it when we made the initial cut last year.

Again, we know we'd already set that in place.

We know what that estimated expense is going to be, and one of the things I think it's important to remember on these particular cuts is while.

Just for purposes of legislating, we do attach a dollar figure to that.

The money is still that one time money is still sitting there, and so obviously we hope that that our economy will continue.

Will will, I guess, get stronger.

I mean, we're we're obviously dealing with the effects of inflation, but we do still have the benefit of having that money set aside and and sitting here while at the same time providing some relief to Arkansans.

I know that they're saying gas prices are going down a little bit.

Right now, so that's a little bit of good news.

There's a hope that that continues, but yes, to really help, the average Arkansan pay for all the things that have gone up between gas prices and inflation and etcetera, all of that.

So let's move to something that has not been agreed upon.

It doesn't seem, anyway, is teacher salary.

There was some hope at some point that this session would be used to increase that minimum teacher salary.

The governor has said that that's not going to happen any longer.

Explain kind of why that's the case.

Well, I'm going to say that there was never agreement to raise salaries, so I want to.

I want to be specific about that.

When I say an agreement with within the legislature and I say raise salaries during this special session.

As you probably heard, we we do a study where we have an adequacy study and and we.

We studied the what's what's needed, you know before each regular session, and that's what we're in the process of doing right now.

So from that standpoint, there was.

The governor had had kind of rolled that out the legislature, we'd said, well, you know from that standpoint, we're not looking to to get ahead of of where we're at, because actually, that should be done by November, which is right around the corner.

And then the regular sessions in January.

As early as this morning, though, what we have done, we had a committee meeting what we have also done.

There are these federal funds out there.

They're called Esser funds, and we've been studying those a lot and what those Esser funds are, is they're available for.

For retention bonuses to educators and actually the secretary of the Federal Department of Education had put out a letter where they expect those funds to be used.

We currently have we have, we have received the school districts Department of Ed.

They've received like 1.7 billion extra dollars for those funds, but some of the districts and the Department of Education State of Arkansas, you know, has not been giving them guidance on.

On how to use them.

So what we've done in a committee this morning is we actually have pulled back on that we've and we're going to ask the Department of Education to get with the educators over the state of Arkansas.

And we're going to come up with the, you know, provide a recommendation that we believe that those retention bonuses you know should be done.

That in no way says that we're looking for those to be used as a salary.

Just as a bonus, right now, because we are doing.

Our our study for the regular session right now to look at salaries.

Also, that's just that there's so much background and information that goes into a decision like this, not something you're going to get in a tweet or an.

It'll small amount of information.

So Speaker Shepard kind of explain a little bit how when you're talking about one time money, it's different when you're talking about a salary, because that is something that continues on.

I know that's been a little bit of part of this discussion.

Yeah, so the surplus that's been generated is one time money.

In other words, we that is not something that is forecast to be received.

Year after year, and so we have those funds available.

We've tried to utilize those and look at expenditures or or in the case of tax relief items that are finite, we set set amount that are not extending into the future.

And when we talk about salaries, that's an expense that obviously occurs year after year.

And as Senator Hickey mentioned, we already have an adequacy study that is ongoing that we expect to get.

Feedback later this year and that that is ultimately would be used in the next regular session.

Let me say this, but we all I'm not not aware of any member of legislature that does not think that teachers need to be paid more and and my wife is a public school teacher.

My mother's a retired public school teacher.

My grandmother's a retired public school teacher.

So this is important and it's something that each of US Senator Hickey served on the school board in Texarkana.

So this is an issue that is very important to us and it's very close to home.

Each one of us I have two kids still in the moderate public school, so I know what I know and I see that first hand and so we no one is is disputing that teachers don't deserve more?

It's just a question of how do we.

How do we go about looking at that and doing our due diligence and then working within the process that has been utilized year in and year out through the adequacy study?

But then to Senator Hickey's point with the federal money that's been provided?

