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Tuesday's open line

Posted: 13 Feb 2018 12:57 PM PST

Here's the open line. Also plenty of Trump talk on the daily video.

AEDC director adds first-class travel costs to ethics form

Posted: 13 Feb 2018 12:01 PM PST

Mike Preston, director of the Arkansas Economic Development Commission, filed an amended financial disclosure form this week after we asked about his omission of travel expenses paid for him by the private Arkansas Economic Development Foundation.

We inquired because Gov. Asa Hutchinson reported some $17,000 in payments by the Foundation for trade-related trips to Europe, Asia and Mexico. Preston's annual statement of financial interest, due at the end of January for state agency heads, showed no travel expenses.

As AEDC director, much of Preston's travel, including abroad, are business expenses of the agency and need not be separately disclosed. But the state will only reimburse for coach class air tickets. Upgrades to business or first class must be paid by the individual or, in this case, may be paid by the Foundation. The same for alcoholic beverages.

In 2017, according to a summary provided by the department, Preston charged the department $6,351 air, hotel and other expenses for a trip to China, $13,070 for a trip to Paris, Tel Aviv and Germany, and $1,313 for a trip to Mexico.

His amended statement of financial interest, filed Monday, after I began inquiries last week, showed in the category to disclose nongovernmental sources of travel expenses that he received $5,229 to pay for upgrade of his air tickets on the European trip in June (on top of $7,156 for coach class tickets charged to the department) and $4,761 for an air ticket upgrade on the October trip to Asia (on top of $2,556 charged to the department)

I asked department spokeswoman Brandi Hinkle why the air upgrades hadn't been reported originally. She said by e-mail:

There's special language in the AEDC appropriation bill that allows a portion of his salary to come from the foundation. He interpreted the reporting under Section 3B – which is where he reports that income from the foundation – to cover any additional payments, such as travel reimbursements. There was no exchange of dollars, as the foundation pays the invoices, but after talking with legal counsel yesterday, Mike amended the filing to include the travel upgrades in the other section.
Preston was hired in 2015 at a rate of $167,000 a year, with $28,000 coming from the foundation. He also got a $50,311 bonus last summer paid from the foundation.

The Trump food boxes: His meanest idea yet

Posted: 13 Feb 2018 11:17 AM PST

The Trump administration idea to replace a big part of the SNAP (food stamp) program with boxes of non-perishable food items is, I think the LA Times writer gets correctly, his meanest idea yet.

It is also stupid. And major media have fallen down badly on the job by picking up the administration phrase that this is somehow akin to "Blue Apron," which provides ingredients and instructions for busy yuppies to put a gourmet meal together.

Even better commentary is this list of 60 questions posted on Twitter by Annie Lowrey. As someone else observed, there's no indication the Trump administration considered any of these questions, beginning with delivery and lack of fresh fruits and vegetables.

The man behind 'Boy Erased,' an Arkansas experience coming to the screen soon

Posted: 13 Feb 2018 11:03 AM PST

Ernest Dumas writes this week about Garrard Conley, an Arkansas native whose biography about being the son of a Baptist preacher forced into a church-supported gay conversion program is the basis for the coming movie "Boy Erased" starring Russell Crowe and Nicole Kidman.

Dumas encountered Conley when he and his mother talked recently at the David and Barbara Center for Oral and Visual History at the University of Arkansas.

There's a happy end to Dumas column, including a surprising credit to the late Justice Jim Johnson, the notorious segregationist, who'd told Dumas long ago that the decision of people to come out of the closet in numbers had transformed public opinion about homosexuality in a relatively short time (if not completely.) Dumas writes:

Conley grew up in Cherokee Village, the son of a salesman- cum-Missionary Baptist preacher and a doting mother, and he was outed by another gay student when he was a freshman at Lyon College at Batesville. His father prayed about it and told him that he either had to enter gay-conversion therapy and exorcise whatever evil attracted him to men or else leave their house and companionship forever. He was more than agreeable and spent some time in the crazy gay-conversion program called Love in Action at Memphis until, realizing that he was on the verge of suicide, his mother said "We're stopping all of this now."

That is the story he tells in "Boy Erased: A Memoir of Identity, Faith, and Family," an account of the mental ordeals of his youth upon the realization that he was a homosexual. It also is a loving hymn to his parents, both of them—the mother who became a sturdy and public champion of his being proud of who and what he was and the missionary father who could not relinquish his love for his son no matter the harsh doctrines of his church and his own ministry

Here's Dumas' full column.

We've written about Conley before, including this Q&A with him during his national book tour.

