Pay commission update: Much work to be done | Arkansas Blog

Tuesday, December 30, 2014

Pay commission update: Much work to be done

Posted By on Tue, Dec 30, 2014 at 11:14 AM

click to enlarge 'IS THE MONEY THERE?' That was Commissioner Chuck Banks' question about the state's ability to afford official pay raises.
  • 'IS THE MONEY THERE?' That was Commissioner Chuck Banks' question about the state's ability to afford official pay raises.
I sat in this morning on the independent state pay commission's meeting at the Capitol. About 20 people turned out to watch, a small crowd given the importance.

Ernest Dumas, in his review of the history of the Arkansas Constitution and official pay, ventured that the commission might be the most powerful in state government. The new Amendment 92 gives the commission absolute control over pay of the seven statewide officeholders, the 135-member legislature and all state judges, from district court up to Supreme Court.

By terms of the amendment, the pay set by this commission (and it can be unlimited this year) is not subject to appropriation by the legislature and must be paid by the state auditor within 10 days after filing. Strong stuff.

For such a powerful commission, it has limits, Chairman Larry Ross noted. It gets some staff help from the auditor's office, but has no money of its own, not even for a pot of coffee. At a break, Ross referred the commission to a water fountain down the hall. The legislature suffers no such indignities. Despite Amendment 92's ban on gifts by lobbyists, lawmakers are still dining and drinking free courtesy of special interests every day they are in session.

Today's commission agenda:

* STATE OF THE STATE: John Shelnutt, the state's chief economic forecaster, painted a middling picture of Arkansas — unemployment at the national average; payroll growth of 1.5 percent; no inflation to speak of; a projected 3.7 percent personal income growth in fiscal 2016, with a gross state product growth projected at 2.6 percent. Though our income ranks low among the states — as low as 48th in Census indicators, 42d in one respected ranking of per capita payroll, he noted that our low cost of living makes salaries here go a lot farther.

* HISTORY: Dumas explained that traditionally low Arkansas pay for politicians was rooted in an 1874 Constitution aimed at reducing the power of the governor and reflecting a general distrust of government. He detailed increases in pay over the years and the incremental add-ons of expense payments and expense account cheating that prompted subsequent constitutional revisions. The last before this year's amendment was in 1992, when salaries were raised and  pay supplements known as public relations accounts were outlawed. That amendment didn't curb abuse of per diem expense claims, nepotistic hiring of relatives and payments unsupported by documented expense receipts.

What's next? The commission needs some research. The legislature should authorize use of the Bureau of Legislative Research to get some readily available national data to guide commission deliberations. The need for this information was cited by commissioners along with a desire to get a full picture of legislative benefits — not just pay, but per diem, expense reimbursements, mileage reimbursements, pensions and health insurance. (This last is a large tangible benefit equivalent to direct income as anybody who must pay for their own insurance knows well.)

Needed immediately:

* Census data and other economic data that ranks the states by income, both in actual dollars and adjusted for cost of living. I'd apply the CPI to the 1992 pay scales as one measure of how much pay has fallen behind what it could have been had the legislature not been willing to make politically fraught pay raise votes. I'd also apply the CPI to earnings of average Arkansans during that period.

* Rankings of the pay of state officials, legislators and judges by state. This should be readily available from such sources as the organizations for state legislators and state courts. Ideally, the comparisons should include pension, insurance and other benefits.

Commissioner Chuck Banks asked Shelnutt if the state was in financial to fund an "upward" change in state pay. "Is the money there? Is the money going to be there?"

Shelnutt said that was a question he couldn't answer because it blended economic forecasting, his specialty, with political policy. He noted that major tax cuts are already set to take effect and the incoming governor, Asa Hutchinson, has proposed $100 million more. There's "quite a dynamic" in those competing factors, he said.

Dumas, in responding to Banks' questions about competition for state money, said there was always competition. Money spent one place inevitably comes at the expense of another. But as to official pay, he said the language of the amendment seems clear — official pay comes first, off the top of everything else. Then other state needs are met, beginning with education.

Commissioner Mitch Berry said he thought the commission should hear from legislators about the time demands of their job — a demand that varies dramatically among legislators.

Incoming House Speaker Jeremy Gillam was in the audience. He tells me he is working on some ideas relative to expense practices as a balance to what the commission might decide on pay levels. The commission sets pay, but only makes recommendations to the legislature on expenses. Dumas suggested that the legislature would likely adopt the commission's recommendations, for political reasons.

A reasonable person might say a meaningful pay increase, accompanied by a cleanup of expense practices and excessove per diem billing, seems in order. That would be so if you trust elected officials to behave reasonably and ethically. History offers some cause for skepticism.

Chairman Larry Ross promised the commission would abide by the Freedom of Information Act and have a process that was "open, honest, transparent and inclusive." He raised a question — on which a member of the attorney general's staff said research was necessary — on whether it was obligated to make a firm pay increase prooposal by mid-February. Could it, for example, if more time for study was needed, make a recommendation later and make a pay raise retroactive. The amendment itself is silent on the point.

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