Hutchinson Gives Specifics On Big Ticket Session Items

May 21, 2015

Gov. Asa Hutchinson speaking with reporters Thursday about next week's special session of the Arkansas Legislature.
Credit Jacob Kauffman / KUAR News

Governor Asa Hutchinson is asking the Arkansas Legislature to approve an $87 million dollar bond package to help Lockheed Martin secure a multi-billion dollar federal military contract. 

Hutchinson held a press conference at the Capitol Thursday to release more details about the special session that convenes next week. 

Lockheed Martin Bonds

“The Amendment 82 project, the Lockheed Martin joint readiness training vehicle project, is the most important issue on the call. That’s really the fundamental reason that we’re calling the Legislature back into session,” said Hutchinson at the opening of his remarks.

The governor’s office released details in an e-mail on how the $87 million bond issue would be spent between a direct payment to Lockheed Martin for relevant developments, workforce training, and financing. Nearly all the funds go to the account of defense giant Lockheed Martin for facilities improvements.

Total Amendment 82 Bond Amount: $87,145,000

• Cash grant to the Company for qualifying building and infrastructure improvements, equipment, and other eligible costs incidental to the project: $83,000,000

• Training grant to be used for construction and equipping of training facilities at Southern Arkansas University Tech: $1,645,000

• Payment of the State’s bond issuance costs, debt service reserves, and other eligible financing costs incurred or paid by the State: $2,500,000

Hutchinson noted it is the “only commitment from the state” with “no additional funds” slated for the economic development super project. Arkansas’s financial backing would only go into effect if Lockheed Martin is successful in its bid to win a federal contract to manufacture the next generation of humvee-like vehicles.

“We are trying to put Lockheed Martin, the state’s partner, in the most competitive position to win this contract from the Department of Defense. It’s a competitive marketplace as to which company is going to get to produce the 55,000 vehicles,” said Hutchinson.

The company would also make a 25 year commitment with the state. The governor’s office estimates the bonds could be repaid in 15 to 20 years. The details of the agreement are not yet available. The governor’s spokesman J.R. Davis said more information will be released Friday. However, some expectations for the project in south Arkansas were voiced by the governor.

“This $87 million investment through a bond issue will return to the state of Arkansas by retention of over 550 employees,” said Hutchinson referring to an existing Lockheed Martin facility near Camden. “Over time we will double the number of employees.”

2016 Primary Change

Moving up Arkansas's primary date from near the end of the election season to 5th, along with a block of Southern states in a so-called SEC Primary, is also on the agenda for next week’s special legislative session. The March 1st date is the earliest allowed by the Republican National Committee following the four contests in Iowa, New Hampshire, South Carolina, and Nevada.

Governor Hutchinson said he has not discussed moving-up Arkansas’s presidential primary date with fellow Republican, and former governor Mike Huckabee. However, at the Capitol on Thursday Hutchinson said he has spoken with others in the 2016 contest at a recent meeting of the Republican Governors Association.

“I’ve actually talked to a few campaigns beyond our former governor and there is an interest in campaigning here but that’s the motivating factor because it is totally unpredictable,” said Hutchinson. “The sole motivating favor for me is that this is the best change for Arkansans, the average Arkansan, to have a meaningful vote in the presidential campaign.”

Also moved would be non-presidential, state-based primary contests. It is not a paradigm shifting or challenging development in Hutchinson’s opinion.

“The fact is that campaigns are pretty much a year long process so even though you move up the filing period, they’re already out there. So, I don’t think it’s a great change in practical politics in Arkansas. There are just some changes as to when the primary is any when the filing times are,” said Hutchinson.

State Government Mergers

The first-term Republican governor also walked through the proposed merger of some state agencies and services.

“If you combine all four of these efficiency matters that we’re presenting at the Legislature it has an approximate savings of$10 million over five years. A small amount year by year but it adds up,” said Hutchinson.”

The Division of Land Survey, Arkansas Building Authority, Department of Rural Services, and Science and Technology Authority will be merged into other state agencies. The governor’s office has a range of projections for each of the mergers.

Below are the conservative estimates:

Arkansas Department of Rural Services to Arkansas Economic Development Commission: $175,599 in general revenue savings; 8.4 percent reduction in operating costs; and a 33 percent personnel reduction.

Arkansas Science and Technology Authority to AEDC: $450,808 in general revenue savings; 14.4 percent reduction in operating costs; and a 20 percent personnel reduction. 

Division of Land Survey to Arkansas Geographic Information Office: $166,880 in general revenue savings; 37 percent reduction in operating costs; and a 50 percent reduction in personnel.

Arkansas Building Authority to Department of Finance and Administration – Management Services: $416,069 in general revenue savings; 2.4 percent reduction in operating costs; and a 9.7 percent reduction in personnel.