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And thank you, as always, for joining us for the broadcast in a moment.

The chaos in Washington, creative ultimately constructive or chaos for its own sake.

In a moment, we'll get a briefing from the Arkansas Democrat-Gazette Washington bureau chief.

First, amid an economy that shows some signs of slowing down with the prospect of tariffs casting a shadow over Arkansas commerce trade with our major trading partners.

The revenue picture.

As the legislature prepares to adopt a budget for the coming fiscal year.

Also, some changes announced by the Department of Finance and Administration that could be beneficial to many Arkansans with digital driver's licenses and visits to revenue officers always a treat.

The state's chief fiscal officer joins us now, Secretary Jim Hudson.

Mr. Secretary, thanks for coming aboard.

Thank you for having me, Steve.

The revenue report, we got the numbers this past week from the previous revenue report and tax cuts, income tax cuts, notwithstanding revenue, any revenue losses from tax cuts notwithstanding.

Growth appears to keep it on a par.

Yeah, we're in a good place.

I think you're today we're about $100 million ahead of what our forecast was.

So we think we're going to see at this point still finished the year with a healthy surplus.

So we remain optimistic about the state's economy and about the state's budget.

Well, there is also a proposal in the administration's proposal to reduce grocery taxes, eliminate the state tax, not state, not the local tax, but state tax.

And that would shave in the neighborhood of about $12 million or a smidge under that.

But in that neighborhood, yes, you'll accept that.

Okay.

All right.

Well, a good time to do this.

It is a good I think it's always a good time to responsibly cut taxes.

And particularly you're talking about taxes that are imposed on necessities for living like food.

And so I think we can afford it.

We have ample funds in the agencies that benefit from the conservation tax, which is the only tax remaining on groceries at the state level.

And so the governor felt very strongly that, you know, if inflation being what it's been some food insecurity issues in Arkansas, this would be a good time to go ahead and let's take that out.

So it's not affecting Arkansans any longer.

The great bulk of the revenue loss to the to the state grocery tax, if it's if it's approved, would be from the outdoor programs, which would seem to be a staple like pillar of the governor's economic development program.

They are, of course, and she's committed to providing them what they need in terms of resources.

But you look at Amendment 75, which is the conservation tax passed about 25 years ago through a lot of work of of the governor's mom.

She campaigned heavily for that.

It has really fulfilled its purpose.

We've gone from the first year in collecting taxes for that program, about 38, $39 million.

Last year, we collected $110 million.

So it is very, very well funded.

The agencies that benefit from that game and fish parks and tourism heritage and keep Arkansas beautiful.

Modest reductions for those agencies.

They'll still be able to achieve their mission of a six $7 million though is that's still modest.

Well, far on the two big ones.

Sure.

Yeah.

So for about 4.8 million, 4.9 million for both game and Fish and for outdoor and for and for parks, heritage and tourism, they have healthy fund balances, we believe.

And they're still collecting a fair amount of revenue.

So about after this change, $100 million total will be collected by the conservation tax.

So it's still a well-funded program.

A good time to do it responsibly.

Is this a good obviously think it's a good time.

Others disagree, particularly for human services organizers like the NGOs particularly.

Well, I think in terms of for this conservation tax doesn't affect the NGOs as much as it does the states budget for those departments.

The governor's first filter, whenever we're talking about tax cuts is, you know, can we do it responsibly and still maintain our level of service that we need to.

Talking to Shay Lewis, who's the Secretary of Parks Service and Tourism.

He absolutely believes that they'll be just fine.

Are you concerned at all about consumer confidence has turned down and we have the matter of tariffs and trade, which could obviously impact every state, particularly Arkansas, because we do so much commerce.

You concern with that?

I'm not at this point.

I think, you know, the financial markets obviously are struggling a little bit this week.

The stock market is down.

And so we always don't pay attention to what's happening in stock markets.

But that really isn't the real economy.

The real economies, you know, plants making products, people going out, performing services.

I think the real economy in Arkansas is doing just fine right now.

But obviously having clarity that's good for consumer spending.

And consumer spending is such a big driver for Arkansas economy.

But look at our most recent revenue report.

Our sales tax collections are up, and that's an indication of consumer health in my mind.

There's a matter of fact, sales tax exemption of a sales tax collection.

Sales taxes are on a par now with a personal income taxes of roughly it is a bigger piece of the pie now as we're reducing our income stream from income taxes.