Watching the money flow in kickback scheme using Arkansas surplus

Posted: 13 Feb 2018 10:07 AM PST

As a service to the Arkansas lobbying industry, I'll save them a few dollars and post the information filed yesterday in federal court in Springdale containing the basis for former state Rep. Eddie Cooper's guilty plea of to participating in a scheme to illegally tap money paid to a giant health care nonprofit for lobbying expenses and kickbacks.

The long and short is that a nonprofit incorporated in Missouri took in more than $900 MILLION from 2008 to 2016 (yes, nearly a billion) in federal and state money to provide various mental health and medical services in four states including Arkansas. Officials of that company then schemed to dole out hundreds of thousands in campaign contributions prohibited by federal tax law, in lobbying expenses prohibited by federal tax law and in kickbacks to legislators such as Cooper. The information noted that campaign contributions often were handed out personally to politicians, to be sure the source imprinted on them.

All has NOT been revealed. Though it's easy enough to trace the unnamed co-conspirators to jobs they held, some references to how they enlisted other legislators and lobbyists in work on Medicaid-related legislation at least raises the suspicion that others might have received ill-gotten money, too. Cooper is the fourth legislator to be accused of profiting from General Improvement Fund money directed to nonprofits.  GIF is the state surplus slush fund ruled unconstitutional last year. He joins fomer Republican legislators, Micah Neal and Jake Files, who've pleaded guilty, and Jon Woods, who's awaiting trial.

The details include quotes from e-mails about targeting GIF money and about divvying up money diverted for lobbying.

Follow the dots, Capitol insiders, in the full federal information.

Government in the shadows; the Arkansas Senate likes it that way

Posted: 13 Feb 2018 07:31 AM PST

The legislature's budget session continues today and, thanks to the Arkansas Senate, the important business isn't accessible to the public unless you trot down to the Capitol.

What do I mean?

In a budget session, most of the action is in the Joint Budget Committee, which reviews appropriation bills. That's just about the only business on the agenda at a budget session, save efforts to suspend rules to take up other matters. That requires a two-thirds vote. Some measures on guns, naturally, have already surfaced.

But back to public accountability. Since Joint Budget includes both senators and representatives, its meetings are not streamed on the web. No meetings of Senate committees are streamed on the web. The Senate grudgingly allows an audio stream of its sessions, but it is impossible for the average Arkansan to have any idea who's speaking.

The House video streaming not only works well, it is archived. The Senate? They don't want you to have that information.

Kudos to the House. Continued shame on the Senate.

LR City Board candidate presses tax question on police car use

Posted: 13 Feb 2018 07:19 AM PST

Russ Racop,
the blogger who's running for City Board of Directors against incumbent Director Doris Wright, has added a new question to those he's been peppering the city with about the police department.

As we've noted before, the police force in a majority-minority city is overwhelmingly white (363 of 560 officers are white); most don't live in Little Rock (376 of 560) and about a third of the force (between 188 and 201), again an overwhelmingly white contingent, get to drive police cars home, most of them (more than 136) to cities other than Little Rock. Racop has been gathering updates on the precise figures and on the amount of money the city pays to fill up these cars with gas, which is only a portion of the depreciation and other costs  incurred from the commuting.

But now he's posed a question several readers have asked:

According to IRS Publication 15-B (Employer's Tax Guide to Fringe Benefits - https://www.irs.gov/pub/irs-pdf/p463.pdf ), "Any use of a company-provided vehicle that is not substantiated as business use is included in income."

As with all non-cash benefits, the IRS requires an employer to calculate the fair market value of the benefit. For vehicles, they are required to use one of three methods for the computation: Cents-Per-Mile Rule, Commuting Rule, and Lease Value Rule.

Can you provide conformation that the employees listed in the attachment – "Fuel Info.xlsx" - have the value of the benefit , i.e., use of a city owned vehicle as a take home vehicle, included in their W-2's and state the method the city of Little Rock uses to calculate the value?

Good questions. Police have justified the practice by saying assigned cars allow officers to respond quicker to emergency calls. Does that make it a business use?

Here's the list Racop received of how much gas pumped by each officer with a car.

I think it would be easy to justify drive-home cars in Little Rock. The high visibility and symbolism of a policeman nearby seems an obvious crime deterrent. In Cabot? Not so much benefit to Little Rock taxpayers.

UPDATE: A city spokesman told me there is a taxable benefit ascribed to cars that city employees are allowed to drive home. But .... if a car is a marked emergency services car (a police patrol car), the city believes the car is exempt from taxation under federal law. Racop has also received a partial response that indicates there are exemption for unmarked police cars as well. He was told there are some "imputed wages" for some employees and a fuller response is promised.

