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

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

As always, Arkansas would seem to be on its way to another record state treasury surplus.

But with interest rates soaring, retail prices rising and threats of a recession, can the good news continue?

And how will Arkansas consumers and businesses weather any storms?

More on that a bit later in the broadcast.

But first, what it's advocates describe as a major step forward for health care in Arkansas to include a specialty, but not exclusively rural Arkansas.

The Biden administration has approved an expansion of our state's Medicaid expansion plan.

It's an initiative that targets especially vulnerable citizen subsets, problematic pregnancies, for example, low income mothers and infants, individuals leaving foster care or the juvenile justice system to name but a few.

The announcement came from Governor Hutchinson.

Today I'm announcing that our amendment for life 360 homes has been approved by CMA s and the Biden administration.

This is something that we have worked very hard on.

Secretary wide and his team has worked diligently to get this through cma us to get this approval for this amendment because we know that will make a great difference for very vulnerable populations in Arkansas program.

Once again, live 360 homes.

Here with more on it, Secretary Mark Wyatt of the Arkansas Department of Human Services and Senator Missy Irvin of Mountain View with a seat on the Insurance and Commerce Committee, among others.

Thank you both for coming in.

Mr. Secretary, may we begin with you.

What's new?

What will this initiative do that we are not already doing under a medicaid expansion?

Certainly.

So when the governor outlined the what became the Our Home program, which is also referred to as Arkansas Health and Opportunity for me, one of the focuses we wanted to have was to ensure that not only are we providing health coverage for Arkansans, but they're were receiving good outcomes from that health coverage.

And so, of course, we've continued the work of providing coverage through qualified health plans in the first part of our home that was approved last year.

This latest round will allow us to use Medicaid dollars to provide some additional services, particularly care coordination services for vulnerable populations.

And so that includes the top of my list is maternal and infant health will be able to provide intensive care coordination for mothers who have high risk pregnancies in the hopes of reducing the chance of complication and reducing the number of children who have to admit had to be admitted to neonatal accuse.

As the program is designed, as it's intended to function is the word.

The word that comes to my mind anyway, is proactive, that the state is becoming a senator a bit more proactive than it was.

Is that fair?

I think that's a fair assessment of the program.

And the life of 360 homes is really about being more intentional and focused around the population that we serve and making sure that government is working effectively and moving the needle so that this can be a game changer for the state of Arkansas, but really for these citizens so that they can be helped to the maximum ability that we have within our grasp, whether that be federal assistance or state assistance, and a combination and a focusing of all those efforts into a home that they will be assigned to if it's a maternal life.

360 home, obviously that is for you're expecting mothers to make sure that they have a successful pregnancy so that we're not facing a pre-term, premature preterm labor situation where the baby would perhaps have to stay in a Nakuru unit, which is costly.

But but it's also not good for that baby's start in life.

And so it's really about making sure that these mothers and these babies have the most successful opportunity in front of them.

And how do we coordinate our services to ensure that that happens?

Prenatal visits, making sure that they have good vitamin care and understand nutrition and understand how important it is to really take care of that baby while that baby's growing in your womb, you know, before your pregnancy.

What was missing before this initiative began?

I mean, why couldn't we do that?

What what will this enable us to do?

How will it enable us to do something that we couldn't do before?

Well, I think and I think digging into the data and seeing who was actually participating in the Medicaid expansion program helped us really design these life360 homes around that population that we're serving.

So we know that there are maternal patients that are that are expecting mothers that are served in the Medicaid expansion program.

We know that there are veterans.

We know that there is a majority of rural Arkansans that participate in this program.

So it's really designing the program around who already participates and looking at the data and making it a more effective use of this program for them.

And that it's not just health care, it's just not insurance coverage, but it's actually a health care program.

And that has accountability to it.

And so that we're not just purchasing coverage for people, but we're actually trying to make outcomes be healthier and more successful for people.

Mr. Secretary.