Sales tax becomes more important.

Yes, sir.

Okay.

Onto a couple of other.

Well, let me ask you, there's one final question on tax and finance.

What are you is there something that you are concerned about?

What are you keeping an eye on?

Well, I think you're always concerned about the unexpected, unanticipated shock to an economy.

So anything in global affairs and anything that can happen in the energy markets, it's those things that could set off, you know, inflation.

That's where we would be a little concerned.

But right now, I think the Arkansas economy is is very healthy and seems to be humming along.

On to digital driver's licenses soon.

Maybe I can keep it on my phone.

You know, you can download right now the Arkansas Mobile I.D.

app.

You can go to the Google store and go to the Apple Store.

It's free.

Just go and download it.

I think this week.

So far, we've had about 12,000 Arkansans since we made the announcement.

Do the download.

So it's functioning right now.

But and this is obviously another step in a digital age of cyber age.

Yeah.

And I think the thing about it is it's also an integrity measure as well.

You know, there is a thriving underground economy, a lot of it from China in terms of producing fake I.D.s.

And so you could have a Arkansas driver's license that looks totally credible and it's fictitious.

It's not real.

With the mobile I.D., you'll be able to as a merchant, if you're selling a product only for people above age, you'll be able to instantly validate that's a that's a true license.

And that person's age is what's represented in that app.

We're really excited about it.

The thing that I'm personally pretty excited about is learning about travel at the airport.

I use my my phone for boarding passes and most people do, I think, these days.

But you sort of fish out your physical driver's license to show the TSA agent or your passport.

We're in the process.

We're having to complete the process, yet we're in the process right now of working with TSA to have them validate the mobile I.D.

for Arkansas.

And once that's validated, you'll be able just to have your phone as you go through security.

Show me a boarding pass.

Show them your digital I.D., you name it to fish out your driver's license.

Now, I am reminding people that that does not apply to driving your car.

So right now, you still have to have that physical driver's license to operate a motor vehicle in Arkansas.

You don't want get in trouble state.

Well, there would be, I would imagine, some interface here with the Department of Public Safety over that now.

But do you see a day where I could, you know, if I'm going a little too fast, I just off.

Yeah, I really do.

I think that that's part of the long term plan.

I think there are two concerns or two issues we have to address.

And this one is it will require, you know, equipment at the state police and issue to the troopers for them to be able to authenticate at the car window.

You don't want to hand them your phone and then take it back to their car.

They need to be able to do it right there as are standing beside you that require that that's obviously will be a capital expenditure for that.

But then we also want to be concerned about the amount of equipment our trooper has to carry around.

They have a lot of equipment on right now.

So we're going to work with Mike Hager, Secretary Haggard, DPS to figure out a plan to get that implemented.

And hopefully local law enforcement will follow soon after making real progress on this.

I mean, is this something we can see in the next couple of years?

The part I would say with law enforcement is going to be probably a longer than a couple of years just because of the capital equipment.

But we are working on the project plans right now.

On to another item.

And that's that will take a number.

Gosh.

Well, maybe we can do it differently.

You know, I'm I'm excited about the mobile ID, but personally, I'm more excited about this one because this changes lives right now.

I'm a secretary DFA, but I'm a customer of DFA as well.

And so I came to the job 18 months ago, maybe with a little bit of a frustration of like, Can we do better?

You know, the governor's father, when he was governor 25 years ago, he, you know, really revolutionized the motor vehicle registration process.

You remember getting the safety inspections?

Oh, I do.

I do.

It was it was a majority.

Yeah, it was a gantlet you had to run just to get your car tags renewed.

And he he was frustrated with that.

And he wanted that changed.

And he did get that changed.

It's been 25 years and I think we probably are past due a little bit of a revisiting of our business processes.

So we want to give Arkansans, you know, their lives back, let them control their calendars, let them control their schedules so you can now go online to DFA dot Arkansas dot gov and you can plan your state revenue office visit, pick a day, pick a time that works for you, and then you show up the way.

It will be very minimal.

Just a few minutes you'll be seen, take care of your business and then be about your life.

But so many of us made so many good friends sitting there waiting on our number two vehicle.

And you know, if you really lacked a walk walking experience, we're going to keep that for you, too.

Secretary Jim Hudson, thanks very much for coming aboard.