Trump's bait and switch on budget, infrastructure

Posted: 13 Feb 2018 05:33 AM PST

The fast and furious news from Washington allows important details to be buried. Let's get to some of them:

* TRUMP'S BUDGET: He likes to emphasize the military spending. It swells the deficit, even though it slashes billions from domestic programs, including Medicare and Medicaid (which candidate Trump PROMISED not to cut) and food stamps. This is on top of his deficit-swelling income tax cut, which gives its biggest benefits to the ultra-wealthy.

* TRUMP'S INFRASTRUCTURE PLAN. It's a sham. He calls it a $1.5 trillion investment. He's talking about only $200 billion in federal spending (he doesn't say where he'll get the money) and depending on 80 percent matches from local governments.

Right. Consider Arkansas. It has embarked on an orgy of tax cutting and slices in government services (60,000 cut from medical assistance for starters). It has no money for highway construction. It's going to come up with an 80 percent match for infrastructure projects? Hell, we can't buy soap or turn on the heat for kids held in squalid youth lockups.

Call it poetic justice. Gov. Asa Hutchinson wants to cut basic services, particularly for the poor, while pouring money on the rich. He'll find it hard to do with the stuff rolling downhill from D.C.

But, hey. 65 percent of Arkansans can't be wrong.

Jan Morgan strikes a populist note, goes after Asa's millionaire supporters

Posted: 13 Feb 2018 05:10 AM PST

Gov. Asa Hutchinson's
proposal to deliver a tax cut worth roughly a 14 percent reduction in state income taxes for the wealthy in 2019 is a good place to check in with his Republican primary challenger, Jan Morgan.

In a speech this week to Cleburne County Republicans, she sounded her familiar theme that she's the true conservative in the race while Hutchinson is a "progressive establishment RINO." (Progressive is now apparently as dirty a word as liberal.) An even sharper illustration of her populist theme is this Tweet:

Indeed, in 2013, only 670 Arkansans reported income of more than $1 million and it's a safe bet that a good number of Asa's campaign committee qualified for that category. The tax break he says he'll roll out in 2019 if in place in 2013 would have saved the 670 super-wealthy $22 to $24 million or so. And they are making even more money today. Thus, Asa's tax cut would give less than one tenth of one percent of taxpayers 15 percent of his tax cut.  A couple of $2,700 checks to Asa would pay some handsome dividends for Asa's plutocrat posse.

PS: No this is not an endorsement of Jan Morgan.

Family advocates fault governor on spending, tax cut for upper income

Posted: 13 Feb 2018 04:57 AM PST

Arkansas Advocates for Children and Families has posted its assessment of Gov. Asa Hutchinson's legislative session-opening remarks.

It notes the positive economic news that Hutchinson cited, but after the brag list:

During the second half of his speech, the Governor outlined his priorities for this year's fiscal session. He proposed a budget that he claims fully funds education; reduces the rate of growth in state Medicaid spending and the use of one-time funds for ongoing Medicaid needs; meets overall state's budget; and creates a surplus that will be used as a cushion for future economic changes while generating funding for highways. However, as AACF has previously noted, the Governor's proposed budget does not come close to meeting important budget needs for children and families in a range of areas, including pre-K, juvenile justice, afterschool and summer school programs, targeted tax relief for low-income families (like a state Earned Income Tax Credit), and adequate funding for K-12 education and facilities, to name but a few. Nor does it come close to meeting the state's growing infrastructure needs for highways and roads.
And then there's talk of a tax cut in 2019 — a huge one for a small percentage of the wealthiest Arkansans. Hutchinson would cut the top marginal tax rate from 6.9 to 6 percent, a 14 percent cut in the taxes taken on the top end.

But whoa. AACF notes this means that the governor wants to give the tax cut only to those making more than $75,000. (Indexing means the top bracket now actually kicks in at $77,400.) Writes AACF:

The rate reduction in the individual income tax would also have major implications for tax fairness, and not in a good way. It would do little to change a state and local tax system that has low- and middle-income taxpayers paying nearly 12 cents in state and local taxes on every dollar they earn, nearly double the less than 6 cents on every dollar being paid by Arkansas's wealthiest taxpayers. The Governor's proposal also would eliminate what little progressivity remains in the personal income tax. A reduced top rate of only 6 percent for higher-income taxpayers (incomes greater than $75,000) would equal the top rate of 6 percent currently paid by middle-class taxpayers, those with net incomes between $21,000 and $75,000 (Act 78/79 of 2017). 
As I noted yesterday, based on 2013 figures, the most recently available, only 39,000 of more than 1 million tax filers made more than $100,000 that year, but they'd realize more than $100 million of the governor's $180 million tax cut — more than half the windfall to less than 4 percent of the filers.

