No spending problem? Asa burns through millions picking higher bidder.
In August, Governor Asa Hutchinson ordered the Department of Human Services (DHS) to move forward to award a new contract for information technology services despite the objections of a majority of the Senators on the Arkansas Legislative Council (ALC). Asa pushed forward to award a huge contract to Deloitte Consulting, who bid $75.3 million over three years, instead of the bid by the current contractor, Northrop Grumman, of $54.4 million.
Why spend $20.9 million more to hire the highest bidder? The supposed “good reason” for spending so much more was based on an arbitrary formula used by state employees. The formula used by the Governor’s administration minimized the importance of cost by making cost only 20% of the contract evaluation.
According to Jeffrey Dean, the chief information officer of DHS, making cost only 20% to 25% of the evaluation is standard among states. Does that justify spending tens of millions more, or does it reflect an attitude on spending that has gotten so many other states into financial trouble?
Let’s summarize – Asa’s formula was used by Asa’s state employees to spend $20.9 million more on the contractor Asa wanted.
Sen. Jimmy Hickey, R-Texarkana, who was described as the leading critic of the contract, objected to the procurement process. “I’m not going to be involved in voting for something like that,” Hickey said. “This [procurement] process down here is flawed.”[i]
Sen. Alan Clark, R-Lonsdale, said, “What has come up here is we have a badly flawed system” that didn’t factor in cost enough in the bidding process.”[ii]
Ignoring Arkansas’ financial condition
One might think a Republican Governor would have been more cautious about spending. Not this Governor. By minimizing the importance of the cost of the contract, Asa’s administration also minimized the importance of Arkansas’ current financial condition. The Governor’s budget is unsteady and the Governor is on a quest for more taxes to grow government.
- Volatile budget. The increase built into Asa’s budget for fiscal year 2016-17 was so overly optimistic, that late in the fiscal year the Governor had to cut $70 million. In the last few days of the fiscal year, which ended June 20, he restored most of the cuts but not all. This too emphasizes the volatility of his budget and how the budget is written to spend every available penny.
- New taxes. Asa signed several new or increased taxes this year including: Doubling the special tax on new tires, adding a special tax on mounting used tires, increasing the sales tax on soft drinks and candy, imposing the sales tax on digital downloads (such as music, movies, and software), and imposing the income tax on money received as unemployment compensation.
- Quest for more taxes. Asa still wants major tax increases, including a new internet sales tax and a tax increase on gasoline and diesel fuel.
Constitutional Struggle?
In moving forward with the contract, Asa was asserting the power of the Executive Branch to execute the laws versus the Legislative Branch’s authority to make laws. The basis of this position is the Separation of Powers clause found in Article 4 of the Arkansas Constitution.[iii]
Yet, even Democrat Senator Joyce Elliott expressed frustration with the Governor ignoring the legislature to spend more money.
… Sen. Joyce Elliott, D-Little Rock, said, “No vendor should operate under the notion that this body is obligated to say yes. “I really object to the notion that because we have done this, this and this, we have to say yes. Otherwise, why don’t we just not meet, because the whole purpose is for us to have a voice,” …. “I don’t think it is right to suggest that once it gets here, it is a done deal.”[iv]
Conduit for Action sees the constitutional issue differently than Asa. The problem is not the legislature trying to overstep its powers. The problem is this Governor can’t be trusted with as much discretion as the legislature has allowed previous governors. The legislature needs to exercise its constitutional powers to rein in this tax-and-spend Governor.
- Budget restrictions. The legislature has the power to pass the state budget, but for the most part the legislature has trusted governors and has given the executive branch broad discretion on how to spend money. The legislature claimed it is a full-time legislature when it argued for a huge salary increase for legislators in 2015. Then the legislature should act like the full-time legislature by working all year to prepare annual budgets and to include many budget limitations necessary because the current governor is unwilling to limit spending.
- There is a new sheriff in town known as Amendment 92 (or Article 5, 42) which was adopted by the people in 2014.[v] The new sheriff in town is the legislature’s authority to VETO STATE AGENCY RULES through committee action. It is no stretch for the legislature to require purchasing formulas (such as the one used here) to be submitted for approval or disapproval by the legislature. The REPUBLICAN MAJORITY LEGISLATURE needs to use this power as necessary to stop Asa’s spending spree. This new power could have been used to shut down Asa’s formula for awarding contracts before he ever thought of using it as an excuse to burn more money.
Spending problem? Revenue problem? Or something else?
When Asa had to cut the state budget a few months ago he described the problem as a revenue problem. He said, “It is a miss on revenue and not a miss on spending.”
Senator Bryan King disagreed saying: “Hutchinson has spent too much money and should cut expenses for the state’s Medicaid program, King said. People always say there is a revenue shortfall instead of a spending problem “when they get into financial trouble,” King said.[vi]
Instead of calling it a “revenue problem” or a “spending problem” perhaps the most accurate description is…. We have an “ASA PROBLEM.”
Have you contacted your state Senator and state Representative to ask them to rein in Asa’s spending?
[i] http://www.arkansasonline.com/news/2017/aug/24/governor-orders-up-contract-for-dhs-201/
[ii] http://www.arkansasonline.com/news/2017/aug/24/governor-orders-up-contract-for-dhs-201/
[iii] Ark. Const. Art. 4
- 1. Departments of government.
The powers of the government of the State of Arkansas shall be divided into three distinct departments, each of them to be confided to a separate body of magistracy, to-wit: Those which are legislative, to one, those which are executive, to another, and those which are judicial, to another.
- 2. Separation of departments.
No person or collection of persons, being of one of these departments, shall exercise any power belonging to either of the others, except in the instances hereinafter expressly directed or permitted.
[iv] http://www.arkansasonline.com/news/2017/aug/24/governor-orders-up-contract-for-dhs-201/
[v] Ark. Const. Art. 5, § 42
§ 42. Review and approval of administrative rules.
(a) The General Assembly may provide by law:
(1) For the review by a legislative committee of administrative rules promulgated by a state agency before the administrative rules become effective; and
(2) That administrative rules promulgated by a state agency shall not become effective until reviewed and approved by the legislative committee charged by law with the review of administrative rules under subdivision (a)(1) of this section.
(b) The review and approval by a legislative committee under subsection (a) of this section may occur during the interim or during a regular, special, or fiscal session of the General Assembly. [As added by Const. Amend. 92.]
[vi] http://www.arkansasonline.com/news/2017/apr/29/state-to-cut-budget-70m-20170429/