And now we know that there's, I think 900 million that may still be out there.

Potentially that could be utilized for stipends and retention.

It seems that we should at least take a look at that and so you know, I think that it's a combination of all these things there.

It's something that the legislature takes very seriously and we want to do everything we can to try to provide for a quality education in Arkansas and try to take care of our teachers.

But it's it's an ongoing discussion.

I do think with these Esser funds that are out there that this may.

Provide an opportunity for us to work towards some type of retention bonus and then allow us to work towards the salary discussion as we move into the regular session.

I think what you shared is a great is a great message to get out there because it's not a disagreement if they don't deserve it or they don't need it.

And that's sometimes gets missed in the conversation and there seems to be this.

If they're anti teacher.

If they say no to this in special session it's more about the details, the timing, it's something that can be discussed later down the road and so along those lines.

What kind of impact does there's?

There's rallies being talked about.

There are signatures being gathered.

What kind of impact does that have on this process with regard to the special session?

Well, I think that any interaction we have with our constituents is is positive and we've received a number of emails.

I've had a number of conversations with folks, and I know that there's there's.

Different, you know, viewpoints on this issue and not unlike so many other issues that we take up, so it's always important to have that feedback.

And that's one of the things that I tell folks all the time is communication is one of the most important things about legislating, and whether it's communication between constituents and representatives or communication among the House members or with the Senate, it's it's an important aspect and so that feedback is important.

But I do think that we operate in an environment where.

Sometimes the discussion and the nuance and looking at these things and making sure that we are spending funds in the most appropriate way, and that when we have a number of different resources, I mean there's there's the surplus money there's.

There's quite a bit of money that's sitting at the Department of Education right now.

That's just adequacy funding.

And now we've?

We've located these esser funds.

There's there's money out there that we.

I think it's important we take our due diligence.

Look at that.

And then hopefully we can make a decision that's in the best interest of the state of Arkansas.

But again, nobody disputes that.

We need to do more for our teachers.

We need to do more when it comes to education.

And but we're going to continue to have that discussion.

And, you know, we'll see.

Will that where that leads us.

But, you know, long before there was ever a discussion about a pay raise, and that's been that came out what a month and a half ago.

This adequacy study was already ongoing.

The legislature was already looking at these things, and so we're just trying to work through that process.

But at the same time.

I do think with some of the developments of the last several days there, there may be some opportunity here in the near term too, which would be very good news.

And Senator Hickey, why do you think this has been so emotional?

Do you think it's the pandemic and this great resignation that we are part of right now?

In this concern that teachers are not only leaving but can't be competitive from one city to another when there's rural?

A lot of rural locations here in Arkansas, it really just seems to be an emotional debate going on.

Sure, it it does, and you know, and I think the speaker, he from the Senate side and.

From the house.

I don't know.

One Member, one member that's not a public school advocate.

You know, The thing is, is that.

There's all of this going on.

We had the COVID.

We understand what teachers are going through.

We also have to go through the school safety thing, which is also weighing weighing on their emotions and things like that.

We all sit here and understand that.

They're not paid enough for what they do.

You could go to that same old thing we always say they never could be, but it's one of those things that as far as salaries come.

I know that's going to be coming and you ask the speaker about you know people coming down there.

From our standpoint though, we have to look at everything from a macro standpoint also, so you know we've got law enforcement.

Whichever 1 supports we've got, first responders, we've got fire.

We've got, we've got all type of things that we do.

Plus the fiscal policy of the state of Arkansas.

So we have to provide that balance.

Social media.

Sometimes we'll.

Sling things in a in a way that's not exactly correct, and then we have to try to try to straighten it out and get that message out there.

That's a very good point, and there has been a lot on social media regarding this and you alluded to it there a little bit.

Let's talk about school safety.

There's been some talk that there will be some sort of money approved for school safety in Arkansas.