Stuttgart lottery dispute settled

Posted: 12 Feb 2018 03:54 PM PST

Remember the dispute over a
$300,000 winning lottery ticket given to waitresses at a Stuttgart restaurant by the owner as a Christmas present.

One waitress, Mandy Vanhouten, claimed the whole prize. Another, Leslie Underwood, said they were supposed to share. She sued.

They've reached an undisclosed settlement, Jessi Turnure of KARK/FOX 16 reports.

The ticket was worth about $200,000 after state and federal income tax deductions. Some legal fees seem likely to be part of the division of the remainder.

Eddie Cooper, former legislator, pleads guilty to kickback conspiracy

Posted: 12 Feb 2018 03:46 PM PST

Eddie Wayne Cooper, 51, who served three terms as a Democratic state representative from Melbourne, has pleaded guilty in Springfield, Mo., to participating in a conspiracy to embezzle more than $4 million from a nonprofit health care agency.

Cooper had been identified in December as an uncharged co-conspirator.

In today's plea deal, Cooper admitted that he conspired with executives of Preferred Family Healthcare to use its money for unlawful political contributions and lobbying, as well as benefit themselves. Cooper received at least $387,501 from a lobbying firm and $63,000 in kickbacks. He must forfeit that money.

Cooper served in the legislature from 2006 through 2011, then became a registered lobbyist. In 2009, he was hired as regional director for Preferred Family Healthcare and worked there until April 26, 2017.

Four others were mentioned but not identified by name in a federal information outlining the three scheme.  They included three residents of Springfield who've been executives of the nonprofit, identified as Persons 1, 2 and 3.  Another person, identified as Person 4, was Rogers resident who served as an executive for company operations in the state of Arkansas and operated two lobbying firms, also was named.

The conspirators had contributions to politicians and their campaigns reimbursed by the nonprofit, which the law governing 501c3 nonprofits prohibits.

The scheme here is similar to that outlined in the federal case in which former Republican Rep. Micah Neal has pleaded guilty and former Republican Sen. Jon Woods is awaiting trial in case in which they allegedly received kickbacks from government grants made to Ecclesia College. Lobbyist Rusty Cranford, who headed Decision Point, an affiliate of Preferred Family, has been identified in court documents as using company money for kickbacks in that case. He has not been charged in the Arkansas or Missouri cases.

From the release on Cooper:

In order to provide a veneer of legitimacy for the kickbacks paid to themselves and others, and to disguise the nature and source of the payments, conspirators caused the payments to be described in the records as business expenses, such as "consulting" and "training" services, and executed sham "consulting agreements."

Part of the scheme involved $3 million in payments and kickbacks with a company identified in court documents as Lobbying Firm A, an Arkansas firm owned and operated by Person #4 that also employed Cooper as a lobbyist.

Preferred Family Healthcare paid Lobbying Firm A to provide lobbying and advocacy services. Cooper and others solicited the assistance of elected and appointed officials regarding legislative issues that impacted the charity, in particular matters involving the charity, and in steering grants and other sources of funding to the charity from 2010 through 2017. These funding sources included proceeds from the Arkansas General Improvement Fund. Preferred Family Healthcare paid Lobbying Firm A more than $3 million from 2010 to 2017. These checks were falsely classified as a consulting expense in the books and records of the charity, when in fact the checks were payments for lobbying services, including direct contact with elected and appointed public officials, and for kickbacks paid to Person #1. From 2010 through 2015, the plea agreement says, Person #4 paid $640,500 in kickbacks to Person #1 by way of checks, and on numerous additional occasions, paid kickbacks in cash.

Part of the scheme also involved nearly $1 million in payments and kickbacks with a Philadelphia, Penn.-based lobbying firm. Donald Andrew Jones, also known as "D.A." Jones, 62,of Willingboro, N.J., pleaded guilty on Dec. 18, 2017, to his role in the conspiracy.

The full federal release is here

The mental health facilities of the nonprofits depended on significant funding from state governments — $180 million in 2016 alone from Arkansas, Missouri, Kansas and Oklahoma.

Cooper can be sentenced to five years on the charge.

The nonprofits merged into a new corporate entity, Alternative Opportunities. Continuing to operate are agencies that provide mental and behavioral health treatment and counseling, substance abuse treatment and counseling, employment assistance, aid to individuals with developmental disabilities, and medical services.

Cooper is the fourth state legislator accused of taking kickbacks from General Improvement Fund money. Former Republican Sen. Jake Files has pleaded guilty to divert GIF money from a construction project to his own use.