Yes, and this was particularly that points to what's particularly innovative about this program.

Before now, what CMS has approved is using these Medicaid dollars for that coverage for those direct medical services.

This goes beyond that provide this additional care coordination services to help be in the homes, to help connect these people to services and not just to medical services.

Because we also know that other issues, what we call social determinants of health, those have a key impact on those health outcomes.

And this will enable us to take these individuals, connect them to resources in their community, and, again, help encourage those good health outcomes.

The much of the Medicaid dollar, as is is already expended in terms of of at risk or prenatal care pre and I guess neonatal care as well.

Can you expand on that for just a second?

We are talking about an enormous share of the Medicaid dollars, are we not?

It's we spent an enormous amount of funding each year on providing for some of these vulnerable populations.

You know, just one infant in a neonatal ICU can cost the state in the Medicaid program.

Hundreds of thousands of dollars.

I've seen cases where the costs exceeded $1,000,000.

So for every one of those cases that we can help avoid and prevent.

Of course, it's a fiscal benefit to the state, but it's also a very real human benefit to that family.

Well, and you were.

Slightly and that's what we're supposed to be about.

We're supposed to be effective with taxpayers dollars.

We're supposed to be accountable for those dollars.

And so we need to be intentional about our program and about our policy.

And that's what we're doing.

We're being intentional about it.

We're trying to move the needle.

We're trying to prevent a premature baby.

We're trying to prevent infant mortality.

We're trying to prevent maternal mortality.

Those are good things that we need to be working towards, and that's going to make a healthier, happier baby mom and citizen for our state.

And and and it goes beyond that with the success three live, 360 Home and the Rule Live.

360 home this is a rural health initiative because Arkansas as a rural state and this prioritizes rural health care in our state, which is absolutely the right thing to do.

We have concentrated thus far in this conversation anyway on pre and neo natal care, but there are other aspects to the new initiative as well.

There are.

Yes, there is the success lot through 60 homes, which is designed around our urban hospitals to help reach out to younger populations.

That particularly needs particularly if they have issues with significant mental illness or substance abuse disorder.

But we also have the rural lot for 60 homes and that's one another one in particular excited about because this will help build our capacity in rural areas to address mental health crisis, because that in too many parts of our state, when you have someone who has an episode of psychosis is they have some other issue that arises that puts them in crisis.

The resources are not there and this will help create those resources.

How do you anticipate or how do you see the program delivering on that?

What was the establishment of new regional centers?

Well, it'll be.

Through those hospitals in those local areas, which will help help strengthen that existing health care infrastructure in those areas, work through the hospitals, provide care coordination, and also to pay those hospitals to use beds for acute crisis units.

So they have that capacity there.

It's the senator notes that much of the program anyway, is almost by definition, if not specifically so, targeted at rural Arkansas, but not exclusively and also not exclusively.

I mean, like the success life 360 home, you have so many kids that are coming out of foster care and they really are vulnerable population that needs assistance.

They need help with their health care and navigating the insurance coverage world and the medical world.

And so and they have particular issues and problems because of their experience in their lives.

And so it's again, you know, that's that is a that's a population that's going to be all over the state, not just in rural Arkansas.

But I think it goes also back to utilizing our existing infrastructure.

And that's that is a smart thing to do.

We're not building new facilities.

We're not we're maximizing our current infrastructure wherever it's located, whether that's Monticello, whether that's in Salem, Arkansas, or Clinton or Heber Springs or Gravett.

I mean, we're able to really reach into all parts of the state of Arkansas using this program as effectively as possible, but supporting them in our efforts as well.

It's a partnership.

And that's what's so exciting about it is it's a smart policy because we're utilizing our existing infrastructure with our health care hospitals, our rural hospitals, and and that's going to help your rural economy services.

In other words, services instead of capital expenditures necessarily.

But that's right.

That's right.

That's right.

The politically, it's got to be expensive.

