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Senator Bryan King Goes "Bulworth"

The movie "Bulworth" is about a Senator who thinks he is dying anyway so he might as well start telling the truth. So far as I know, King's health is fine, but he's decided to tell the truth regardless...

printed in the Carroll County News


Tuesday, August 8, 2017

By Scott Loftis, CarrollCountyNews@cox-internet.com

"Arkansas’ state budget has been a moving target for the past several months, and state Sen. Bryan King of Green Forest says much of the turmoil is related to the expansion of the state’s Medicaid program under the Affordable Care Act.

Arkansas first implemented the Medicaid expansion in 2013 through a compromise agreement often referred to as the “private option.” That plan allowed the state to use federal Medicaid-expansion funds to purchase private insurance on the state’s health insurance exchange, with the state paying a small percentage of the costs — gradually increasing from 5 percent in 2017 to 10 percent in 2020 and beyond.

On April 8, Gov. Asa Hutchinson signed a bill enacting changes to the program. Those changes include requirements that enrollees participate in job training programs. The new law is titled “Arkansas Works.”

Later in April, Hutchinson announced $70 million in cuts to the state budget to address what he described as a revenue shortfall for the fiscal year ending June 30. However, the Hutchinson administration restored all but $10 million of that funding on the final day of the fiscal year. The state finished the year with a $15.7 million surplus, according to published reports.

King, a Republican who has been an outspoken opponent of the state’s Medicaid expansion, says the program is rife with fraud and abuse. And he says the state’s portion of the costs have contributed directly to its budget uncertainties.

“We’re in a spending problem,” King said. “Arkansas is raising more revenue than ever, and (Hutchinson) had to cut the budget. Well, you have to do that because you’re spending too much.”

According to King, the state’s spending is out of control.

“There’s two aspects of it,” he said of the state’s budget situation. “I don’t know what percentage of it, but some of it is the tax cuts that we enacted in years past that decrease revenue. Some. But the vast majority of the problem is that we are spending too much money, and when you look at our expenses, what’s went up is, 90 percent of is related to Medicaid and this expansion program.”

King said the Medicaid expansion has led some able-bodied Arkansans to quit their jobs.

“Because now we’re having the detrimental effects of disincentivizing people to work, so it’s hurting our revenue that we bring in,” he said. “We have people who were making $20,000, $30,000, $40,000 a year and people with health insurance coverage quit their jobs and now are working less. Well, when they work less, and you create a program that disincentivizes them to work, you collect less revenue. Somebody making $20,000, $30,000, or $40,000 obviously spends more money, pays more income tax than somebody who makes zero.”

King said the state’s Medicaid costs, which were $3.145 billion in 2006, are now $7.2 billion.

“It’s over doubled,” he said. “We’re spending more than ever in Medicaid, and we’re in budget trouble at a time we’re not in a recession.”

The state’s Medicaid rolls have swelled from 215,000 people to 320,000, according to King.

“We have had situation after situation — you have to understand this is 320,000 people,” he said. “This is (equivalent to the population of) northeast Arkansas. And their average income, half of ’em make zero. And then … we have people coming down from Missouri that sign up on this program. Never lived one day in Arkansas. Never paid school taxes, never paid that kind of stuff and we’ve become a Medicaid magnet.”

The abuse occurs both close to home and half a country away, according to King.

“Do you know there are people in Carroll County with a half-million dollars in assets that are on this program?” he said. “There is somebody in New Jersey with a home valued at $750,000 that’s on Arkansas Obamacare.”

King also expressed frustration at what he described as a double standard and a lack of enforcement related to Medicaid fraud under the expanded program.

“Let me tell you something else that never has been addressed,” he said. “Why is it — if you’re on traditional Medicaid and you’re found to be collecting benefits, and you’re actually ineligible, DHS will come after you. They would expect you to pay that back. Why is it if you’re on this program, why do we have two standards that you’re on this other program — a program that I busted out, that we had somebody in every state in the union on Arkansas Obamacare, Medicaid.”

Primarily, King said he was unhappy about how state officials like Hutchinson and state Sen. Jonathan Dismang (R-Beebe), who serves as the Senate’s President Pro Tempore, have “misled” the public about the financial impact of the Medicaid expansion.

“These guys have misled people,” King said. “They’ve misled and deceived people. And for Gov. Hutchinson to go out there and say that our budget problem is not related to a spending problem is a bold-faced lie.

“When it comes to our revenue growth, and he had to project a balanced budget over the next two years, his spending target that he put in last year — which he’s not meeting because he’s having to make cutbacks — he then doubles down. He puts in a 2.9 percent growth to balance this coming year’s state budget. So he didn’t make last year’s. Now he’s already rolling that back. And it’s year two. If you wanna talk about spending, we have to have 4.9 percent growth to balance his budget. The national GDP growth is estimated, maybe a little over 2 percent. So you’re gonna say our state economy is gonna grow more than our national economy in an agriculture economy. Nah. He puts these things out there to balance the budget because our expenses, our spending side, is growing. He’s trying to catch up our revenue projections with his spending.”