Thank you, sir.

Glad to be here.

All right.

Come back soon and we'll be right back.

And we are back.

Federal layoffs, federal closings, possibly even some federal buildings on sale.

It's difficult to accurately inventory the impact of the spending cuts that are ordered by the Trump administration, at least those in recent days, as some of the directives have been reversed.

But we can we could get an overview maybe of the situation at the end of this first week of March.

And we do that with the Arkansas Democrat-Gazette Washington correspondent who joins us from the nation's capital.

Alex Thomas, thanks very much for coming aboard.

What do we know?

What do we not know and when Can we know something for sure?

Boy, aren't those the question, Steve?

This is an ever fluid situation up here in D.C.

I think that may be the nicest way to put it, because on one day we'll hear something and then the next day it changes.

We'll have tariffs on Canada and Mexico.

Well, wait, there's exemptions to it.

Some buildings may be up for sale, like the Federal building in Little Rock.

Well, wait a minute.

That webpage is inactive anymore.

This has just been a pattern with this new administration.

We're not even at 50 days yet for the second Trump presidency.

And there's a lot of questions about how this administration is going to run for the next four years.

When it comes to our lawmakers, they're happy with the policies that the Trump administration has been supporting and the policies that they want to implement down the road, furthering the Trump tax cuts, for instance.

But at the same time, from an outsider's perspective and from a reporters perspective, it's difficult to track all of this because there's just so much moving every single moment of the day.

Well, for those of us who aren't necessarily immediately or think we aren't immediately reliant on the federal government, there are real people involved here households, incomes, mortgage payments, etc.. And they are asking who's running the show up there?

Exactly.

And when you look at it from the outsider's perspective, it seems a lot of it is coming from the White House.

But keep in mind, Congress still does work up here.

They do legislation.

They hold meetings to hold votes.

They'll hold a vote next week on trying to prevent a government shutdown and hopefully a vote later this spring on budget resolutions.

But there have been challenges in just trying to get everybody on the same page with the House the way it is.

You have that small Republican majority.

And with the Senate, yes, you have 53 senators who will support a Republican agenda.

But if you want to get past the filibuster and seriously advance legislation, you need some Democrats on board.

That's been a real challenge.

Take, for instance, the vote this week on transgender female athletes.

Yes, Senate Republicans voted for it, but they couldn't convince any Senate Democrats to go along with them.

Well, we have a deadline of the ides of actually the eve of the Ides of March of this year.

It's a week from today, a week from Friday, anyway.

What what's the outlook there?

How close are we to a shutdown?

Right.

So the two possibilities right now that I've heard are, one, we have a continuing resolution that gets us through the rest of the fiscal year through September 30th.

But the other option is maybe a short term continuing resolution that allows appropriators to finalize appropriation measures for the current fiscal year.

That's something that Steve Womack would actually prefer.

Keep in mind, a senior House appropriator leads the subcommittee on Transportation, Housing and Urban Development.

And not only does he lead that subcommittee, he also has projects in the appropriation measures that don't get funded unless we include that money in some sort of measure or some sort of package.

Okay.

On.

Go ahead.

I'm sorry if I interrupted.

No, you're absolutely fine.

We can continue on that.

When we're talking about continuing resolutions, it's only continuing funding based on current levels.

We need new appropriation measures to fund project in districts and states.

And that's something that Steve Womack is concerned about.

He would prefer having a short term C.R.

so lawmakers and appropriators can get their work done for the current fiscal year.

This is still a relatively new Congress, but the same time they're having to deal with the past Congress's lack of effort in trying to get the previous fiscal year work done and trying to get things started for the current fiscal year, which we're now in month four into month five kind of course dependent.

Another issue that's hanging and that's the extension of a of the 17 tax cuts.

Where does that stand?

A lot of a lot of businessmen here in Arkansas, one to go.

Homeowners are consumers as well, wondering what our tax rates are going to be like.

Exactly.

And it's a big question for consumers, for business owners, A lot of people not just in Arkansas, but across the country.

And here's where we are.

The Senate passed its budget resolution, not including those tax cuts and the House passed a budget resolution with those tax cuts.

So now senators, House members, they have to come up with some sort of plan if they want to get this done.

But this also means that they're going to have to come up with an agreement when it comes to budget cuts.

And that's been the biggest issue, I think, when it comes to discussions regarding what that budget resolution may look like.

