A second look at a third high school, sudden departure of a chicken chief, Barling’s liquor request and the potential contest between Hillary and Huckabee are part of the Feb. 28 Friday Wire for the Fort Smith region.

NOTES & ANALYSIS
• A second look at a third high school
Kudos to the Fort Smith Public School Board of Directors for agreeing to a request by a group of Fort Smith business leaders to conduct more due diligence on how to best respond to the future facility needs of the public school system.

Plans for a third Fort Smith high school have been discussed for some time, though a formal pitch for the more than $65 million high school was made at a January school board meeting.

At the time, Dr. Benny Gooden, superintendent of schools, said the district needed a new high school due to continued enrollment increases in the district coupled with an eventual plan to re-align the schools to have freshman be on high school campuses instead of the current configuration, which places freshman in the city's junior high schools.

The business group has expressed concerns not only about the necessity of a third high school, but about the future operational and administrative costs to the district of a third campus.

Let’s hope the due diligence is thorough, transparent and devoid of any bias used to push the initial recommendation. Fort Smith could use a healthy dose of efficiency, innovation and vision in at least one of its local government operations.

ICYMI
Following are a few stories posted this week on The City Wire that we hope you didn’t miss. But in case you missed it ...

• Sudden departure of CEO of O.K. Foods
O.K. Foods is under new leadership after the resignation of CEO Paul Fox, but the company is keeping quiet as to why Fox may have left the company. Donna Miller of O.K. Foods confirmed in a telephone call with The City Wire that Fox had resigned from the company, but declined to provide details or the date his resignation became effective.

• Business friendly discussion
Development and business friendliness took center stage for much of a more than hour long brainstorming session of the Fort Smith Board of Directors on Monday night (Feb. 24). The session, which was absent a set agenda in order to allow a free flow of ideas among Board members and the administration, started with City Director Keith Lau simply asking what the city could do to make it easier for citizens needing to do business with the municipality.

• Energy overregulation warning
A U.S. Chamber of Commerce official warned an Arkansas audience that overregulation of fracking practices in the oil and gas industry could cost jobs, tax revenue, and the overall economy.

NUMBERS ON THE WIRE
2016: The original start date for Whirlpool's remediation of a toxic plume of trichloroethylene (TCE). The company is under a remediation plan by the Arkansas Department of Environmental Quality and notified the agency this week that it would speed up its remediation schedule by two years, starting chemical injections to neutralize the cancer-causing TCE within weeks.

$12.716 million: Revenue from Arkansas’ 2% tourism tax set a record in 2013 by reaching $12.716 million, and the state’s tourism chief is predicting that 2014 could be even better for Arkansas’ tourism and travel sector. The 2013 collections were up 2.5% compared to the $12.405 million in 2012, and well ahead of the $11.378 million slump in 2009 when national economic conditions proved tough on Arkansas’ tourism industry.

6.55%: Increase in number of January home sales in Arkansas’ four largest metro markets compared to January 2013, according to The City Wire’s Arkansas Home Sales Report.

OUTSIDE THE WIRE
• Hillary and Huckabee
The likely 2016 matchup in Iowa if the race were held today would be former Secretary of State Hillary Clinton against former Arkansas Gov. Mike Huckabee, with Clinton ahead, according to a new poll. The former first lady and senator leads all her potential Republican challengers by at least 4 points. She tops Huckabee 46% to 42%, Bush 45% to 41%, Paul 47% to 42% and Christie 45% to 39%.

• Bill and Hillary papers
The Clinton Presidential Library will make its first release on Friday (Feb. 28) of records that were previously withheld from the public under legal provisions that expired early last year, a spokeswoman for the National Archives said. About 4,000 to 5,000 pages will be put online at 1 P.M. Friday, with paper copies becoming simultaneously available at the library in Little Rock, the spokeswoman said. More releases are expected in the next couple of weeks.

• Tough path for states seeking Medicaid expansion
Of the 25 states that already have expanded Medicaid under the Affordable Care Act, all but Arkansas, Iowa and Michigan simply added newly eligible adults to their existing Medicaid programs. That was the easiest approach. In contrast, the states that haven’t yet expanded Medicaid but are considering doing so want to tailor the program to fit their own priorities—and that will take time.

WORD ON THE WIRE
“I think we’re going to have a good season this year. I think holding on during the bad times was a victory. From what I can tell, if the weather will let us alone for a while, we’re going to have a good year. I think people are a little more sure about the economy. I think they’ve got a little money in their pockets. And I think after this winter, they may have some severe cabin fever they want to solve. So I’m looking forward to a good year.”
— Richard Davies, executive director of the Arkansas Parks & Tourism Department, when asked about the tourism industry performance in 2014

"The last time (changes in legislation were proposed in 2013), there was a lot of opposition to it both from the existing alcohol lobby and all the people who run liquor stores. The last thing they want to see is more stores. It cuts into their business. They want to be the only game in town, especially if they are on the border (of a wet and a dry county)."
— Fort Smith attorney Matthew Ketcham, speaking about an attempt by the city of Barling to change Arkansas’ liquor laws to allow the municipality to conduct a wet-dry vote

“(A) court facing a defendant arrested with a gun would interpret the statute based upon its plain meaning. When all is said and done, how can the court punish a person for following the literal and unambiguous meaning of the statute? A person should not be expected to consult the history of the law’s passage, or its political context, to understand what it proscribes."
— University of Arkansas law professor Laurent Sacharoff and law student Jacob Worlow, on their review of a law that has allowed for open carry of handguns in Arkansas

Still two votes shy of a supermajority in the Arkansas House, Speaker Davy Carter (R-Cabot) says he is unsure of what potential change may secure the additional votes needed to pass the private option.

Appearing on this week’s Talk Business & Politics, which now airs Sunday mornings at 9 a.m. on KATV Channel 7, Carter said that limiting the enrollment period for people to sign up for the subsidized health insurance offerings may not be the breakthrough solution.

“If that’s something that’s involved in the final resolution of the matter, I can’t say for sure right now,” said Carter.

In week one of the 2014 fiscal session, Carter has managed to secure 73 votes for funding the private option, which has already cleared the State Senate.  The funding bill needs 75 votes to gain passage in the House. Last week, Carter called off daily votes on the bill in order to find a solution from any of the 27 House members opposing the private option.

Carter said he remains “100% confident” that the private option will eventually pass the House, but he said the possibility of limiting enrollment has not secured any changes in the “no” votes from members opposed to funding the plan.

“I can’t say I’m 100% sure that that will be a part of the solution,” Carter said.

The Republican-led legislature crafted the private option in conjunction with Democratic Gov. Mike Beebe as an alternative to straight Medicaid expansion allowed by the Affordable Care Act. Arkansas’ plan, which was approved by the federal government and passed into law in the 2013 session, allows Medicaid dollars to be used to subsidize private health insurance plans in an exchange where lower-income workers can shop for health coverage.

When asked if a vote would occur on a Department of Human Services budget or Medicaid budget without private option funding included, Carter said he did not foresee that happening.

“That has not been the will of the chamber to do so,” he said. “The reality is there aren’t 51 members to approve the amendment or perhaps to even take it back on second reading.”

When pressed by Talk Business & Politics host Roby Brock on whether the Republican-controlled legislature could go home without a DHS or Medicaid budget, Carter said that’s not a possibility.

“We’re not going to do that. At the end of the day, we’re going to get this resolved. The people of Arkansas should have some comfort in that. And I will say this: even the ones who are still opposing the measure – even up to this day – are beginning to come and recognize that that’s not a good option, so I don’t see there’s a chance of that happening.”

Link here for the video interview with Carter.

Under the direction of its new CEO Doug McMillon, Wal-Mart Stores is embracing an open conversation with its stakeholders and anyone else who has something to share. The retailer plans to unveil a new blog on its corporate website sometime Monday (March 3), according to Chad Mitchell, senior director of digital communication at Wal-Mart.

In a bold move, Wal-Mart will allow public comments on the blog site, which the retailer plans as a discovery portal for its major platforms such as veterans hiring, empowering women, manufacturing jobs, healthy food and hunger, sustainability and global responsibility. 

“Drawing on the success of the Greenroom blog, we are excited to use the blog platform  for two-way communication about broader topics. We will be rolling the Greenroom blog into this new site. The Walmart.com blog will remain separate, but we hope to get content from the team in San Bruno on occasion,” Mitchell said.

The Greenroom blog is where Wal-Mart has promoted its sustainability and environmental initiatives. San Bruno, Calif., is the headquarters of Walmart.com.

He said there will be blog contributions from across the entire company from marketing, shopper insights, operations, and even the executive circle. On occasion, it’s possible that some news announcements could be made using this forum, which is how Walmart.com typically announces acquisitions, updates on testing phases, and other developments.

MR. SAM’S PLAYBOOK
This move to embrace conversation is straight out of the Sam Walton playbook. Two of the 10 rules found in Walton’s plan for building a business directly involve conversation.

Rule No. 4
Communicate everything you possibly can to your partners. The more they know, the more they'll understand. The more they understand, the more they'll care. Once they care, there's no stopping them.