King, who said he has not decided whether to seek re-election, said he was targeted by Hutchinson and other Arkansas Republicans because of his opposition to the Medicaid expansion.

“What I want to focus on is last year when he was calling me out and contacting you guys and all this to get after me and the superintendents were saying ‘if Bryan doesn’t vote for this DHS appropriation bill, it’s gonna crash the state budget,’ ” King said. “I said at the time, Medicaid was on an unsustainable path, we had too many people on Medicaid, there was corruption going on with Medicaid and lawmakers. I said there were problems at DHS that needed to be fixed. I addressed those four major concerns when I said ‘I’m not voting for this DHS appropriations bill because it’s gonna put us on an unsustainable path.’ We had too many people on Medicaid that we had to make changes to it. I said that there was corruption going on, and I said there was mismanagement in DHS that needs to be fixed, OK? Guess what? Four months later, what’s Asa Hutchinson say: ‘Medicaid’s unsustainable. We’ve got too many people on Medicaid.’ What’s happened since then? ‘State rep pleads guilty to bribery.’ Now we have all this stuff coming out and some of it’s involved with this college, but some of it’s involved with Medicaid. So you’ve got this corruption going on. I said that at the time. You know what? That’s happened. You’ve got problems at DHS. We were promised a great verification system by lying Senate president Dismang. We were promised that in 2013 — ‘you vote for this, we’re gonna get this great verification system.’ That never happened. DHS wasted $60 million on a program that did absolutely nothing. They then spent $200 million. Guess what? They’re coming back for more money because that $200 million system doesn’t work. So you have all these things come up. Why is it we have one standard for somebody that’s ineligible on traditional Medicaid, but on this expansion program they have not recouped $1 of benefits from any ineligible people?”

King said Hutchinson, Dismang and other state lawmakers aren’t being honest with the public about the Medicaid expansion.

“These guys lack the character to come back and say ‘Bryan King was right,’ and retract what they said. … They don’t want to talk about the hundreds of millions of dollars that has been paid to ineligible people, and recouping that. You know why? Because it makes them look bad.”

Ravenous Republican Revenue Rampage (Internet Sales Taxes)

Internet Sales Tax Collections is the subject here. The two traditional parties in this state just insist on passing new laws to collect sales taxes on online purchases made from out of state vendors. This even though the 800-pound gorilla of online sales, Amazon, voluntarily collects Arkansas sales tax. In spite of their stated reasons, I think that Wal-Mart's positioning on the issue is an important factor. They are pushing a model where you order online but go pick up in store. I think that is smart, too bad their e-commerce site is such a mess. But it means they are most directly competing with online retailers, and they want government to move the bar in their favor by increasing tax collections from such retailers, even if it precipitates a lot of other problems for the rest of us.

I recently got into a FB discussion on it with a State Senator who in many ways is one of the top five or ten in the legislature. I will give his provocative post first, then my responses, so you can be ready when you hear the same line....

WINNERS AND LOSERS (about keeping internet sales tax free while forcing local retailers to collect the taxes WE voted for highways, jails, city fire and police, game and fish, and schools)
There are examples such as the name brand chainsaw. The manufacturer sets a MSRP of $149. They sell to both the local Mom and Pop small engine business and the internet retailer at $135. That $135 includes shipping. The Mom and Pop small engine business has the chainsaw shipped to their site, because they will sell it in the community. Because it becomes part of their inventory, they will also pay property taxes on it that support the local school, library, solid waste, roads, city and county government, etc. The internet retailer never owns the chainsaw but has it shipped direct from the manufacturer or distributor anywhere in the country. In Hot Springs, Arkansas, the local Mom and Pop has to collect $14.16 sales tax. They also have to hire a bookkeeper to keep up with the tax and remit it to the state.
I, shopping in my pajamas can order it from the Goliath internet retailer for $149. Or I can go locally and pay $163.16. He gets asked a dozen times a month if he will eat the sales tax and sell it for $149. Sure, he can now sell the chainsaw for which he paid $135, for $136.08. (That does not include the people who came in and asked for his expertise on how it worked and whether it was any good or not, before ordering it via internet without even asking him to meet the price. His time after all doesn't cost anything). Yep, local retailers get to figure those numbers out because the state requires that they collect the exact amount of sales tax on the sale. They must collect the whole amount of sales tax, but they must be careful not to mistakenly overcharge the sales tax. You will be fined or jailed for going under or over.
How do we benefit from that? Let's set aside the macro that there are millions of dollars now not going to schools, libraries, roads, etc. Let's look at the micro.
Anyone who has operated a business, knows that they were only selling that chainsaw to start with, to find that one little bit more of income to make the whole thing make sense. How is the community better off, when he closes the small engine shop and and goes to work for Walmart? How is the community better off, when an ice storm or windstorm hits and instead of running down to Tony's or even Lowes for that matter, you sit and wait. Now you get to live like the settlers did in the plains (and here) when you ordered out of the catalogue and waited. Mean time, we could have been clearing the broken trees off of the roads and our homes.
DO NOT ARGUE, THAT THEY WOULD HAVE CLOSED ANYWAY because they were small and local. I have been told since the 70s that I couldn't compete against the big boys and the local store was on the way out. Well, the Big Boys of the 70s in my business are gone. Sure small mom and pops close all of the time, even if the sales tax were fair and equal. But so do Circuit City and Montgomery Wards.
Buy why do you want me not to offer 25 good jobs in my community? Why do you not want me to pay large amounts of property tax to educate our kids and pay our teachers? Why do you not want me here to donate to every local activity to come along?
Why do you think that we should be punished for being in business, but rewarded if I shut down my showroom and only take orders from people in other states just like you? I can then participate in helping people in other communities starve their schools and other government services because somehow if I sell online rather than storefront I become special.
Don't be surprised when I do just that. We have been headed that way for awhile. If by tax policy you pick on-line retail as the winners, only a fool would not get on the winning side. When I do that, I can pick my business up and relocate wherever I want. No need to support this community or this state for that matter.
P.S. For the number of people who have never operated a business who say "sales tax doesn't matter, they would have went out of business anyway", take 9.5% out of your own budget and get back to me. For many if not most, they will find that paying the mortgage, car payment, and health insurance becomes difficult if not impossible when you take 9.5% out of your budget.