Governor ASA Hutchinson on that that is something that the legislature wants to do, but he he is out front for sure on that part.

The way that we're kind of looking at structuring it right now.

As with all things down there, there is ideals galore and with the special session we look to hold those to three days.

So and that's whenever you do that.

Debate and things like that that might normally take.

Two months behind the scenes we're not able to do So what we're looking to do is go ahead and providing like $50 million is the current number.

Is that what we're considering?

And we're going to park that in what's called one of our restricted reserve accounts, and then we have this large committee that's made-up of the House and the Senate called the Legislative Council.

Make sure that all the plans have been developed to make sure that we're taking full benefit of any federal money that might be available out there.

Make sure that that's vetted through the legislative process before we disperse those funds out, so we're looking to go ahead and fund it.

But to do our due diligence after the fact and like you were saying with the teacher salary as well, the committee that's been talking about school safety has been going on for a long time.

It didn't just appear because of the shooting in uvalda, but I think it just brought it to light and people again get emotional and.

Concerned about it and so talk a little bit about Speaker Shepard that what kind of things this could go to when it comes to that money when it comes to school safety, because again, this has been reviewed and talked about a long time.

It didn't just happen overnight.

Well, I think some of that remains to be seen.

I know there's a lot of different ideas and and if you talk to different districts and superintendents, there's probably varying ideas from one district to another, and each district has maybe different needs in that regard.

I think that one of the things that's going to be probably important.

This week's work through that issue will be what are?

What is the recommendation of the task force that's been working on this?

I think they're set to provide a report in the next few weeks, and so I that's something that obviously we'd look at, but I would also say that there's there's.

I know there's several legislators that have really taken a specific interest in this and have been working on this for some time, and so you know, I think we'll work through those things.

We'll see, you know, if I think there'll be some consensus to get an appropriation, but that may be something that's that's more or less worked out when we get to Legislative council.

And that could depend on the task force.

It could depend on the individual school needs, so a few more topics, and we want to cover before we wrap up here today.

And so we've talked a lot about the overturning of Roe versus Wade and what that meant in Arkansas and the trigger law that then became into effect once signed by the Attorney General.

And so there has been.

There had been some talk about there.

Getting some sort of discussion in special session, especially with regard to rape and cases of incest about trying to get that changed right away.

What is your take and feel and whether or not that will be discussed in this well?

I know that there had been some talk, I think that some folks had had, you know, asked the governor to put that on the call.

At this point, it doesn't appear that that's going to be part of the call, and I could also say that from a legislative standpoint that's I don't know that there I don't.

It's not something that I've had members come to me.

Asking to, you know request to put on the call so you know it remains to be seen.

At this point it doesn't look like that's going to be on the call.

But you know, ultimately, we'll we'll see where that ends up as we approach the special session and same question to you, Senator Hickey.

Has that been something that the Senate has discussed at all?

Well, I think it goes back to the three day special session.

It's one of those issues that I don't believe that it could be debated in a in a three day session.

And The thing is, is I I've not heard that it's going to be put on the call really would not anticipate that to happen.

And then if a member tries to bring it up, it is it is.

Good, go ahead and note.

If we do bring it up.

If I remember correctly, we opened the whole session up for 15 days, which is something that the speaker and myself and others guard against because sometime at that point you know there's all could be all type of legislation that should wait until the regular session.

Absolutely.

Is there anything else that we do know for sure that will be on that I haven't touched on yet?

Is it all still not set in stone?

Of course, it's always at the at the governor's prerogative when we have to give him full due with that it's a win to call it and what he puts on the call is is his decision.

At this point you know the governor has told me that as far as the salaries that we've talked about for the teachers out there, that that will not be on the call.

Trust that that will not, you know, based on what he's told me.

So other than the other than the tax cuts and the school safety, that's all that I know about the Esser funds that we've talked about as far as the.