Rule No. 7
Listen to everyone in your company. And figure out ways to get them talking. To push responsibility down in your organization, and to force good ideas to bubble up within it, you must listen to what your associates are trying to tell you.

“Although it would seem to be difficult at times to tie current and future initiatives into Sam’s founding values, it’s really a matter of leveraging modern communication channels to expand upon them. Maintaining a ‘listening culture’ is the root here,” said Carol Spieckerman, president of New Market Builders.

STIRRING THE POT
She applauds the retailer’s efforts to stir the pot and rally the troops with active conversational channels like a blog.

“Wal-Mart is masterful at framing initiatives in a straightforward way (and) achieve multiple beneficial outcomes for the retailer, and its recent blog announcement is no exception,” Spieckerman said.

She adds that Wal-Mart is smart to incorporate employee engagement and executive input into this expanded vision for corporate communications. 

“Doing so, expands on Wal-Mart’s overall tone of transparency and authenticity. The blog also enables Wal-Mart to originate conversations and keep its point of view circulating rather than allowing a vacuum to form that others are all too eager to fill with speculation and spin,” Spieckerman said. 

It reminds her of the retail executive who once said, “It’s better to have conversations about your company in your living room than in someone else’s.” Spieckerman also said it will be important for Wal-Mart to demonstrate that it is heeding input from associates and not over-managing the conversation. 

“Once people are given a voice, validation should follow. Corporate blogs are no different from customer forums, reviews and social media outreach in that regard. Once solicited, retailers face a backlash if input goes unacknowledged,” she said.

DIFFUSING RANTS
One has to wonder if the blog might become a target platform for rants from unions and other vocal groups on issues such as living wages or better working conditions.

Spieckerman has said Wal-Mart is adept at diffusing those pointed conversations by telling its own story. 

Mitchell said the blog comments will not be censored, but the retailer will moderate the blog in accordance with certain terms and conditions — for instance it will not allow foul language or threats.

He said there many great stories to share like that of Doug McMillon, the hourly worker who became CEO of the world’s largest retailer, and the blog will provide Wal-Mart a better medium than traditional social media platforms. Those stories and insights can then be shared via social media links back to the corporate website which garners more than 25 million originals visit annually, according to Mitchell.

CONVERSATIONAL LEADERSHIP
Analysts describe McMillon as a master communicator and charismatic leader who is dialed into tapping the strength found in the Wal-Mart network of 2.2 million employees.

McMillon recently presided over his first big meeting as CEO at the annual sustainability milestone event in Bentonville. He said that meeting and those to come would be conversational. He challenged his workforce to engage, innovate and converse in important dialogue he believes can help the company improve at all levels.

“In the future you can expect more interactive meetings like this one. So bring your stories and your ideas and be prepared to share them,” McMillon said at the conclusion of the sustainability meeting.

Wielding a combined net worth of nearly $140 billion, the Walton family heirs were again dubbed the world’s wealthiest family, according to Forbes Annual Billionaire List.

Christy Walton, the 59-year-old widow of John Walton, is the world’s wealthiest woman with a $36.7 billion net worth, according to Forbes. At No. 9 she edged out Lillian Bettencourt of L’Oreal and her sister-in-law Alice Walton, who are the only three women in the Forbes’ top 20 list. Bettencourt’s net worth is a reported $34.5 billion ranking her No. 11. Alice Walton at age 64 has a reported net worth of $34.3 billion, ranking No. 13 in the world.

Jim Walton, the 66-year-old chairman of Arvest Bank, ranks No. 10 on the list with a net worth of $34.7 billion.

Rob Walton, the 70-year-old chairman of Wal-Mart Stores Inc, has a net worth of $34.2 billion, ranking No. 14 in world.

The Walton family fortune increased 20.9% during 2013, spurred by record stock prices. The bull market last year helped produce 1,645 billionaires in 2014, up from 1,426 in 2013. Forbes reports the average net worth of this year’s class at $4.7 billion, up from $4.2 billion 2013.

Johnelle Hunt, co-founder of J.B.Hunt Transports, also made the Forbes list with a net worth of $2.1 billion.

Hispanic and Latino shoppers across the United States wield more than $1.2 trillion of buying power annually with projections of $1.5 trillion by 2015, according to Nielsen. That economic power is why Wal-Mart, Home Depot and most major retailers invest in marketing efforts to woo this important demographic.

Experts said consumer packaged goods (CPG) companies and other retail suppliers are just starting to scratch the surface with targeted marketing efforts to Hispanics. McKinsey Group reports that retail spending of Hispanic consumers will nearly double over the next 10 years and account for almost one-fifth of total retail spending.

Hispanics spend money differently from other consumers. For example, they spend at least one and a half times more on children’s apparel, footwear, and fresh food than non-Hispanic consumers do. 

Enedina Vega, publisher of Meredith Hispanic Media, recently said during a Bentonville-Bella Vista Chamber of Commerce meeting that Latino shoppers already number 52 million and their annual incomes are growing at a healthy clip. She outlined three target areas where suppliers and retailers could wield influence with this savvy demographic: beauty; baby registry; and food.

“The Latinos are a younger demographic, two of three are under the age of 35. One in six Americans is a child, but one in four Hispanics is a child,” Vega said, an indication that the Latino families are growing a faster rate than the overall U.S. population.

EXPERT INSIGHTS
Jason Long, CEO of Shift Marketing Group, said retailers understand the importance of reaching Hispanic shoppers and have required bilingual signage in their stores for several years. He said Home Depot publishes a trade magazine geared to Hispanic construction and trades professionals.

He said CocaCola is a brand nailing it with efforts to reach Hispanics, citing the recent SuperBowl ad that featured “America The Beautiful” sung in different languages. A recent survey by the Hispanic local search company YaSabe found it was the favorite commercial of their online Hispanic audience — more than one-third said it was the ad they liked the most. That was more than 20 points above their second-favorite commercial.

Unilever reached out to Hispanics on Facebook in recent years with its ViveMejor page and has garnered nearly 311,000 likes as it continues the conversation, promoting new products as well as offering recipes and other advice for Latino consumers. The site is maintained in Spanish. Unilever also maintains a Twitter page for ViveMejor with 33,500 followers.

Clinique also is a brand that resonates well with the Latina demographic, according to Vega. She said Clinique has a simple three-step process that busy Latina consumers appreciate. Latina shoppers spend more on beauty products such as cosmetics, perfumes and haircare products than the general population, Vega added.

Erin Conrad, senior manager of client services at Collective Bias in Bentonville, works with suppliers and retailers on strategies designed to engage Hispanic consumers. She said CPG companies must connect with the Latina shopper before he or she ever gets to the retail store.

She said connecting through culture and values are the best way to grab the attention of this diverse demographic. Conrad said connecting in Spanish is not as important as it once was given that 50% of Latino shoppers were born in the U.S. and are bilingual. She said connecting with Latinos in the right medium is far more important than the language.

“Hispanics are early adopters in mobile and digital media. They are more social while shopping as they share opinions via Twitter, Facebook and other social platforms. Because they are more apt to share their own opinions to a trusted circle of friends, they also pay more credence to the opinions of their friends and family,” Conrad said.

Three out of four Hispanic shoppers use technology as part of their shopping trip, Conrad said.

"Hispanic shoppers spend significantly more per stock-up shopping trip, $128 versus the average U.S. consumers’ $117. We also found that Hispanics shop more often than the general population," Conrad noted from a study by Univision and AMG Strategic Advisors.

That study also found 40% of Hispanics say they buy higher quality non-grocery products that they know will last them longer versus 27% of total U.S. shoppers.

CPG OPPORTUNITY
Conrad said Hispanic incomes are growing faster than the general population as Latina women are entering the workforce and those with bilingual speaking skills are finding higher paying jobs and employment opportunity in professional roles. For this reason, Conrad said there is opportunity to push the demographic into higher-priced brands. Culturally, Conrad said Latino shoppers naturally gravitate to the brand name they are best able to afford and still provide the best quality possible for the family. She said there is a notion common in the culture translated as, “What is cheap always ends up as more expensive.”

Food companies have huge opportunities if they can win Latino market share because Conrad said they eat at home more often, have bigger families and spend more on groceries than the non-Hispanic consumers. Conrad said unlocking cultural clues have also provided companies with growth opportunities when they marketed toward Hispanics.

Last year, Conrad told The City Wire that Latina moms are more apt to cook dinner for their families during the work week. Eggs and non-toasted bread are more commonly found on Latinos' breakfast tables than warm cereals which are more popular with non-Hispanic households, according to year long study by the NPD Group which was released in 2012.

Aunt Jemima brand heavily marketed toward Latinos, according to the 2012 case study conducted by Chicago-based Aspen Marketing. The study revealed that Latino mom’s had reservations about serving breakfast in a box to their families which likely kept them from trying the pancake mix. Aspen and Aunt Jemima set out to win Latinos over by staging a Promotional Pancake Breakfast Tour in top U.S. Hispanic market to give moms and children a chance to see the convenience and taste of the boxed pancake mix brand. The results were sweet for retailers and suppliers, according to Aspen, who reported Aunt Jemima saw a 5% sales lift among participating retail customers after the promotional breakfast campaign.

