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Annual Meeting Report 2004

Reflections & Projections

It's been a busy but successful year at the State Chamber/AIA headquarters in Little Rock. With the Second Extraordinary Session of the 84th Arkansas General Assembly extending well into 2004 and the 85th General Assembly just around the corner, our staff, officers and committees have and continue to work diligently to enhance Arkansas' business climate. Here's a rundown of what we've done and what we're getting ready to do.

GOVERNMENTAL AFFAIRS

Reflections: Education reform dominated not only the news this last year, but much of our work as well. Our governmental affairs team of Ron Russell, Kenny Hall and Angela DeLille, with much input from Chairman of the Board Stacy Pittman, members Tom Kennedy and Morril Harriman and our Education Committee and Tax Committee, worked closely with legislators and other lobbyists during the special session to ensure reform of the state's public school system. Specifically, we lobbied for accountability in our schools and, thanks to the measures that passed, can look forward to improvements beginning this school year.

That's because Arkansas now has one of the strongest accountability systems in the nation, one that mandates annual testing and monitoring of each child's progress. A system for financial accountability for school expenditures as well as additional measures to track schools' extracurricular spending have been put in place. A new Division of Accountability will enforce these efforts.

In addition, Arkansas now has a funding formula based on students that was devised to meet the Arkansas Supreme Court's test for adequate funding. Pay raises for teachers are in force, with special emphasis on salaries for those just entering the profession.

To pay for the reforms, the State Chamber/AIA supported a tax compromise that was less harmful to business than other legislative proposals. It was composed of three pieces of legislation that together raised the state sales and use tax by 7/8ths of one cent, applied the sales tax to about 15 previously untaxed services, made minor changes to the tax structure for vending machine sales, increased the franchise taxes paid by corporations and limited liability companies to the secretary of state for incorporating and doing business in Arkansas, and authorized the legislature to propose an increase in the uniform rate of tax from 25 mills to 28 mills in a general election.

The State Chamber/AIA also supported bills that resulted in professional assessment of school facilities and in consolidation of school districts with fewer than 350 students. This spring, 57 of the state's 308 districts faced consolidation.

In addition, the State Chamber/AIA was asked to file briefs to the Supreme Court as it considered its final action in the case of Lake View et. al. v. Governor Mike Huckabee et. al last spring. We had filed an amicus brief with the Supreme Court about the Lake View matter in 2002.

Projections: While the State Chamber/AIA expects a few more education, health care and worker's compensation matters to arise in the coming legislative session, we are also preparing to work on a couple of ballot issues:

Term Limit Reform. The State Chamber/AIA staff worked diligently to organize a legislative question committee, Arkansans for Term Limits That Work, which will manage the campaign for Amendment 1 on the November ballot. This proposed constitutional amendment extends term limits in Arkansas, now among the most restrictive in the nation, to six 2-year terms for state representatives and three 4-year terms for state senators. Staff will continue to support the committee.
Economic Development. State Chamber/AIA staff have and will continue to provide advice and support to the committee working to pass Amendment 2 on the November ballot, which will ask voters to give the General Assembly the authority to issue general obligation bonds in an amount up to 5 percent of the state's general revenues collected in the most recent fiscal year to pay for necessary infrastructure improvements associated with a large economic development project. Based on fiscal year 2003 forecasts, this would be about $166 million. To issue bonds for such a project, the Arkansas Department of Economic Development would have to bring forward a project investing a minimum of $500 million and employing a minimum of 500 new employees. Funds would be appropriated from general or special revenues to retire the bonds and meet any obligations associated with the issuance of the bonds. Staff members will continue to make speeches in support of this amendment across the state through the November election.

COMMITTEES

Reflections: The State Chamber/AIA committees continue to provide strong feedback and support on issues critical to the organization's mission. To reduce the time required to serve on a State Chamber/AIA Committee, they all meet on an as-needed basis. The Tax Committee and Education Committee were the most active committees this past year as we worked through the special session dedicated to education reform and the necessary revenue options. A sub-committee of the Workers Compensation Committee is working on a study of the Arkansas Workers Compensation Commission's Trust Funds that have been recently declared actuarially suspect. The Unemployment Compensation Committee dealt with changes at the state's Employment Security Division, and Kenny Hall continued to monitor Environmental Committee issues through service as an ex-officio board member of the Arkansas Environmental Federation.

Projections: The Workers Compensation Committee will complete its work on the trust fund study and begin negotiations with labor for necessary changes to the workers' compensation laws in the 85th General Assembly. The Tax Committee is meeting this fall to analyze anticipated tax issues and prepare strategy for the legislative session. The Unemployment Compensation, Education and Health Committees will also make preparations for the legislative session. We expect some critical issues to arise in the area of health care. The education facilities issue will be the primary revenue concern for the legislature and the Education Committee will be hard at work on this as well as protecting the sound reform measures adopted by the 84th General Assembly. We hope to revitalize the Arkansas Small Business Council and provide some meaningful information to small businesses. With new employees in communication and marketing positions, the Communications and Public Relations Committee will be relied upon to provide guidance as new ideas are explored.