But I mean, it's anticipated that the state will that the taxpayer will save to be just looking at the dollars and cents of the political viability of it.

Senator, is this do you see any is this sustainable, both fiscally and politically?

Well, I mean, if you can prevent, you know, ten babies or even one baby from being a premature baby and having a stay at the NIC, it pays for itself.

And so that's what we're talking about.

It's really a game changer for the lives of Arkansans.

And that's what I think taxpayers want us to do.

They want us to be smart.

They want us to be innovative.

They want us to be efficient and accountable to their dollars.

And so this program is very specifically designed in bringing together all those different resources that are available to our citizens already, but just doing it a smarter way that that supports our rural health care infrastructure and and doing it in a way that really helps the vulnerable populations that we know exist in our state.

And if you solve that hardest problem that you have, then you're really moving the needle where health outcomes matter for our state and we can move up the ladder in these national rankings, which is very, very important when it comes particularly to infant and maternal mortality rates.

Mr. Secretary, I'll give you the final word here.

I'll just add to this.

Go to the executive run the legislature.

Now is just going to build on what Senator Ertl is saying, that even though this is a very innovative program in terms of how it's funded and how it's structured at bottom, the services are providing these are these are services and models that other states have used successfully.

And that's what we want to see, is we want to move the needle, move Arkansas out of the bottom rankings for these types of indicators.

We know other states have done it, so we know we can as well.

Got to end it there because we're out of time.

Mr. Secretary.

Senator, as always, thank you for being with us.

Thank you for joining us.

And we'll be right back.

And we are back.

Financial news made in two capital cities this week in Little Rock.

Word that from the state finance department of yet another month of strong tax collections, both sales and income levels.

And in Washington, word from the Federal Reserve of yet another significant increase in the price of money.

The Fed asking are adding three quarters of a point, the sixth increase this year.

So the shake out in Arkansas, our near-term outlook.

Joining us from the UK economics faculty, Dr. Jeremy Hospital and from the Daily Record, our West Brown.

Gentlemen, thanks for coming in.

Let's start with something that's really local and that's a local economic issue as its advocates sometimes pose it.

And that is marijuana.

Recreational marijuana, Jeremy, it's on the ballot.

We won't discuss the politics of it, but what about the finance?

I assume some claims are being made about its economic benefit.

Do they how do they figure?

How do you calculate?

Yeah, it's a little bit new of an issue.

I mean, we've only had about ten years of states legalizing marijuana for recreational use, but studies have looked at states like Colorado and Washington.

The early legalization have actually found that these large claims don't pan out in either direction.

So there aren't really large economic benefits in terms of jobs created.

But there's also not any big losses of productivity that we can detect.

So a lot of the big claims about even about crime and traffic fatalities, there just really aren't a lot of them.

So I think we can focus on some other questions economically about, you know, what kind of a market does this initiative create.

It's giving licenses to existing medical marijuana dispensaries.

So I think economically, I think more about what the market will look like afterwards than any kind of big effects that will take.

Place with the economic.

I though Jeremy you're saying it's essentially a wash. Or the the the say the number of jobs added is so small it might be the overall economy might be you know, the amount we would add in one month anyway normally in terms of normal job growth so that the the the large there won't be any large effects.

Now, there may still be reasons for legalizing marijuana, but I wouldn't hang my hat on there being large economic effects from it.

There are some tax revenue effects.

Right.

But again, in terms of the overall picture, they're not very large.

And remember, a tax tax revenue is just a transfer from the private to the public sector.

That's not an increase for the overall economy.

Yeah, that's.

Right.

Yeah.

You know, the some of the forecasts have been as much as $1,000,000,000 to be added to the economy.

But you have to also figure in the fact that money this is an industry already, it's just illegal.

And that money is already coming into the economy indirectly.

So the as Jeremy said, the indirect economic benefit is pretty much is not going.

A lot of states, even some of the advocate for for for this amendment have said, you know, it'll it'll have some some effect, but not as big as some people are predicting.