SOCIALLY CONNECTED
A recent study by Unilever and its media planning agency Mindshare looked at four months of social media data use gleaned from 42 million users and 70 million shares. This research found Hispanic consumers are twice as likely to share content or click on shared content than Americans in general.

The research also showed Hispanic consumers share via social media five times more often than non-Hispanic users, and content shared by Hispanic consumers is 35% more likely to be clicked on than content shared by the non-Hispanic population. Hispanic consumers were also twice as likely to purchase the kinds of products they share or like online. Non-Hispanic consumers were 1.3 times as likely to make a purchase compared to what they share online.

The categories most talked about by Hispanics in this study were health food, personal care, beverages, sweets and snack categories. Arts and entertainment, family and sports were the most searched content categories, followed by politics and government, food and drink, health and fitness, style and beauty, technology, home and gardens, business, travel and leisure, education and automotive.  

The study found that nearly 20% of Hispanic consumers consume mobile content (6.4% iPhone, 8.1% tablet and 5.1% Android), versus 13.6% of non-Hispanic consumers.

The 2014 filing period for state candidates came with a few surprises, both in terms of candidates and unforeseen difficulties for last minute filers making the cold and icy journey to Little Rock on Monday (March 3).

The filing period, which began Feb. 24, lasted for one week, ending at noon Monday.

REGIONAL LEGISLATIVE RACES
Among the Northwest Arkansas legislative races, nine of the 15 House districts that represent all or parts of the area will have a primary and/or a general election contest. Of the nine contested races, three – House districts 87, 88 and 90 – will see the winner of the GOP primary be unopposed in the general election.

There are no contested races for the three Senate districts in Northwest Arkansas up for election in 2014. Barring any surprise developments, Sens. Cecile Bledsoe, R-Rogers (District 3); Uvalde Lindsey, D-Fayetteville (District 4); and Bryan King, R-Green Forest (District 5) will run unopposed in the primary and general elections.

In the Fort Smith area, only two of the 10 House districts will be contested. House District 76 will see Bobby Altes and Mat Pitsch face off in the GOP primary. No Democrat filed for the District 76 seat, meaning the winner of the primary will win the seat. Rep. Charlene Fite, R-Van Buren, will face Libertarian candidate Taylor Watkins in the District 80 general election.

Of the three Senate districts in the Fort Smith area up for election in 2014, only District 9 will see a contest. Sen. Bruce Holland, R-Greenwood, is being challenged by Rep. Terry Rice, R-Waldron, in the GOP primary for the seat. No Democrat filed for the District 9 seat. Sens. Gary Stubblefield, R-Branch (District 6) and Jake Files, R-Fort Smith (District 8) will run unopposed in the primary and general elections.

Overall, of the 30 Fort Smith and Northwest Arkansas House and Senate districts up for election in 2014, only 12 are contested.

STATEWIDE FILINGS
One of the unexpected primaries is the Democratic primary for governor, which had until Friday (Feb. 28) consisted of only former U.S. Rep. Mike Ross, D-Prescott, after Attorney General Dustin McDaniel dropped out of the race following an admission of an extramarital affair and former Lt. Gov. Bill Halter dropped out following disappointing fundraising figures.

On Friday, Dr. Lynette Bryant came to the state capitol to file her paperwork to challenge Ross, explaining to media at the capitol that she did not expect that she would not have the support of the Democratic Party of Arkansas.

One of the late filers for office on Monday was Mark Robertson, a Democratic candidate for Land Commissioner.

Robertson, a Fellow of American Society of Landscape Architects, said he was bringing nearly 35 years of experience to his race against current Land Commissioner John Thurston, a Republican.

“It’s time for the office of the Commissioner of State Lands to better serve Arkansans by pursuing innovative measures to make the office more open and responsive,” Robertson said in a campaign announcement. “I have extensive experience in land use and running a small business and will be able to offer a wealth of knowledge to the state. I am excited to file my paperwork today and ready to begin my campaign to serve all Arkansans.”

WEATHER IMPACT
While 412 candidates did file for office this year, the last minute rush normally experienced at the state capitol did not happen this year due to a winter storm that blanketed a large portion of the state, according to Press Secretary Alex Reed of the Arkansas Secretary of State's office.

"We've had about 10 filings so far this morning, including a candidate for Congress and a candidate for attorney general," he said. "The last day of filing is usually a heavy day for filing since the other days are light. But I'm not sure how the weather is going to impact people's travel."

While all non-essential state employees were told to stay at home due to the conditions, Reed said state law dictates candidate filing periods with no flexibility in schedule, meaning he and fellow staffers of the Secretary of State's office had to make it into work. And it's not the first time such an incident has happened, he said.

"I heard of a situation in 2010 where it snowed a couple of days down here and filing remained open, though it was not the last day (of filing)."

Following is the final list of candidates for federal and state races in or including the Fort Smith and Northwest Arkansas areas.

CONGRESSIONAL RACES
U.S. Senate:
• U.S. Rep. Tom Cotton, R
• U.S. Sen. Mark Pryor, D
• Mark Swaney, Green Party
• Nathan LaFrance, Libertarian

Third Congressional District:
• U.S. Rep. Steve Womack, R
• Grant Brand, Libertarian

Fourth Congressional District:
• Rep. Bruce Westerman, R
• Tommy Moll, R
• James Lee Witt, D
• Ken Hamilton, Libertarian

ARKANSAS CONSTITUTIONAL OFFICES
Governor:
• Curtis Coleman, R
• Former U.S. Rep. Asa Hutchinson, R
• Former U.S. Rep. Mike Ross, D
• Dr. Lynette Bryant, D
• Josh Drake, Green
• Frank Gilbert, Libertarian

Lieutenant Governor:
• U.S. Rep. Tim Griffin, R
• Rep. Andy Mayberry, R
• Rep. Debra Hobbs, R
• John Burkhalter, D
• Chris Olson, Libertarian

Secretary of State:
• Secretary of State Mark Martin, R
• Susan Inman, D
• Jacob Holloway, Libertarian

Attorney General:
• David Sterling, R
• Leslie Rutledge, R
• Patricia Nelson, R
• Rep. Nate Steel, D
• Aaron Cash, Libertarian

Auditor of State:
• Ken Yang, R
• Rep. Andrea Lea, R
• Regina Hampton, D
• Brian Leach

State Treasurer:
• Rep. Duncan Baird, R
• Saline County Circuit Clerk Dennis Milligan, R
• Hot Springs City Director Karen Garcia, D
• Chris Hayes, Libertarian

Land Commissioner:
• John Thurston, R

• Mark Robertson, D
• Elvis Presley, Libertarian

ARKANSAS SENATE *
Senate District 3:
• Sen. Cecille Bledsoe, R

Senate District 4:
• Sen. Uvalde Lindsey, D

Senate District 5:
• Sen. Bryan King, R

Senate District 6:
• Sen. Gary Stubblefield, R

Senate District 8:
• Sen. Jake Files, R

Senate District 9:
• Sen. Bruce Holland, R
• Rep. Terry Rice, R

* Senate Districts 1, 2 and 7 are not up for re-election this year.

ARKANSAS HOUSE OF REPRESENTATIVES
House District 21:
• Marcus E. Richmond, R

House District 74:
• Rep. Jon Eubanks, R

House District 75:
• Rep. Charlotte Douglas, R

House District 76:
• Matt Pitsch, R
• Bobby Altes, R

House District 77:
• Justin Boyd, R

House District 78:
• Rep. George McGill, D

House District 79:
• Rep. Gary Deffenbaugh, R

House District 80:
• Rep. Charlene Fite, R
• Taylor Watkins, Libertarian

House District 81:
• Rep. Justin Harris, R

House District 82:
• Rep. Bill Gossage, R

House District 84:
• Rep. Charlie Collins, R
• Washington County Justice of the Peace Candy Clark, D

House District 85:
• Rep. David Whitaker, D

House District 86:
• Rep. Greg Leding, D

House District 87:
• Robin Lundstrum, R
• Lucas Roebuck, R

House District 88:
• Rep. Randy Alexander, R
• Former Washington County Justice of the Peace Lance Eads, R

House District 89:
• Rep. Micah Neal, R

House District 90:
• Paul Caldwell, R
• Jana Della Rosa, R
• Mike Whitmore, R

House District 91:
• Rep. Dan Douglas, R

House District 92:
• Kim Hendren, R

House District 93:
• Rep. Jim Dotson, R
• Alderman Bill Burckart, R
• Alderman Leah Williams, D

House District 94:
• Marge Wolf, R
• Rebecca Petty, R
• Grimsley Graham, D

House District 95:
• Rep. Sue Scott, R
• Dane Zimmerman, R
• Eddie Moser, Libertarian

House District 96:
• Grant Hodges, R
• Damon Wallace, R
• Tom McClure, D
• Michael Kalagias, Libertarian

House District 97:
• Rep. Bob Ballinger, R
• Charles "Sonny" Carter, D

A blast of winter weather may have closed schools, governments and businesses across Northwest Arkansas, but regardless of the weather, employees of the Benton and Washington County Clerks had to report to work Monday (March 3) for the last day of candidate filing, which ended at noon.