To which I responded...

You have convinced me- that Arkansas sales tax is way too high. Ten percent sales tax is outrageous. I live three mile from the Missouri border and Wal-Mart opened a huge store on the other side of the line and lots of folks around here go there for large purchases to save on sales tax. Heck, the Hendren's had a car dealership right on the other side of the line for a long time. Maybe still do. The root problem is that AR sales tax is high enough to cause real distortions in the market. Solving the problem of government intervention with more intervention is going to cause two problems rather than solve one.
In addition, the "Goliath" in your scenario can only be Amazon, which is already voluntarily collecting the Arkansas Sales tax for you. So you are not really hurting the Goliath when you pass your law increasing collections, you are hurting other, smaller, online retailers. Including maybe your local hardware store if they choose to do that. There is also no reason why they can't have a customer order direct from the factory and not pay property taxes on it if the customer is willing to wait a few days. One only pays it for inventory at the end of the year anyway.

My grandfather owned a hardware store. I would be very sympathetic if that was what this was about. Wal-Mart is pushing an order-online pick up at store program right now. THEY are the ones who would benefit if online sellers from out of state were somehow forced by the Arkansas legislature to collect sales tax. They are more directly competing with online sales than walk-in mom and pop stores because the order is made online. I think enforcement costs of your new tax collections will be greater than the revenue collected but Wal-Mart won't be paying those costs, we will. Whatever you think this is Senator, this is in fact yet another AR-leg indirect subsidy for WAL-MART.

And the Senator answered by asking a series of leading question based on dubious premises.....

Political philosophy, tax policy, etc should be able to be conducted in a vacuum and the answers be the same. Truth is truth.

Should the government pick winners and losers?
Should retailers be treated the same?
If there are incentives should they drive jobs and capital in or out of the state or community?
Does tax policy matter in economic development?
It is interesting that you can see a tax rate difference of 3% drives people across state lines but not that a 10% difference would close down local jobs.

Or are you intentionally arguing for protectionism for certain businesses?

Which I nevertheless attempted to answer....

No, the government should not pick winners and losers, in particular for folks who don't even have a chance to vote against it, and that is exactly what you would be doing with this law: Wal-Mart would be the winner. Small online retailers, in state and out, would be the losers. 

Retailers under your purview should be treated the same- and that is what existing law does. They all operate by the same rules and nothing should prevent any brick and mortar from going online too under the same rules. Now if they choose not to go online as well that is THEIR CHOICE and I do not think the government should try to protect them from the consequences of their choices. It would be like a hamburger chain that refuses to get a drive-through window asking you to tax others that do have one because of the "unfair" competition.

There should not be incentives from government. That is government picking winners and losers as your leading question previous hinted at. Like Big River Steal which I remind you that you and most of your colleagues voted for. Since you swallowed that camel should you really be straining at these gnats? Instead they should tax the least amount possible in the least disruptive way possible to fund essential services. This would not be least disruptive. It involves reaching into other states and attempting to collect from people who you have no just authority over, as they chose not to live within your jurisdiction. All they can do is have their legislatures retaliate AGAINST ARKANSANS. This is taxation without representation, which our founders rightly labeled tyranny.

Tax policy does matter in economic development. Wal-Mart will want this because it is a tax policy which will support what they are doing but it will hurt the rest of us once other states retaliate. What you are doing is basically like an anti-free trade measure between the states.
You wrote: "It is interesting that you can see a tax rate difference of 3% drives people across state lines but not that a 10% difference would close down local jobs. " - Ha! I see both, what you are not seeing is all the potential consequences of your actions. You seem to think that we can step on their toes without them ever stepping on ours. Government is the only winner in this course of action.

As for the "protectionism" I have already explained how what you are doing amounts to protectionism and intervention on behalf of Wal-Mart. Leaving the rules as they are, especially when the largest online retailer is already paying voluntarily, is not protectionism.