INTERNATIONAL TRADE

Reflections: Director of International Trade Angela DeLille attended a four-day seminar in April sponsored by Trade Roots of the U.S. Chamber of Commerce in Washington, D.C., for a jam-packed learning experience on export development. The seminar helped her gain expertise in United States trade agreements as well as make contacts with important resources to help in expanding international trade for Arkansas businesses.

Projections: DeLille has a number of plans in this department for the coming year. She will participate on an informal steering committee for the Southern Growth Policy Board, a 32-year-old nonprofit with 13 states and Puerto Rico as members whose mission is to raise the quality of life for all southerners through policy development, educational materials and conferences. SGPB is looking into ways to promote business between South American countries and Arkansas as well as other southern states. Working with the Arkansas Small Business Council, DeLille also plans to work with Trade Roots to formulate plans for a seminar focusing on the role of Arkansas businesses in the global marketplace.

COMMUNICATIONS

Reflections: The State Chamber/AIA continued to keep members informed of general news through our PolicyWatch print newsletter and PolicyEWatch electronic newsletter and on a daily basis during the Second Extraordinary Session of the 84th Arkansas General Assembly with our Legislative Update. More information was relayed through our website.

We said goodbye to Bill Paddack, Vice President for Communications and Events, this June after 8 _ productive years with the State Chamber/AIA. Julie Johnson Thompson joined our staff in July as Director of Communications and Events. She comes to us from a journalism and public relations background, her most recent position being an assistant city editor at the Arkansas Democrat-Gazette.

Projections: We will continue to communicate with you in better ways. Look for more reliance on the Internet. Instead of monthly printed newsletters, you will receive sleek electronic news bulletins in addition to the daily Legislative Updates sent during the general session. But we will not give up on print completely. A new magazine will allow us to delve more deeply into policy-related issues, feature member organizations and provide other information. If you have suggestions on content, email Thompson at jjthompson@arkansasstatechamber.com.

And, be sure to visit www.arkansasstatechamber.com, our redesigned, reorganized website.

MEMBERSHIP & MARKETING

Reflections: In July, Rose Clemmons Gladner joined the State Chamber/AIA staff as Director of Membership & Marketing. She comes from a sales background, most recently working as an account executive for KARK Television.

Projections: Gladner plans to revamp the package of benefits for State Chamber/AIA members to improve services already provided and add additional ones. She will focus on recruiting new members as well as increasing awareness of the organization. Building relationships with the loyal core membership will also be a top priority for Gladner.

EVENTS

Reflections: State Chamber/AIA members enjoyed a number of social and educational events throughout the year, including:

Annual Conference on Current Employment Law Issues on Nov. 4, 2003
State Chamber/AIA Spring Golf Tournament on April 19, 2004
45th Annual Salute to the Arkansas Congressional Delegation on May 3, 2004.
14th Annual Arkansas Small Business Awards Luncheon on June 7, 2004.

Projections:

Fall Golf Tournament: Plans are well underway for the State Chamber/AIA Fall Golf Tournament, which will be held at Maumelle Country Club on Thursday, Oct. 21.

Conference on Employee Fraud: Angela Morelock of BKD LLP will present this entertaining and educational seminar on Wednesday, Nov. 10 at the DoubleTree Hotel in Little Rock.

During the 84th General Assembly, the State Chamber/AIA used a multitude of resources to pull off a successful session. Our governmental affairs team of Ron Russell, Kenny Hall and Angela DeLille worked closely with lobbyists from member companies and other associations-individually and through coalitions-to achieve results. Our daily legislative update-delivered by e-mail each morning and also posted on our web site-was the key to keeping members informed and enlisting grass-roots support. Here are highlights of the most significant accomplishments.

Tort Reform: The State Chamber/AIA was a leading participant in the "Committee to Save Arkansas Jobs" coalition that successfully pushed a tort reform measure into law. The act caps punitive damages, changes joint and several liability and revises medical malpractice rules.

Education: Three important bills became law with the State Chamber/AIA's support. Separately they provide an early care and education program for children ages three and four, bring Arkansas into compliance with the federal "No Child Left Behind" legislation and require all districts to participate in public school choice. Our Education Committee, in conjunction with our Tax Committee, has carefully maintained the position that it will only support significant tax increases in the fall special session IF meaningful changes are made to the existing education system.

Constitutional Issues: The State Chamber/AIA played a key role in the legislature's referral of two constitutional amendments to the November 2004 ballot. If approved by voters, one would extend term limits and the other would authorize the General Assembly to approve general obligation bonds for economic development projects.