According to Alex Reed, press secretary for the Arkansas Secretary of State's office in Little Rock, "the filing period is set in the (state elections) statute."

Long story short — no matter the weather, candidate filings must go on.

And while Reed said the last day of candidate filing where he was stationed in Little Rock was light compared to normal, it was not unheard of to get inclement winter weather during the filing period, which is why "the filing period is a week long."

"I heard of a situation in 2010 where it snowed a couple of days down here and filing remained open, though it was not the last day (of filing)."

Few of the top offices in Benton and Washington counties will see contested races. The county judge race is the only top office to have more than one candidate. County Judge Bob Clinard will face Dale King and Ronnie Smith in the GOP primary. In Benton County, no Democrats filed for county offices.

And of the 15 Benton County Justice of the Peace (Quorum Court) races, only two – Districts 1 and 4 – drew more than one candidate.

Of the eight top county races in Washington County, only three drew more than one candidate. County Judge Marilyn Edwards, a Democratic candidate, will be challenged by Republican and County Assessor Jeff Williams. Joshua Crawford and Russell Hill, both Republicans, will square off in the GOP primary for the open Assessor post.

Washington County Sheriff Tim Helder (D) will face a general election challenge by Republican Mort Marshall.

Following is a list of candidates for offices in Benton and Washington Counties.

BENTON COUNTY
County Assessor
• Assessor Bear Chaney, R

Circuit Clerk
• Circuit Clerk Brenda DeShields, R

County Clerk
• County Clerk Tena O'Brien, R

County Collector
• Collector Gloria Peterson, R

County Coroner
• Coroner Daniel Oxford, R

County Judge
• Judge Bob Clinard, R
• Dale King, R
• Ronnie Smith, R

County Sheriff
• Sheriff Kelley Cradduck, R

County Surveyor
• Ronald Lee Ridout

County Treasurer
• Treasurer Deanna Ratcliffe, R

Justice of the Peace, District 1
• Elizabeth Bowen, R
• Ron Easley, R
• Mary Gardner, R
• Mike McKenzie, R

Justice of the Peace, District 2
• Susan Shadlow, R

Justice of the Peace, District 3
• Justice of the Peace Jay Harrison, R

Justice of the Peace, District 4
• Justice of the Peace Tom Allen, R
• Clell Alden, R

Justice of the Peace, District 5
• Justice of the Peace Kevin Harrison, R

Justice of the Peace, DIstrict 6
• Pat Adams, R

Justice of the Peace, District 7
• Justice of the Peace Joel Jones, R

Justice of the Peace, District 8
• Shirley Sandlin, R

Justice of the Peace, District 9
• Justice of the Peace Susan Anglin, R

Justice of the Peace, District 10
• Justice of the Peace Michelle Chiocco, R

Justice of the Peace, District 11
• Justice of the Peace Steve Curry, R

Justice of the Peace, District 12
• Tom Leadabrand, R

Justice of the Peace, District 13
• Justice of the Peace Kurt Moore, R

Justice of the Peace, District 14
• Brent Meyers, R

Justice of the Peace, District 15
• Barry J. Moehring, R

WASHINGTON COUNTY
County Assessor
• Joshua Crawford, R
• Russell Hill, R

Circuit Clerk
• Circuit Clerk Kyle Sylvester, R

County Clerk
• County Clerk Beck Lewallen, R

County Collector
• David Ruff, R

County Coroner
• Coroner Roger Morris, D

County Judge
• Judge Marilyn Edwards, D
• Assessor Jeff Williams, R

County Sheriff
• Sheriff Tim Helder, D
• Mort Marshall, R

County Treasurer
• Bobby Hill, R

Justice of the Peace, District 1
• Tom Lundstrum, R

Justice of the Peace, District 2
• Robbie Wilkinson, R

Justice of the Peace, District 3
• Harvey Bowman, R

Justice of the Peace, District 4
• Yessie Hernandez, D
• Wm. Bill Ussery, R

Justice of the Peace, District 5
• Joe Patterson, R

Justice of the Peace, District 6
• Lisa Ecke, R

Justice of the Peace, District 7
• Kendra Boyle, D
• Justice of the Peace Rick Cochran, R
• James Maynard, R

Justice of the Peace, District 8
• Daniel Balls, D
• Armistead Freeman, R

Justice of the Peace, District 9
• Justice of the Peace Eve Madison, D

Justice of the Peace, District 10
• Robert Dennis, R
• Pedro Fimbres, R
• James Miller, D

Justice of the Peace, District 11
• Justice of the Peace John Firmin, D

Justice of the Peace, District 12
• Sen. Sue Madison, D

Justice of the Peace, District 13
• Rhonda Hulse, D
• Joel Maxwell, R

Justice of the Peace, District 14
• Justice of the Peace Ann Harbison, D
• Jim Renfrow, R

Justice of the Peace, District 15
• Justice of the Peace Butch Pond, R

Local candidate filings concluded Monday (March 3) at noon across the state, even as icy roads made traveling treacherous throughout much of the state.

The Crawford and Sebastian County Courthouses remained open, as required by state law, with county clerks in both counties saying candidates continued to show up even with the bad road conditions.

"We just have to be here by law," said Sebastian County Clerk Sharon Brooks. "There's nothing in the (state) code that (says anything) about if we have inclement weather. It's my understanding, and this is just what some (other counties have) said, they might come in and some would extend to Tuesday for the county clerks. But I came in."

Alex Reed, press secretary for the Arkansas Secretary of State's office in Little Rock, said state law was clear that the filing period was the only time candidates could file to run for office, effectively eliminating any discussion of extending the period due to the weather and road conditions.

"The filing period is a week long, in case there is inclement weather," he said, adding that from where he was stationed in Little Rock, candidate filings have been slow on what is typically the busiest day of the period.

"We've had about 10 (candidates file) so far this morning, including a candidate for Congress and a candidate for attorney general," Reed said. "The last day of the filing is usually a heavy day for filing since the other days are light. But I'm not sure how the weather is going to affect people's travel."

For anyone who may have attempted to journey to one of the local courthouses Monday, they better have made it in before the clock struck noon since no exceptions are allowed due to the weather, according to Reed.

In Crawford County, County Clerk Teresa Armer said her office has a long standing tradition of abandoning the office at noon, regardless of the weather.

"We always close the office at noon and are gone for an hour and a half to make sure no one tries to say we snuck someone in (after hours)," she said, adding that during her 21 years in the office and almost four as county clerk, it has been an annual event.

Local races in Crawford and Sebastian Counties do not appear to be eventful, as only one justice of the peace race in Crawford County and races for treasurer/collector, assessor and district 7 justice of the peace in Sebastian County are the only contests of interest.

Following is a list of candidates for office in Crawford and Sebastian Counties.

CRAWFORD COUNTY
County Assessor
• Assessor Ronnie Dale, R

Circuit Clerk
• Circuit Clerk Sharon Blount-Baker, D

County Clerk
• County Clerk Teresa Campbell Armer, D

County Collector
• Collector Kevin Pixley, R

County Coroner
• Coroner Pam Wells, D

County Judge
• Judge John Hall, D

County Sheriff
• Sheriff Ron Brown, D

County Treasurer
• Treasurer Beverly Pyle, R

Justice of the Peace, District 1
• Justice of the Peace Jason Cox, R

Justice of the Peace, District 2
• Justice of the Peace Shane Griffin, R

Justice of the Peace, District 3
• Justice of the Peace David Rofkahr, R

Justice of the Peace, District 4
• Lloyd Cole, R

Justice of the Peace, District 5
• Justice of the Peace Cathy Gifford, D

Justice of the Peace, DIstrict 6
• Connie Beyerle, Independent

Justice of the Peace, District 7
• Justice of the Peace Mary Jan Blount, D

Justice of the Peace, District 8
• Justice of the Peace James Lane, R
• Tia Woodruff, R

Justice of the Peace, District 9
• Justice of the Peace Stanley Clark, D

Justice of the Peace, District 10
• Justice of the Peace Cleo Coatney, R

Justice of the Peace, District 11
• Justice of the Peace Carrie Jernigan, R

Justice of the Peace, District 12
• Justice of the Peace Elaina Damante, R

Justice of the Peace, District 13
• Justice of the Peace Butch Barnes, Independent

SEBASTIAN COUNTY
County Assessor
• Ken Colley, R
• Assessor Becky Yandell, R

Circuit Clerk
• Circuit Clerk Denora Coomer, R

County Clerk
• County Clerk Sharon Brooks, R

County Coroner
• Terry Campbell, R

County Judge
• Judge David Hudson, R

County Sheriff
• Sheriff Bill Hollenbeck, D

County Treasurer/Collector
• Steve Hotz, R
• Treasurer/Collector Judith Miller, R

Justice of the Peace, District 1
• Justice of the Peace Johnny Hobbs, R

Justice of the Peace, District 2
• No candidate

Justice of the Peace, District 3
• Justice of the Peace Shawn Looper, R

Justice of the Peace, District 4
• Justice of the Peace Tony Crockett, R

Justice of the Peace, District 5
• Justice of the Peace John Spradlin, R

Justice of the Peace, DIstrict 6
• Justice of the Peace Danny Aldridge, R

Justice of the Peace, District 7
• Justice of the Peace Jim Medley, R
• Jim Perry, D

Justice of the Peace, District 8
• Justice of the Peace Don Carter, D

Justice of the Peace, District 9
• Justice of the Peace Rhonda Royal, D

Justice of the Peace, District 10
• Justice of the Peace Dickie Robertson, D

Justice of the Peace, District 11
• Justice of the Peace Linda Murry, D

Justice of the Peace, District 12
• Justice of the Peace Bob Schwartz, R

Justice of the Peace, District 13
• Rep. Denny Altes, R

Three faculty members with the University of Arkansas at Fort Smith and The City Wire will collaborate to deliver a series of political-based essays and reports beginning in March.