The other thing, as Jeremy said, once it starts getting taxed, it's going to be taxed at a higher rate.

And then then other business sectors, 16.5%.

Right.

A lot of that will go to, I think, to the courts and then some will go to tax revenue, some will to, um, Hamas and I think the other paying for law enforcement stipend.

So you know, it will, it's one of those things if it passes and the polls are telling us it's going to be pretty close, then then I think we'll find that the the economic benefits are going to be pretty pretty normal in terms of a new industry, so to speak.

Well, I guess we go back to the old moonshine days, Juan.

Hey, why pay any tax on it at all, on booze at all?

I mean, if you can get it untaxed at a lower price.

Yeah.

I mean, the the I think the industry and the state will, you know, the tax a benefit.

I think that's the reason why this was proposed in the state of Arkansas.

But this is not a clean amendment as you've seen in other states like Colorado.

It has a lot.

If you started looking at it, the proposal is kind of, you know, the proponents when people look at it.

But this is not what we thought it was.

You know, there's a lot of things in this in this amendment that I've heard people say it's a mixed bag of things.

You know, I.

Think a lot of the financial contributions this is, I think the the most heavily funded contributions for a ballot initiative in Arkansas ever, $30 million.

Most of that money comes from the existing medical marijuana dispensaries because they know that they will benefit from this since they're being given the initial licenses.

Yeah.

So again, I don't think that's necessarily a reason to vote against it, but that's thinking about what the market will look like afterwards.

It's going to we're giving out licenses to a specific group of people.

Who will.

Benefit from it.

The same 40 medical dispensaries that already have licenses.

They're the ones who are going to be getting the benefits from this.

And they've already have established industries.

Have established customers.

Right.

And you may not see a bigger increase in in the number of customers, because you still the one thing that people would I'd say the federal law still makes marijuana is illegal.

And and you still think I still think you're going to have in legal a part of this industry that still operates in the shadows.

Okay.

Looking at the Arkansas revenue report, the if you want to call them sin taxes, whatever, the recreational tobacco and alcohol levy state about flat what they are.

But income and sales are at least well over forecast, which Jeremy says what?

Well, I think, first of all, it says that the income tax cuts we've enacted in the past seven years aren't cutting into tax revenue at all.

We're still seeing the same kind of growth we've seen, in fact, bigger growth.

On the sales tax side, I think part of what you're seeing there is that we've had a lot of inflation.

And so as the prices of goods go up, of course, sales tax collections will go up, but they've been going up even faster than the rate of inflation.

So sales tax collections are up about 10% year over year.

That's even faster.

The rate of inflation.

So it's not just an artificial effect of that inflationary environment.

I think, though, this does mean that when we get to the next legislative session, we've just had a big budget surplus the previous two years.

They didn't even spend all the surplus in the last special session.

I think the incoming legislature and the new governor are going to have a lot of excess revenue to play with, and I think so.

I think further tax cuts could be will certainly be part of the discussion given the recent revenue reports.

As well and certainly an awful lot of political pressure.

Yeah.

You know what?

I think you're going to be looking at over again, well over a billion surplus.

If you get some marijuana revenue coming into that picture, then you're going to have a even bigger whoever is the next governor after November 8th, we're going to they're going to have to come up with a plan.

I'm sure you're going to have this back and forth between the legislature and the new governor fighting over what to do with this extra money that's going to be out there added on to it already, probably about a 6 billion annual budget for the state of Arkansas.

Well, on the demand side, I suppose you can call it, you've got some pretty vocal lobbies, too.

And of course, it's a policy question on political question, how much will be there for teachers, for the public school fund, particularly teacher salaries, which we deferred in the last couple of special sessions?

That and also higher ed has got a wish list.

There's DHS to be funded as always and the Bank of England.

Just forget the Fed for a sign.

The Bank of England said, Holy cow, what are we going to do?

The whole island is about to sink.