Millions in GIF money was sent at legislators' direction to general improvement fund projects around the state, including a number in which Rusty Cranford participated. No other allegations of kickbacks or bribes have been made against other legislators, but suspicion has run high that more could be implicated.

The federal information against Cooper details his work to help the nonprofit with other legislators. Read on for nitty-gritty of the work of a legislator on the take, who had some friends helping, whether they received money as he did or not.

On February 22, 2010, Person #4 emailed Person #1 and Person #2 and courtesy copied Cooper, who was then an elected public official, and one other person, regarding an issue with bundled Medicaid billing and how they should approach it. The email states, in part, "We have placed Medicaid on the agenda for Public Health Committee, thanks to our very own Cooper and ["Arkansas Representative A" and one other person]."

On August 24, 2010, Cooper, while serving as an elected public official, emailed Person #4 letting him know he had heard from a source that the Governor was going to lift a moratorium on RSPMI [rehabilitative services for people with mental illness] providers, which would allow public schools to bill Medicaid.

Cooper further stated that source was, "…going to snoop around and see what he could find out." Cooper then stated, "I really don't know what he is looking for but I do have concerns about anyone snooping around our Medicaid contacts." Person #4 forwarded this message from Cooper to Person #1, whose email response consisted of an expletive.

On October 24, 2010, Person #4 emailed "Arkansas Representative B," asking about the meeting time for the RSPMI Policy Work Group, and stated that, "Rep. Cooper is on the
committee and he is carrying my vote to follow your lead." Person #4 then forwarded the messageto Cooper stating, "Here it is."

On October 20, 2010, Cooper emailed Person #4 scanned images of two items: a check written to a political candidate for $500, with the word "Donation" in the memo section; and a receipt from a restaurant in Texarkana, Arkansas, for $2,851.07, roughly half of which was spent on food and the other half on alcoholic beverages (115 separate drink items) and gratuity.

On October 22, 2010, Person #4 forwarded the email with the scanned items to Person #1, stating, "this is one of coopers."

Also on October 20, 2010, Person #1 replied, via email, to Person #4 stating, "That one is going to be tough to pay out of AO. Can you send me a [Lobbying Firm A] bill for that and I will FedEx you a [Lobbying Firm A] check for about that amount or a little over. So it is the $500 plus the dinner receipt?"

Also on October 22, 2010, Person # 4 emailed Person #1, stating, "will do."

On February 27, 2011, Person #4 emailed Cooper and Arkansas Representative A with the subject line, "GIF," stating: Each of us divided up Members of the Legislature several weeks ago. I have all those Legislature that had us draft bills. We know the outlook of the House is not good. I need a report on everyone's Senator that has not had bills drafted and what Rep. [redacted] and [redacted] final word is for us.

We can meet at the office around 6:00 - 6:30 Monday evening at the office. In our report we have to draft for the Resource Team we have to know what each Senator final word is. We have froze all spending until we know where we are with the House.


(1) Senator [redacted] did not do a bill, but he has committed to adding funds to Senator [redacted] bill.
(2) Senator [redacted] will be adding funds to Senator [redacted] bill.

Will see you there."

On October 10, 2011, Cooper emailed Person #4 and courtesy copied Person #2, Person #3, Person #5, and Person #12. Cooper provided an update regarding the potential lifting of the RSPMI moratorium and stated, "Arkansas has 243 school districts that could potentially operate their own RSPMI service if this policy is adopted" and, "[o]ne thing about this Draft that really troubles me is that they have included the Educational Service Cooperatives as a possible School Run RSPMI Provider." Cooper also congratulated Person #12 for his/her being on the Governor's Commission on Children's Mental Health, and stated that the point of his email was to provide information to Person #12 before his/her first commission meeting.

On November 28, 2011, Person #4 emailed Cooper, Arkansas Representative A Arkansas Representative C, and courtesy copied Person #2, stating, "Please read through this info, this is what we can not [sic] have happen if they try to bring this to the Legislature." The attached document, entitled, "Healthy Children = Successful Students," discussed a proposal to permit the state's Educational Service Cooperatives to bill as possible school-run RSMPI providers, providing health care services that could have competed with the Charity.

Person #4 told Cooper he/she "had good news and bad news." The "good news" was that "we've picked up AO as a client," meaning the Charity had retained Lobbying Firm A to provide lobbying services in Arkansas. The "bad news" was that Person #1 "wants half the money, he's gonna lobby, so there's no money in it for you," meaning that Person #1 would get half of the Charity's payments to Lobbying Firm A, and there would be no additional income to  Cooper from the arrangement.
You can read the whole information here.