The series is scheduled to run on a bi-weekly basis beginning in early March, with essays and reports written by Dr. Williams Yamkam, assistant professor of political science; Dr. Eric Baker, assistant professor of political science; and Dr. Robert Willoughby, head of the history, geography, political science, philosophy and religious studies department. The three will continue to alternate as the series progresses.
 
Dr. Henry Rinne, dean of the College of Humanities and Social Sciences, said he believes the series will be good for the University and for the community.
 
“I am very pleased that our political science faculty have entered into a partnership with The City Wire to create a platform to facilitate the exchange of ideas,” said Rinne. “Our faculty members have many years of experience with public policy, campaigns and elections. I look forward to reading their insights into local politics as well as state and national issues."

Michael Tilley, an editor and co-owner of The City Wire, hopes that improving access to the various aspects of political science will result in a more informed electorate.

“Too often, a voter’s knowledge of political candidates or issues is based on sound bites or some of the nonsense on which television and radio attack ads are built. We believe information from the UAFS faculty will provide The City Wire readers a better filter from which to make political decisions,” Tilley said.
 
The three writers bring their different backgrounds and experiences to their roles as members of the UAFS faculty and to what they will write for The City Wire.
 
Yamkam came to UAFS in 2009 after earning his doctorate in political science from Wayne State University in Michigan. Yamkam teaches multiple political science courses, including a course on campaigns and elections. Besides the various professional trainings that he has received in campaign operations, he is a graduate of American University’s Campaign Management Institute in Washington, D.C.
 
Baker, who joined the UAFS faculty in 2008, has a doctorate in political science from the University of Florida. He teaches several different courses in the political science department, including American National Government, State and Local Government, The American Presidency, Public Policy, and International Relations. Baker previously taught at the University of Richmond in Virginia and East Carolina University in North Carolina.
 
Willoughby, who first came to UAFS in 2006, has been head of the department since 2010. He has a doctorate in American history and government from the University of Missouri-Kansas City. Willoughby has a wide range of teaching experiences, ranging from public middle and high school to small, private colleges and state universities. He has also published articles and books and has delivered numerous papers at history conferences.

Convenience is the name of the game in retail these days and Wal-Mart Stores Inc. is taking nothing for granted as they test and build out a tethering system that will include pick-up depots for items ordered online.

Walmart U.S. CEO Bill Simon said Tuesday (March 4) during a speech at the Raymond James & Associates investors conference in Orlando, that the retailer is focused on delivering service where and how consumers want it.

He said the drive-through pick-up for online orders being tested in 11 stores in the Denver area are yielding a 90% satisfaction rating with consumers. This test in the Denver market was first announced in October. Shoppers pull into the parking lot and a loader brings the items to the car. Wal-Mart also allows order pick-up through the drive-in pharmacy line. 

This notion of drive-in has prompted Wal-Mart to explore and test the drive-in depots that are not attached to a supercenter. Simon described the drive-in modular as a “Sonic-like.” Simon did not give specifics about the timeframe for the depot concept, but said it is part of the retailer’s tethering efforts to fully connect its digital orders with its massive physical infrastructure.

He described the retailer’s tests that will allow someone to order online, then pick-up that order later in the day at various places of their own choosing. For instance, he said the online order could be picked-up at the retailer’s gas station later in the day when the shopper stopped for fuel. Simon reminded the analysts that the pick-up service does not require a subscription and is for any of the products offered by the retailer from big screen televisions to snow shovels.

He said the retailer continues to test numerous initiatives toward more convenience such as lockers which are used in its ASDA business in the U.K., and more recently offered in Washington D.C.

This new stand alone pick-up depot modular could include lockers which are filled through various supply chain options — the nearest supercenter, smaller delivery trucks running from distribution center to the depot or direct shipment from online fulfillment centers.

Wal-Mart has said the pick-up depots – whether attached to a supercenter, smaller format or as a stand alone unit – are not designed to replace the traditional stock-up trips, which are a $585 billion market and still 60% of the grocery spend. Wal-Mart has a 25% share.

The drive-in service is for more about convenience, and those fill-in trips mid-week, an area that Wal-Mart has lost sales to in recent years from the rise of smaller format dollar stores and convenience stores. Simon said this quick-trip market is worth $415 billion annually and equals some 40% of the U.S. grocery spend. Wal-Mart’s share is just 10%, something the retailer thinks it can improve.

This is a concept quite similar to the “dark stores” that retailers like Tesco and Waitrose have begun to open in Europe – depots that hold no inventory and serve as pick-up locations for goods purchased online, said Carol Spieckerman, CEO of NewMarketBuilders in Bentonville.

"This is an exciting development on a number of fronts. Standalone locations will get products to shoppers without forcing them to navigate football-field-sized parking lots and supercenters. The convenience factor alone is huge and in some cases, may mitigate price comparisons. Wal-Mart wins a number of other fronts by expanding its omnichannel scale, optimizing total enterprise inventory and bringing convenience-conscious customers on board who otherwise might not shop at Wal-Mart – all without the costs and location limitations associated with building stores. These locations will be inherently cost-effective and less labor intensive than the smallest of stores and advances in robotics have the potential to make them even more so," Spieckerman said.

She applauds the retailer's efforts saying  "Wal-Mart gets it" that attempting to force customers into a couple of convenience solutions isn’t the way to go and its growing portfolio of right product, right time, right place options represents the ultimate in customer-centricity.

"The drive-through options play heavily on convenience and will be particularly effective in driving incremental business with shoppers who already trust Wal-Mart yet may shop elsewhere for fill-in trips. This is a powerful attack on drug retailers and dollar stores that continue to expand into consumables and fresh produce in particular. Until Wal-Mart’s small format stores proliferate, drive-through options are a great way to keep convenience-focused, price-sensitive customers from seeking other options," Spieckerman added.

Simon told analysts the retailer will continue testing various initiatives designed to bring more convenience to the consumer while adding retail sales with minimal costs. He said once a test proves to be viable the retailer has no problem with a quick rollout. In terms of home grocery delivery, Wal-Mart is testing it in the San Jose/San Francisco market since 2011, but is not yet convinced there is enough demand for a larger rollout.

Wal-Mart has said it’s in the process of increasing the number of small trucks for grocery home delivery program from seven to 10. Wal-Mart continues to test same-day delivery of general merchandise in northern Virginia, near Washington D.C.,  Philadelphia, Minneapolis and in the San Francisco area.

Simon said three of the retail ecosystems announced in October will come online this year, the first of those in May. The facilities in these fully tethered ecosystems could soon include stand alone pick-up depots.

A growing local economy and increased enrollment at the University of Arkansas kept multifamily occupancy levels stable at 96.5% last year, despite the opening of 823 new student housing units since the fall of 2012.

A recent report by CBRE-Northwest found that occupancy rates were strong enough to prompt a 3.3% overall hike in rental rates last year, led by a 5.3% rate increase in Fayetteville.

Brian Donahue, senior associate and author of the CBRE report, said private multifamily investment has been stagnant since 2012 as the University of Arkansas student housing growth has escalated. Looking ahead, he said the university will add another 250 units this year and 500 more next year, which is likely to keep private investment at bay.

MAINTAINING SUPPLY
In 2013, there were just 96 new units completed outside of UA student housing —the Copperstone Phase II project in Bentonville. Donahue said Lindsey Management still has plans to build the Trails at Rainbow Curve, which is 487 additional units planned for Bentonville. ERC recently announced a 62 unit multifamily, mixed-use project – the “Thrive” – in Bentonville’s new Art District.

These private projects are expected to temper occupancy rates in Bentonville, which were 93.5% at the end of 2013, according the CBRE report. Donahue said Bentonville’s occupancy rate decreased from 98% midyear 2013 to 93.5% at year-end because of the recent opening of Cornerstone Phase II.