They're talking about cuts to Medicaid, cuts to SNAP.

And something I learned when I was covering West Virginia lawmaker Steve is from Joe Manchin.

People don't know who gives them certain programs, who gives them certain services, but they sure as heck remember who takes them away.

And that's something that a lot of people up here are talking about, what they're going to do, what the map looks like as they try to get that final budget resolution, that final spending package together.

Well, I need not tell you that here in Arkansas, as in it probably every state, there is a great deal of attention being focused on the Medicaid program and what Congress is likely to do.

Can you give us an update on where the Arkansas six, shall we call them, stand on that?

Absolutely.

So just kind of give people an overview here.

Between Medicaid and CHIP, the Child health Insurance program, there's around 820,000 or Kansans who are covered through those programs.

Now, the way that the budget resolution from the House is written, the committee that handles that needs to cut $880 billion over the next ten years, which likely means cuts to Medicaid.

Now, that being said, the House budget resolution does not specify they need to cut Medicaid.

They just have to find the money from that big pot.

And I talked to Steve Womack about it.

He said it's reasonable for people to be concerned about the same time we don't have final text yet.

And so what we're going to have to look out for is what that final text looks like in the coming weeks and coming months.

It's going to be a very busy spring up here.

And I talked to Representative Westerman about that the other day, and he said, hey, I didn't come up here to sleep.

I came up here to get work done.

I'll sleep when all is said and done.

I'll sleep when they put me on the ground.

Well, well, in terms of block grants, is that likely?

That becomes another big issue as well, especially when it comes to agriculture.

And it's just a big question mark right now.

Everyone wants to cut money, but where we cut money from?

That's the challenging part.

That's the part a lot of people are going to have to get out the calculators and use their best four functions here to figure out the math, because on paper, the math has to work out and Congress has to abide by those numbers.

It's just how we end up getting there that is just not quite clear at this moment, Steve.

That's the hard part.

Well, you people are saying it's not quite fair, but I mean, when you take a look at where to to get the cuts that the administration says that it is is demanding anyway, there's really not enough money anywhere other than in the big three or four.

I mean, you know, the medical programs, defense interest on the debt, those are huge programs.

Yeah.

Yeah, huge programs.

And they want to boost defense spending as well.

And also continue those Trump tax cuts.

And I only know four functions on a calculator.

Steve, I'm not a mathematician.

I got a degree in poly sci, but at the same time, the math isn't quite math in here.

And if we're going to do this, it's going to take a lot of math to try to figure it out.

And if you're going to cut Medicaid, if you're going to cut SNAP, which by the way, 235,000 Arkansans receive benefits through that program, you're going to have to convince a lot of people this is worth it and we can do it while protecting benefits.

And that's a tough argument to make.

There's just not enough fraud and not enough abuse to say, hey, we could do this and make sure everybody who currently is part of those programs, they're still going to be protected.

Yeah.

Is there any do you foresee a moment, a a within the next, say, six months when there will be some stability that the business community and the consumers are will want?

That becomes the hard part, especially when it comes to something like agriculture.

So Senate agriculture has held a few hearings already on the state of the farm economy.

The farm economy has not been doing great, especially because Congress has dragged its feet on trying to get a farm bill done over the last two years.

And one of the things that was brought up in multiple hearings among multiple producers, not just senators but producers, the impact of the previous Trump administration's tariffs policy.

You're closing markets in China.

You're trying to find smaller markets that can fill that gap, and that just doesn't create a lot of stability.

So as we're seeing with these tariffs, you know, we sell stock markets dip the other day, it's becoming a real challenge for this administration to make adjustments, trying to make sure if they're going to protect American interest, also protect American investors, and also protect those who the international markets have not been favorable to, in part because of past administrative actions.

But when you in talking in terms of the Arkansas six, our two senators, our four U.S. reps. Is there a consensus at all on what will eventually shake out on a tariff and trade policy?

So it really depends on what policy we're talking about here.

So a great example is aluminum and steel tariffs that came on the first day of the administration, the first days of the ministration.

Representative Crawford and Senator Cotton have been instrumental, very vocal about protecting Arkansas Steel, especially with Mexican steel imports.

And they've voiced support of those tariffs because they feel that the current situation, the current relationship with Mexico, is not protecting domestic creators, not protecting producers.