Economic Development: As a member of the Arkansas Partnership, the State Chamber/AIA was successful in helping pass an incentives package developed by the Arkansas Department of Economic Development.

Healthcare: An important plan to reduce the burden on healthcare costs caused by uninsured care was passed with the support of the State Chamber/AIA and the Employers' Health Care Coalition. Many business members of the State Chamber/AIA Health Committee are also active in the Employers' Health Care Coalition.

Labor & Employment: The State Chamber/AIA led a large group that defeated a bill that would have eliminated Arkansas' employment-at-will laws. Three union expansion proposals were blocked with our help, but a bill that mandated specified public employers to allow payroll deduction of union dues passed.

Taxation: The State Chamber/AIA blocked attempts to exempt food from the sales tax, a bill that would have removed the discount for prompt remission of sales tax collections and one that would have changed the laws on when a product comes to rest in Arkansas. The State Chamber/AIA Tax Committee facilitated modifications to legislation that will make possible the collection of sales taxes on Internet and catalog sales. The committee met several times to discuss the various tax bills that were filed and drafted a letter to the legislature encouraging members to find funds that could be used to shore up the budget temporarily and then include revenue increases to pay back any borrowed funds with revenue enhancements expected to be considered in a fall special session. The State Chamber/AIA discouraged a 10 percent income tax surcharge, a 4 percent surcharge on utilities and the removal of significant tax exemptions. During the special session called to address the state's budget shortfall, the State Chamber/AIA asserted the position-developed by our Tax Committee-that we were opposed to a proposed one-cent sales tax increase, but would not oppose the tobacco tax, a small temporary income tax surcharge or small temporary sales tax increase. The legislature approved a 25-cent per pack increase on cigarettes, a 7 percent increase in smokeless tobacco taxes and a temporary 3 percent income tax surcharge.

Unemployment Insurance: The State Chamber/AIA's Unemployment Insurance Committee helped develop and pass legislation that would protect the unemployment insurance trust fund.

Transportation: The State Chamber/AIA helped pass a bill that provides a sales tax exemption on the purchase of semi-tractors and trailers and one that repeals escort vehicle requirements for vehicles with lengths in excess of 90 feet.

Workers' Compensation: Our Workers' Compensation Committee met to discuss an "agreed" bill between the AFL-CIO and the State Chamber/AIA; however, shortly after the session began, an agreement was signed by both parties to bring no new legislation and to oppose all bills proposing changes to the workers' compensation laws. Acting in accordance with this agreement, three unwanted workers' compensation proposals were defeated. Two subcommittees have been formed, one in the process of reviewing Rule 30 and another studying the solvency of the Death and Dismemberment Trust Fund.

Activities: The State Chamber/AIA hosted an informal meeting in February between Senator Mark Pryor and leaders of small- and medium-sized businesses. Pryor had requested the meeting to discuss issues and circumstances that might be unique to Arkansas, especially in regard to smaller companies. We also set up a meeting between Pryor and our PINNACLE members in August at Tyson Foods' world headquarters in Springdale. Ernest P. Joshua Sr., founder and CEO of J.M. Products, Inc., was inducted into the new Arkansas Small Business Hall of Fame during the 13th Annual Arkansas Small Business Awards Luncheon in June at the Wyndham Riverfront in North Little Rock. Each year the State Chamber/AIA honors the U.S. Small Business Administration's small business persons of the year in Arkansas with this luncheon and awards ceremony. The event recognizes the contributions made by members of the small business community. Gov. Mike Huckabee was the guest speaker and helped present the awards. The State Chamber/AIA Annual Fall Golf Classic, which helps fund our governmental affairs activities, was held in September at the Maumelle Country Club.

Trade: Although much of DeLille's time this past year has been devoted to helping with our lobbying efforts at the legislature, she continues to develop an international trade emphasis for the State Chamber/AIA. She has met with diplomats from Japan, China and Nigeria in addition to building contacts throughout Arkansas and in Washington, D.C.

Communications: In addition to the communications efforts previously mentioned, PolicyWatch, our printed newsletter, continues to provide information to our members on issues and events on a monthly basis. Two of our printed pieces were honored last fall by the Arkansas Chapter of the International Association of Business Communicators in its awards competition. Bill Paddack received Bronze Quills for the 2001 Annual Meeting program/report and the 2002 Congressional Salute program/poster.

Other State Issues: As a member of Arkansans to Protect Police, Libraries, Education & Services (APPLES), the State Chamber/AIA was a strong voice in the opposition to Constitutional Amendment 3. The amendment, which would have eliminated taxes on food and medicine, was defeated at the polls in November 2002.

National Issues: The State Chamber/AIA, through its partnership with the U. S. Chamber of Commerce and the National Association of Manufacturers, advocated several issues with members of the Arkansas congressional delegation, including estate tax repeal, class action reform, oil exploration and the airline crisis.

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