ERC is slated to break ground in the next 45 days on the “Thrive” project. Kyle Cook with Lindsey Management said dirt work has begun on the Trails at Rainbow Curve project. He expects some of the units will be available to lease by the end of the year, with the entire project coming online in the first quarter of 2015.

Donahue expects the low vacancy rate in other submarkets to spur more private investment over the next 12 to 18 months. Rogers reports the lowest vacancy rates at 1.5% year-end, followed by Fayetteville at 2.5%. Springdale showed 5% vacancy rates at the end of 2013, according to the report.

In the most recent Skyline Report for the multifamily sector, Kathy Deck, director of the 
Center for Business and Economic Research at the University of Arkansas, credited low vacancy rates to an improved employment metric across the region.

“Northwest Arkansas is benefitting from positive growth in our job production,” Deck said in the September 2013 report. “The area gained 9,000 new jobs last year on top of the 9,000 created in 2011. That kind of growth puts some positive stress on our capacity to house these new workers.”

RENTAL RATES
Strong demand for units has allowed property managers to raise rates in one and two-bedroom apartments last year, according to the CBRE report.

The average rental rate across the region was $591, a $19 per month increase from the prior year. One bedroom units rose the most averaging $502 in monthly rent. The rent rose $31 per month over the past year. Two bedroom, two bath units rose $15 per month to $699. Three bedroom units stayed steady at $855 per months, with four bedroom units rents declined $83 per month to $1,033.

Donahue reports rent specials and concessions were up slightly last year, but given the demand for units, deals are not that common in the Northwest Arkansas market.

PENT-UP DEMAND
New household formation is key for the multifamily sector and this is one metric that is running behind schedule. Roughly 1.5 million new households are typically formed each year, but since the recession of 2008, this activity has slowed.

The National Association of Realty estimates household formation fell by 3.5 million over the past five years. At the same time population has grown. Experts believe as the economy improves and the employment picture improves, more people will move out on their own. Real estate experts believe this pent-up demand will be a source of strength in single family home sales for the next 18 to 24 months.

CBRE warns that in Northwest Arkansas there could be softening in the occupancy levels once the 750 new student housing projects come online late this year and next. However, the market has been able to absorb the 823 new units opening since the fall of 2012, given the UA’s enrollment increase.

As the market fundamentals remain strong, Donahue expects all classes of multifamily to fare well. He said the market is also ripe for selling these properties as investor demand is growing.

He said with single family residential now in full recovery, a potential bump in tourism with Crystal Bridges Museum and steady job growth, Northwest Arkansas’ apartment market will maintain its upward momentum in the near term.

On a fifth and final effort, the Arkansas House of Representatives passed a funding measure for the private option health insurance program. The bill passed the House by a 76-24 margin.

In week one of the session, House Speaker Davy Carter, R-Cabot, called for votes on the private option on four different days. The funding measure never cleared the 75% vote threshold needed for passage. In week two, Carter adopted a different tactic choosing to meet with members to negotiate possible changes to secure the additional votes needed for the proposal.

Two weeks ago, the State Senate passed its version of the funding bill (SB 111), 27-8, with no votes to spare.

Rep. Kim Hammer, R-Benton, had opposed the measure previously, but he spoke for the bill on Tuesday (March 4) outlining several of his reasons for changing his position.

”There will be people who are hurt if I don’t vote for this. I don’t want to do that,” Hammer said, implying that lower income workers would benefit from continuation of the program.

Hammer also said he would vote against the measure next January if the private option did not meet “measurable success.”

Two other House members – Rep. Les Carnine, R- Rogers, and Rep. Mary Lou Slinkard, R-Gravette – both voted yes for the first time in this fiscal session. Carnine and Slinkard are term limited in the House and are not running for re-election.

With passage in the House, the bill now heads to Gov. Mike Beebe (D) for signature. The Governor supports the private option, which takes federal Medicaid expansion money provided by the Affordable Care Act and allows it to be used to subsidize private health insurance plans for lower income workers.

The Republican-led legislature crafted the private option in conjunction with Gov. Beebe as an alternative to straight Medicaid expansion allowed by the Affordable Care Act. Arkansas’ plan, which was approved by the federal government and passed into law in the 2013 session, allows Medicaid dollars to be used to subsidize private health insurance plans in an exchange where lower-income workers can shop for health coverage.

The growth of year-to-date tax collections in Arkansas is on a downward trend, and the February gross revenue number was below the budget forecast. The February report also showed a continued decline in collections related to consumer spending.

Year-to-date gross revenue (July 2013-Feb. 2013) totaled $3.909 billion, 2.3% above the same period last year and above forecast by 0.5%, according to the report issued Tuesday (March 4) by the Arkansas Department of Finance and Administration.

The gross collections were up 3.4% after the first six months of the fiscal year, and 0.9% above forecast. After the first four months of the fiscal year, the gross revenue was up 4.1%.

Individual income tax collections for the fiscal year totaled $1.907 billion, up 2% from last year and 1.1% above the budget forecast. Year-to-date sales and use tax collections were $1.446 billion, up 2.4% above last year and 1.6% below the budget forecast. The sales and use tax collections were up 4.8% four months into the fiscal year and up 3.9% six months into the fiscal year. Income taxes and the sales and use tax collections are the two primary sources of state revenue.

The corporate income tax collections for the first eight reporting months of the fiscal year totaled $240 million, up 5.7% compared to last year and 4.5% above forecast.

FEBRUARY NUMBERS
February gross revenue was $427.3 million, up 3.9% above last year and 0.7% below forecast.

John Shelnutt, head of the Department of Finance and Administration’s Economic (DFA) Analysis & Tax Research division, provided this analysis of the February numbers: “Results were significantly impacted by: 1) decline in Sales and Use tax compared to year ago and versus forecast, 2) higher-than expected growth in individual refunds due in part to delayed start of the tax filing season in January, and 3) a positive contribution from temporary effects of payroll timing for Individual Withholding tax. ... Sales and Use tax collections in February largely reflect economic activity in January. Weather effects on collections were noted in the retail sector.”

Individual income tax collections during February totaled $226.7 million, up 14.4% compared to February 2012 and above forecast by 7%. Sales and use tax collections during the month totaled $167 million, down 4.3% from last year and 7.6% below the forecast.

Sales and use tax collections, considered a barometer of consumer confidence, ended fiscal year 2013 on a down note. Collections in the segment for the fiscal year totaled $2.124 billion, up just 1.1% compared to the 2012 period, and 1.4% below forecast.

The DFA in early December updated the projections for 2014 and 2015 fiscal year revenue. Gross general revenues are estimated at $6.203 billion for the current fiscal year (July 1, 2013-June 30, 2014), down about 0.2% from fiscal 2013 collections.

The revenue forecast for fiscal year 2015 is $6.333 billion, up just 2.1% above the 2014 estimate. The 2015 estimate includes an anticipated reduction of $85.2 million from tax cuts approved in the 2013 Legislative Session.

OTHER TAX COLLECTIONS
Alcoholic beverage
July 2013 - Feb. 2013: $33.8 million
July 2012 - Feb. 2012: $32.7 million

Games of skill
July 2013 - Feb. 2013: $24.8 million
July 2012 - Feb. 2012: $21.8 million

Tobacco
July 2013 - Feb. 2013: $146.8 million
July 2012 - Feb. 2012: $150.5 million

Insurance
July 2013 - Feb. 2013: $45.8 million
July 2012 - Feb. 2012: $43.2 million

COLLECTIONS HISTORY
Tax collections during fiscal year 2013 (July 2012-June 2013) totaled $6.214 billion, up 4.9% above the previous fiscal year and up 2.5% compared to budget estimates. One result of the gains was a budget surplus of $299.5 million.

Fiscal year 2013 marked the third consecutive year of year-over-year gains. Arkansas tax collections reversed a negative two-year slide in the 2011 fiscal year, with collections up 4.5% in the July 2010-June 2011 period.

State tax collections for fiscal year 2011 totaled $5.673 billion, up 4.5% above the $5.43 billion in the 2010 period.

The biggest declines in the 2009 and 2010 fiscal years were with individual income tax collections and sales and use tax collections.

February building permits came in at a combined $7.405 million for the cities of Fort Smith, Greenwood and Van Buren. The total is an increase of 12.04% over the same period last year, which saw only $6.609 million in permits across the region's three largest cities. The total is also an increase of 8.96% from February 2011's total of $6.796 million.

For 2014 so far, the three cities have a combined building permit valuation of $16.874 million. Fort Smith had the largest share of the pot with $10.593 million in permits, while Van Buren had permit totals of $5.633 million. Greenwood is lagging farthest behind with a mere $647,445. The total is down 13.44% compared to the first two months of 2013, which saw $19.495 million in building permits across the three cities.

FORT SMITH
The city of Fort Smith issued a total of 124 permits in February. With a total value of $5.962 million, the city saw an increase of 11.92% over February 2013's total of $5.327 million on 146 permits.

The Fort Smith figures were most heavily weighted in residential construction, which saw 83 permits issue with a total value of $3.613 million. While that is 10 less residential permits than the 93 issued in February 2013, the total is 59.95% higher than last year's figure of $2.259 million.