And so that's one interesting aspect to this.

But at the same time, when Trump talked about tariffs the other day possibly affecting the agriculture sector, we didn't hear a lot of from our delegation regarding how that may be problematic.

A lot of people are just patient waiting.

Let's see how this all plays out, because everything, like I mentioned at the start, is changing so quickly.

We may have to make some changes, we may have to make some adjustments, and we still have to pass major legislation this year, not just spending resolutions, not just budget, trying to get something together, but also a farm bill at some point because farmers and producers need that kind of support after two years of inaction.

You're right.

Well, and with specific reference to China, these these tariffs are significant.

And the Chinese say we don't appreciate that.

We'll reciprocate.

The fact is, though, in terms of inflation, which the administration has campaigned on, you know, forever, if you go to Wal-Mart, you might as well visit China.

Exactly.

I mean, who has not been to a major box store and not seen something from China on the shelves?

At the same time, though, if you're talking to someone like Senator Cotton, who just wrote a book about the issues with China's presence in the international marketplace, the international power structure, you see these tariffs as a way to keep China in line from China, who has been abusing its practices, abusing its measures and abusing its relationships.

You see this as a way to say, hey, China, we are going to protect the United States interests.

But like you mentioned, this does come at a price to consumers.

Tariffs are not a win win situation for everybody.

Someone has to pay the price and usually it ends up being producers here in the States.

And this has been brought to my attention, too.

There are now something along the lines of 1500 Fulbright scholars or international exchange of Fulbright scholars or similar programs that are either here visiting, going to school or are abroad or preparing to go abroad.

Their stipends on which they depend have been suspended now for a couple of weeks, and they were promised some sort of update.

They're still waiting on it.

These are not documented people.

They're scholar, they're students.

And we've reached out to the State Department.

I reached out to them last night, still waiting for an answer.

We haven't heard anything quite yet, but that ends up being another problem with just how this administration is run.

A lot of questions with their actions, a lot of confusion, and just waiting to see what's going to what's going to happen when all said and done with this administration, when it finally gets its feet fully soaked here.

And that's just been a real challenge, just trying to follow this along and try to figure out, okay, who is going to be impacted by these policies and what do we need to look out for because so much has just been thrown up in the air and thrown at us and so much is now facing legal challenges.

There's just so many questions right now that we're still trying to find answers to just 50 days into this new administration.

Yeah, I think there are something in the neighborhood of 100 in Arkansas University, Fayetteville or other campuses around the country hosting foreign students who now don't know whether they can pay their rent.

Mm hmm.

Absolutely.

And it's just a hard question that we all need answers to to figure out, okay, what is this administration really trying to do here?

How are their actions impacting folks, whether it be students or the transgender community in Arkansas, whether it be farmers with tariffs?

There's just so much going on here that we all kind of need to sit down and try to get answers.

But getting those answers has been a real challenge as this new administration continues its work.

Yeah, one final question, Alex, and that involves foreign policy.

Mr. Trump continues to spook our NATO partners and badly.

How how are they Arkansas publicly or privately?

How are they Arkansas that allows the Arkansas delegation delegation reacting to that?

Well, this is an interesting topic that I brought up with Senator Cotton when it came to USAID, which he has spoken against.

He supports the freeze that the Trump administration has put into place.

But if you look back at his past writings, he has spoken favorably about USAID and the use of what we call soft power.

So instead of putting military or personnel in certain countries, you give them money for programs and it builds the United States presence up.

But the problem is right now, when you take money away, you don't have that soft power.

So when I asked him about that question, he says, hey, the freeze is good.

We want to make sure we're supporting projects that are worth our time, but economically, as well as supporting the United States presence.

But in terms of Neda, when something like that, we haven't heard much noise from our delegation.

I think the most noise I've heard so far was actually from Representative Hill on the same program a few weeks back when it came to Ukraine.

But at the same time, even with Ukraine, there are still questions out there and a lot of uncertainty about the United States role in helping that country combat Russia.

Exactly.

Alex Thomas.

Got to end it there because we're simply out of time.

As always, thanks for coming aboard.

We'll see you next time.

Thanks, Steve.

All right.

And that does it for us for this week.

As always, we thank you for watching and see you next week.

Support for Arkansas Week provided by the Arkansas Democrat-Gazette, The Arkansas Times and Little Rock Public Radio.