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To fee or not to fee: industries evaluate Tucker's plan to make agencies self-supporting.

GOV. JIM GUY TUCKER is seeking fundamental changes in the way state government is funded. However, not everyone in the business community shares his fundamental views.

In the past, several state agencies have been heavily subsidized by the state's $2.5 billion general fund, which comes from a countless array of taxes. The theory was that if the general public benefited from an agency -- even indirectly -- it should share in the expense of running that agency.

Now comes Tucker, who wants the state Legislature to shift the burden of running the agencies to the industries they regulate and serve.

It seems a clever way to increase government spending without raising taxes. After all, the argument goes, there are already more than 60 self-supporting state agencies, including the Game & Fish Commission, Highway and Transportation Department and Oil and Gas Commission.

Tucker's recent push, however, has alienated a few industries.

Take forestry, for example.

Tucker has asked the state Forestry Commission to raise an additional $7.9 million on its own next year and give up the same amount from the general fund.

To reach that point, the commission probably would be compelled to more than double the forestry severance tax, which currently pulls down only $3.5 million a year.

Before the Forestry Commission could respond with a plan to raise the money, a trade group called the Arkansas Forestry Association answered Tucker with a counter-plan of its own: doubling technical service fees and the fire protection tax to bring in a combined $800,000 in new revenues, and reducing general revenue funding by $2 million.

"We feel very strongly that there should be some general revenue funding of the forestry commission," says Chris Barneycastle, executive vice president of the association.

If the general revenues are completely dropped, he says, the timber industry will be unfairly forced to subsidize untaxed fire protection for 800,000 acres of state-owned land and 4 million acres of pasture and range land.

For his part, Forestry Commission executive director Ed Waddel is trying to work within Tucker's wishes.

Testing Fees Debated

But one state agency -- the Livestock and Poultry Commission -- is fighting Tucker's desire for higher fees. Dr. Taylor Woods, commission director and state veterinarian, is resisting Tucker's proposals to raise another $4.4 million a year, doubling the commission's take from fees.

The commission countered with a more modest plan to increase fees by $406,000, believing Tucker's increase would lead poultry businesses to do their own lab testing.

"The cattle industry would be hit the hardest," says Woods, explaining that ranchers are required by law to have certain tests performed by the state.

The industry already pays a $1-a-head "check-off" fee for the required brucellosis testing on cattle sold in the state, although some neighboring states do not charge a similar fee. Higher fees would lead to even more out-of-state sales, says Mark Cowan, executive vice president for the Arkansas Cattleman's Association.

It's hard to tell how much in fees the agricultural industries can afford, says Richard Weiss, deputy director of the state Finance and Administration Department.

"Each industry is very secretive as to what it costs to do business," he says. "They don't want to offer any help at all. If you listen to them, they are all on the verge of going out of business."

Cowan seems to confirm Weiss' suspicions.

"The question isn't are we able to absorb it, but are we willing to absorb it," Cowan says.

Several industries, however, have embraced Tucker's suggestion of paying their own way.

The insurance and securities businesses have put up no substantial resistance yet to the fee-increase concept. Tucker wants the Insurance Department to raise another $1.45 million in fees next year, and the Securities Department to ante up with another $1.8 million.

Both agencies are already self-sufficient and their executives are enthusiastically seeking new revenue streams to improve operations.

Similar cooperation is being found at the state Plant Board, asked to raise another $1.08 million in fees, and the Department of Pollution Control & Ecology, requested to produce another $2.8 million.

PC&E director Randall Mathis notes, however, that he is prepared to go far beyond the $2.8 million fee increase in his request to the Legislature.

Opportunity for PC&E

The PC&E lacks funding for 53 positions authorized by the Legislature in 1991 but in a low-priority budget category and never funded. Mathis will push for even higher fees.

"That's a very dangerous situation," says Ron Russell, executive vice president of the State Chamber of Commerce. "That's like running a police department on the fines that are generated."

Mathis says Louisiana recently removed $5.4 million in general revenues from its pollution watchdog agency and more than made up for it by raising an additional $12 million in fees.

Tucker's other targets for self-sufficiency include the Department of Labor, the Parks and Tourism Department and the Soil and Water Conservation Service.

Details are just beginning to emerge, and Tucker faces a house-to-house battle to get each individual fee increase through the legislative process.

On the bright side, Tucker is getting good reviews from the business community for his package of economic development bills, which would enhance the operations of the Arkansas Development Finance Authority and the Arkansas Industrial Development Commission.

"My general impression is that Tucker's program is a good one," says Robert Young, chief executive officer of ABF Freight System Inc. "The way we improve the tax base is by getting money invested here. You get people off welfare and paying taxes."

It's a good thing there is one area of consensus, for there may be even greater controversy to come.

Tucker has pledged to offer bills addressing civil rights and workers compensation insurance but is putting off that romp through the briar patch until his first set of problems is solved.
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Title Annotation:Arkansas Gov. Jim Guy Tucker
Author:Haman, John
Publication:Arkansas Business
Date:Feb 22, 1993
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