The city also saw the issuance of 27 commercial building permits worth $2.153 million. Included in the commercial permits was a permit valued at $700,000 for a new I Am Well Clinic to be built at 7215 Cameron Park Drive.

GREENWOOD
Building permits issued in the city of Greenwood during February were consistent with last February's figures, coming in at $464,485, a 1.23% increase from February 2013's total of $458.825.

Of the permits issued in the city, one was for a new home valued at $364,410. Another permit, valued at $93,980, was issued for a new swimming pool while a storm shelter valued at $6,095 was permitted, as well.

VAN BUREN
Thirty-three permits were issued by the city of Van Buren in February with a total value of $978,376. The figure is an increase of 18.74% from the same month last year, when permits totaled only $824,000. But the value is a decrease of 78.98% from January. That month saw permits totaling $4.655 million, including a $4 million expansion of the Legacy Heights Retirement Center. Legacy Heights is expanding its alzheimer's unit.

Permits issued in February were largely centered in residential construction, where six permits totaling $863,100 were permitted. Another construction permit totaling $88,000 was also issued, as were eight sign permits totaling $27,276.

2013 RECAP
Combined values in the three cities during 2013 were $203.037 million, compared to $157.32 million during 2012. The 2013 value is above the $201.079 million in 2011.

Fort Smith closed 2013 with the largest share of valuations, logging $177.687 million (a one-year increase of about 30.24% from $136.428 million in 2012), while Van Buren was the next largest with $17.067 million (a one-year increase of 38.96% from $12.282 million in 2012). Greenwood posted an additional $8.283 million, the only city to show a decrease from the previous year's total of $8.609 million (a decrease of 3.79%).

The gains in the Fort Smith market were largely from industrial construction projects at Chaffee Crossing, the construction of Mercy's new orthopedic hospital along Phoenix Avenue and various municipal construction projects across the city.

President Barack Obama unveiled Tuesday (March 4) his 2015 budget proposal he says will cut deficits, put Americans to work, promote national security and will “redesign high schools to help students succeed in today’s economy.” The budget plan drew criticism from Arkansas’ Congressional delegation, including from U.S. Sen. Mark Pryor, Arkansas’ lone Democrat in the delegation.

The plan, which seeks to set the federal budget beginning Oct. 1, shows $3.901 trillion in spending, and an estimated $3.337 trillion in revenue. The result is a $564 billion budget deficit, which is less than the projected $649 billion deficit for fiscal year 2014. According to the Obama budget, the annual deficits will decline to $531 billion, $458 billion and $413 billion for fiscal years 2016, 2017 and 2018, respectively.

“Under the President’s leadership, the deficit has been cut in half as a share of the economy, the largest four-year deficit reduction since the demobilization from World War II,” noted a White House statement accompanying the budget proposal. “While making investments to grow the economy and expand opportunity, the Budget continues this progress, bringing deficits down as a share of the economy to 1.6 percent by 2024. It also stabilizes debt as a share of the economy by 2015 and puts it on a declining path after that.”

MANUFACTURING, ENERGY INVESTMENTS
Other budget proposals highlighted by the Obama White House included:
• “Enhance our national security by accelerating modernization of key weapons systems, accelerate progress in restoring military readiness degraded by sequestration, support nuclear R&D and infrastructure, and invests in defense facilities and construction across the country.”

• "Support high-quality early learning opportunities across the country, prepare teachers to take advantage of broadband technology in the classroom, invest in closing the achievement gap, and redesign high schools to help students succeed in today’s economy.”

• “Transforms regions across the country into global epicenters of advanced manufacturing by supporting the President’s goal of creating 45 manufacturing innovation institutes over 10 years, building on the four institutes already launched and the five additional institutes that will be launched 2014.”

• “Advances the President’s ‘all-of-the-above’ strategy on energy by investing in the safe and responsible production of natural gas; promoting cleaner-burning fossil fuel technology such as natural gas with carbon capture; supporting the development of clean energy alternatives; advancing energy efficiency in our cars, trucks, homes, and buildings; expanding and making permanent the tax credit for renewable energy production; and eliminating $4 billion per year in taxpayer subsidies to the oil, gas, and other fuel producers."

The Obama budget also includes $302 billion for a four-year surface transportation reauthorization proposal to “support infrastructure projects and create jobs while improving America’s roads, bridges, transit systems, and railways.” The transportation budget plan includes a “fix-it-first” effort to support repair needs of existing transportation assets. The White House said the transportation budget would be supported “with transition revenue from business tax reform that simplifies the tax code and promotes economic growth.”

ARKANSAS RESPONSE
Pryor, who is in a tight re-election race with U.S. Rep. Tom Cotton, R-Dardanelle, said the President’s budget was “lopsided” in terms of tax increases and spending cuts.

“While I appreciate that the President finally heard my concerns about his proposed cuts to Social Security, I’m frustrated to see more of the same in his budget blueprint. Once again, we see lopsided tax increases, as well as cuts to the Corps of Engineers, the Small Business Administration, and drinking water improvement programs — to name a few,” noted a statement from Pryor’s Congressional office to The City Wire. “We should responsibly cut our spending by making smart cuts to government programs, eliminating inefficiencies, and working together to implement policies that will secure our nation’s economic future. That being said, I’ll continue to look for areas of common ground as more details are released in the weeks to come.”

U.S. Sen. John Boozman, R-Ark., said Obama’s budget is “reckless” and is meant to appeal to the President’s political base.

“If President Obama’s budget proposal was enacted, it would turn the clock back on the little progress we have made toward reining in Washington’s reckless spending. It is a step backward that we cannot afford to take. An honest discussion on our spending priorities and ideas to get our economy moving again is well overdue and a budget proposal to fit that bill would have been welcome. However, instead of engaging, the President has opted to appeal to his political base,” Boozman said in a statement.

Boozman’s office said the Obama budget would increase spending 63% from present levels and add $8.3 trillion to the national debt over the next 10 years.

Cotton also criticized the proposed budget.

“Today, President Obama presented his most unserious budget to date, continuing to place an immoral burden on the backs of future generations with more out-of-control spending that will only add to our national debt. Under the President¹s proposal Arkansans would see their taxes go up and their savings go down, proving once again that his policies are wrong for our state and wrong for our country."

U.S. Rep. Steve Womack, R-Rogers, a member of the powerful U.S. House Appropriations Committee, said the budget simply “calls for more spending and more taxes.”

“As a member of the House Appropriations Committee, I look forward to working with my colleagues to evaluate the President’s budget line-by-line and ensuring taxpayer dollars are spent responsibly,” Womack noted in his statement.

With Republicans in charge of the U.S. House, it is unlikely that Obama’s budget will survive Congressional action intact.

OPPOSITION FROM TRUCKERS
The American Trucking Associations, which represents several prominent Arkansas-based trucking companies, said the Obama budget “fails to recognize the realities of freight and passenger transportation” and “offers nothing in the way of long-term stability for transportation funding.”

The ATA was specifically critical of the President’s plan to spend more money on intercity rail connections and the plan to shift highway and transportation funding away from user-related fees and taxes.

“By mid-January, this (trucking) industry moved as much freight as the railroads will move all year, and this budget proposes to re-direct funds from road and bridge projects that would improve capacity and ease bottlenecks to underwrite projects for an industry that continually crows about how self-sufficient it is,” ATA President Bill Graves said in a statement.

According to the ATA, freight railroads moved 14.7% of all domestic freight and the trucking industry moved 68.5%.

“Using the proceeds from corporate tax reform, while creative, does little to address the long-term solvency of the Highway Trust Fund or to uphold the principle of users paying for the services they get, in this case, the federal fuel tax, which has not been adjusted in more than two decades to account for inflation and improvements in vehicle fuel efficiency,” noted ATA Chairman Phil Byrd, who is also president of Bulldog Hiway Express.

Link here for summary tables of the budget presented Tuesday.

One of the first actions of the new Arkansas governor will not be policy-related once the individual takes office in 2015. Instead, the new governor is likely to fill at least one likely opening on the Sebastian County Quorum Court after Justice of the Peace Phil Hicks did not file for re-election to his District 2 seat and no one else filed to replace him.

According to Hicks, he declined to run for re-election after long deliberations with his wife about the possibility of running again.

"Me and my wife talked about this for a long time," he said, adding that he wanted to spend more time with family.

"My oldest son lives north of Denver and my youngest son, who lives in (Washington), D.C., is a flight engineer on Air Force Two. And I want to start spending more time with my kids and grandkids."

Hicks added that he also needed to focus more time on his insurance business, which has "been on the back burner for the last five or six years."

With Hicks declining to run for re-election, the Secretary of State's office said there were two options for filling the position. According to Alex Reed, spokesman for the Secretary of State's office, Hicks could decide to hold the office until the 2016 election.

"The justice of the peace, he can continue on until his successor is elected. So he can hold over."

Another option, Reed said, was the governor appointing his successor "if (Hicks) gives notification that he doesn't wish to serve at the end of his term this time."