Teacher bonuses, that is something that we can do in that committee and are going to do in that committee to try to get that steered the correct way.

Couple other things.

I want to touch on with regard to farming in Arkansas and the struggles that they've been going through and we are in the midst of an incredible heat wave going on and not looking like any relief insight at the moment.

What kind of things can you do and what kind of things Senator Hickey could be done to help Arkansas farmers?

Well, I I had the first Member of this morning kind of bring that up.

I say that I had another one the other day.

I mean, it's it's just hard to say.

We're just kind of getting into the thought and the detail.

You know that would go along with that.

Of course I come from a farm family and I understand those struggles that are out there, so that's that's one of those things that I won't have a lot of comment on.

We'll just have to kind of watch and see what happens, and those discussions will just have to begin taking place right now.

To you with regard to Arkansas farmers, yeah, and I think I believe I saw the other day.

The governor made a request for a Federal Emergency declaration and then one of the other things that we've talked about that would looks to be part of the tax relief packages.

There is a bill that we potentially would run that would provides for some conformity with between state and federal tax law when it comes to depreciation, which my understanding is that that's something that could be very significant in terms of providing some.

Some benefit to our our farmers, particularly over in East Arkansas.

It's something that's essentially a wash over five or six years in terms of the expense to the state.

So, like Senator Hickey, you know it's something that that we're monitoring, but so much of that, particularly, the relief has to be provided at the federal level.

So moving past the special session that is coming up, what do you see the session looking like this year?

And what do you see as some of the hot topics that will be discussed then?

Well.

You know, I think that one of the things that that regardless of the discussion of teacher pay, I think education is something that will undoubtedly have a lot of attention.

Whether it comes to teacher pay or other things that we can do to hopefully enhance the education that we provide here in the state of Arkansas, I think that you'll likely see discussion when it comes to tax policy.

That's something.

That's that's, you know, seems to be always out.

There has always been a discussion, but.

You know one of the things as serving as speaker for four years.

One of the things that I've I've also come to realize is that there's probably many other issues that aren't readily apparent right now that that could end up taking center stage by the time we get to January, and I think that for me as speaker, one of the things that's that's of particular importance is that this will be our first regular session since the COVID outbreak.

You know, two years ago or a year and a half ago on a regular session.

Is a very different environment in terms of interaction with Members.

How we operated the the links we went to provide for a safe environment for not just ourselves but for lobbyist for the public, for our staff and with when we convened.

It was really at the height of the COVID pandemic.

If you go back and look at the numbers really at the height, I'm very proud of how we operated.

But it also I think it had an effect on the legislative process.

You just didn't get to have that kind of.

Interaction that normally you would have and so one of the things that's important for me is hopefully to get back to set the set the right tone that hopefully we can maybe get beyond some of the things that sometimes will divide us and really come together and work in the best interest of the people of Arkansas.

OK. And Senator Hickey, same question over to you.

What do you hope is for sure discussed in that regular session?

Well, I mean of course, along with what the speaker said.

I mean, I'm going to go back and say fully expect that with our adequacy study.

The teacher.

Alright, that that will be looked at and addressed.

Of course there's multiple other issues and with us having this surplus, you know that's there.

You know.

As time goes along we can kind of make sure our forecast or the correct way you know there's been discussions.

And as you know, we've probably parked.

We have part money in a restricted reserve account, you know, for to look at one of our prisons to do that.

There's also talk out there about expanding the state crime lab to make sure that.

You know all that?

They have everything that they need.

You know that will help in maintaining the.

The way that you know our citizens want everything with the safety aspect of it.

So things of that nature.

But other than that, I figure it'll just be a standard standard type session.

Well, one thing's for sure, never a dull moment in the realm of public service, so we want to say thank you to both of you for sharing your time with us today.

Thanks for having us.

Thank you ma'am.

We very much appreciate it and we thank you for joining us and we will see you next week.

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The Arkansas Times and KUARFM 89.