In.

Three quarters of a basis point or 77, 50 basis points this past week.

Now, so we're looking at a lot of predictions of a recession coming on.

Yeah, you know, the Fed likes to when they raise interest rates that generally when you raise interest you like to bring the the world's largest of in for what's called a softly landing.

We've had six of those.

And it's kind of interesting to try to bring the world's largest economy in for a soft landing, to keep it out of a recession.

The Fed, that they believe that's their responsibility.

That's why you see these large three, three quarter percent hikes that that that we're seeing.

And and if you look at what's the housing numbers, it's having little effect on the housing market.

People are just not not buying right now and not so much on inflation, though, you're seeing the I think the biggest impact on inflation in terms of of of pricing is that I think in the employment report you saw the annual rate of increase for income is about 4.7%.

That's why consumers are still continuing to purchase, you see in the tax numbers.

But in terms of inflation prices, we don't see the prices coming down as quickly as the Fed is seeing.

If you when you saw their statement that came out after that meeting, that we're going to have more rate hikes in the future, well, we could we could be about 10% interest rate before this is all over with.

Well, guys, Jeremy, I mean, the good news is in but interest rates, Mr. Powell said, well, we probably won't do three quarters again.

There's some more coming.

We just don't we won't hit you that hard.

So as West pointed out, the mortgage industry is out and home building industry is fields that immediately.

Yeah, so absolutely.

Arkansas entrepreneurs, Arkansas businesses, Arkansas consumers too.

Yeah.

I mean, the housing sector is the one part of the economy that seems to be very quickly reacting to the interest rate hikes.

There's been some slowdown in hiring a little bit, but that's not really happening in a big way.

So as the Fed's looking out at the world, looking at the data coming out in real time, just as we do, the rate of inflation hasn't come down yet.

The job market is still growing.

Even real incomes adjusted for inflation are still up.

So the Fed is looking at all this and saying, hey, all we've done so far hasn't really done what we want to do.

I mean, slow down the housing market.

But that that's that's not exactly what they're trying to do.

They're trying to get that rate of inflation down.

But the real challenge for the Fed and they know this is, you know, you can't turn the economy on a dime.

Right.

This is not a zero turn, you know, lawnmower.

It's more like steering a big.

Ship.

And changes you make.

I mean, the inflation we see now, that's due to monetary stimulus back from 2020.

It takes a long time for this to filter in the economy.

Much.

But they're very cautious to to to over suppress it, which is why they might be in the near future, slowing down these rate hikes, even though inflation is nevertheless.

A soft landing, it doesn't spring to mind.

There really aren't any great examples.

You know, there's not.

And it's always a quest.

And then the next day after the crash and then, of course, is a recession or a slowdown.

And we I generally say that I think the housing market is actually in a recession right now.

If you look at the numbers out there, are people buyers are just saying, no, no, I'll wait.

And and the home prices are coming down somewhat, but not at the rate.

And once you see home prices come down, then you may see the some of the building materials related to the housing market come down.

But but but we haven't seen that as Jeremy said, we haven't seen those things take place yet and more rate hikes in the future.

Okay, Jeremy, I'll give you the last word here.

What is Mr. and Mrs.

Right?

What are we looking for in the very near term?

Obviously, grocery prices, fuel prices.

Yeah, we're we're hoping to see more relief like we've seen in fuel prices showing up in other sectors, which we really haven't.

I mean, used cars have come down a little bit, but really used cars and gas prices are the only thing coming down.

We really need to see that.

And and and soon I mean, certainly won't happen for the election.

That's a few days away.

But hopefully if you look out over the next six months, next year, we really hope that rate of inflation will come down.

But if you look what's happening in Europe, the situation is a little different, but it's it's not slowing down there.

Even if you take out the energy increases.

It ain't pretty over there.

Now, guys, thanks for coming in, as always.

Come back soon all the time.

We have, as always, thank you for watching.

See you next week.

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