Sebastian County Judge David Hudson said he would rely on the county's legal counsel when filing the position, adding that he has already been in communication with Prosecuting Attorney Dan Shue regarding the position.

Hudson said "this is the first time something like this has occurred (in Sebastian County)," according to the best of his knowledge.

The gubernatorial campaigns of Republican Asa Hutchinson and Democrat Mike Ross were contacted regarding how they would deal with what it likely to be the first appointment of their potential governorships.

Hutchinson's campaign evoked job creation as one of his top priorities in whoever he appoints.

“As Governor, I would appoint someone who understands that job creation is a priority in the River Valley. My number one priority is economic growth and job creation so the person I would appoint would need to share that priority. To find that person, I would consider suggestions and recommendations but, having lived in Sebastian County for nineteen years, I have personal knowledge of qualified individuals that I would either consider for the position or ask for their advice and recommendations. Ultimately, I will appoint the person that best represents the people of Sebastian County.”

Ross said he would look for qualified and competent individuals who have a "history of working with others."

"Once the quorum court officially declares a vacancy, I would take applications from any qualified person within the district who wanted to apply, and I would strongly rely on the recommendations from the remaining quorum court members and the county judge in making my decision. As governor, each and every appointment I make would be someone who is qualified, competent and who has history of working with others - regardless of party affiliation - to put sound public policy over partisan politics.  I have always considered public service a tremendous honor that requires a strong work ethic and unwavering integrity, and I will appoint people who share those same values."

Hicks said should it become necessary for him to continue serving on the Quorum Court, he would continue serving, "but I'm 99.9% sure (the next governor) would have someone ready by January 1."

"It's one of those things (that) I've thought about it for a long time. I've got to get my priorities right. I've spent a lot of time doing stuff for the city (of Greenwood) and the county. It's time to put my family first again and that's what I'm going to do."

Construction of a new tournament softball facility at Chaffee Crossing will move forward later in 2014 after a series of votes by the Fort Smith Board of Directors Tuesday night (March 4).

Prior to voting to approve a contract, which awards $1.6 million to River Valley Sports Complex for construction and sale of the facility to the city of Fort Smith, there were many questions about how sure the non-profit lead by Sebastian County Election Commission Chairman Lee Webb and Sen. Jake Files, R-Fort Smith, would secure the additional funding needed to complete the project without having to come before the Board to ask for more money.

In order to secure the city against the potential of the project not being completed, Vice Mayor Kevin Settle proposed limiting the first payout to RVSC to only $100,000 in order to complete engineering and architectural work necessary so the National Guard could complete grading work at cost on land donated from the Fort Chaffee Redevelopment Authority starting on Aug. 1. The land, which FCRA Executive Director Ivy Owen said was valued at $1.1 million, has already been deeded to the city.

Once the Board was satisfied with the work completed with the first $100,000, Settle said the rest of the funding set aside for the project from a quarter-cent sales tax could be approved so the project could move forward.

Settle said he felt the proposal, which was eventually voted down by a vote of 3-2-1 (with City Directors Philip Merry and Pam Weber voting against, City Director George Catsavis abstaining and City Director Keith Lau absent), would have provided Webb and Files to do additional work to make sure the project was ready for the city's investment.

"I want this project to continue, that's what I'm trying to do here," Settle said. "But at the same time, there's an incomplete project plan because we're not doing it (constructing the facility). We're relying on someone else (to do) it — an entity, a non-profit, a corporation — to do it. You've got to make sure that it's there. It's not us. It's somebody else. We don't need to come back at the end and say we missed this."

Settle referred to a defined project plan the city proposed, which Webb said he was not opposed to, which would lay out the scope of the project with cost details. It would also lay out clear expectations of what RSVC would need in firm commitments before the city would commit to funding its portion of the project.

Following the meeting, Webb said some of the items Settle was referring to as incomplete are actually just the difference between doing a project with solely public money and relying on donations from individuals and corporations. He said what may seem incomplete only appears so because a large company may not be comfortable divulging planned donations prior to the actual donation.

"We've had some verbal commitments that we didn't want to bring completely forward until we were sure the project was a go because it involves bringing some people's names out and we wanted to go solidify those and get it in writing. You know, we're going to make the Board happy."

With Settle's original plan of limiting the city's purse strings to the RVSC failing to secure enough votes for passage, he attempted to remove the original sale and subsequent lease of the facility by RVSC from the agenda and instead call a special meeting for next week. That move failed by a vote of 2-4.

The project, which in previous study sessions and Board meetings has been contentious because of cost estimate differences between RVSC and the city, was funded by a vote of 4-1-1, with Settle voting no and Catsavis abstaining.

Even with the Settle proposal failing, Webb said he would still try to meet Settle's performance standards and provide updates on donations as he is able to secure them in writing.

He also said questions about any sort of differences in cost estimates between RVSC and the city were unfounded based on RVSC's estimates being centered on actual costs versus the city's estimate, which he said included profit for whichever construction companies were involved in the project.

"I think that was the biggest issue that was short with the Board, was the way we presented things. We presented hard costs, what we could build things for. They ultimately, I believe, wanted to see the savings - show this inflated price for this and what we could get it for, and show that for the savings. Jake (Files) and I looked at that as a number that was we wouldn't use in our business. We looked at hard costs. What could we go build this for? Not including overhead, not including profit, because we are basically doing this as cheap as we can physically do it and get it done."

Even though he voted against moving forward with the lump sum payment to RVSC, it did not change Settle's view of what impact the project could have on the Fort Smith region. But he said he still questions whether Webb and Files can deliver on his requests for more information that would have been included in Settle's failed proposal.

"I think it is a good deal for the voters, but I feel like given what we passed tonight without the data, I think that we just, you know… If we get to that point where he says he'll give it to us in a couple of months and we get it, then we'll know. But if we don't get that data before we start the (National) Guard work, then that's going to be the question."

"New" high schools are popping up in communities in the region, filling a district's capacity needs while potentially changing the way students learn.

The alternative, known as "New Tech" high schools, have been implemented in the Rogers and Van Buren school districts and according to Ashley Siwiec, communications director for Rogers Public Schools, the high school alternative is about finding a different approach to learning.

"It's part of a national organization called the New Tech Network," she said. "They have a different approach to learning that uses project-based learning. It's heavily infused with technology. Every student at the school has a laptop that they use for learning."

The New Tech Network supports 135 schools in 23 states and Australia. (See a short video at the end of this story from New Tech Network.)

LEARNING OUTCOMES
Siwiec said the tech high school campus came about as district officials searched for a way "to offer our students something different than traditional high school."

"The overall idea is that students kind of get assigned a project at the beginning, like a unit. They'll analyze what they already know, where they have gaps, and what research (the students should) do to solve it. Teachers may present mini-lectures if they need help in a given area," she said. "But a small team of students will work collaboratively to research on the project and often times, it ends in an oral presentation to the rest of the class."

It's not only students who work collaboratively, but also instructors, Siwiec said.

"Some of the classes are taught collaboratively. Like they might combine English and social studies into one class that is team taught, where teachers facilitate learning both of the subjects at the same time."

In Van Buren, the school's "New Tech" campus grades students on five school-wide learning outcomes (SWLOs):
• Critical Thinking (10% of their overall score);
• Collaboration (10% of their overall score);
• Oral Communication (10% of their overall score);
• Written Communication (10% of their overall score);
• Work Ethic (10% of their overall score); and
• Content Knowledge (50% of their overall score).

CHEAPER ALTERNATIVE
Not only is the new approach a way to think outside the box academically while providing students a cutting-edge learning environment, but Rogers Public Schools Chief Financial Officer Kathy Hamlon said it was far cheaper to create the Rogers New Tech High School, which is a charter school, than to construct a third high school in the district.

"We went out shopping for ideas," she said. "We wanted to find a creative solution to do a third high school before we needed to build a traditional new high school. That's where we were when we were brainstorming ideas and 'New Tech' filled that (need). We could get our third high school without a major capital investment and that was appealing."

She said the district was able to retrofit an existing building within the district for a cost of only $4 million in two different phases, versus building a brand new campus for the school's eventual 600 students (150 students for each grade once the district is able to fill the school in the next two years). The cost of the Rogers High School campus, built in 2001, was $43 million while additions to Rogers Heritage High School (the site of the former Rogers High) totaled around $32.5 million.

"For $4 million, that's a mighty cheap high school. It's a much less expensive option. We had space we could use and remodeled part of the building versus if we built a full-fledged high school with athletic facilities, those sorts of things, it would have been much more expensive," likely to the tune of more than $90 million for a school built from scratch, according to Hamlon.

Not only did the district save on construction costs, but Hamlon said the school also received more than $600,000 in grants to get it off the ground operationally, with those funds supporting programs such as STEM (science, technology, engineering and mathematics) and CTE (career and technical education) education.

EXTRACURRICULAR ACCESS
For students wanting to take part in extracurricular activities, such as band and athletics, Siwiec said the lack of a football field or band room would not leave them out in the cold.

"At Rogers New Tech, students in their first or seventh period can participate in music or athletics at their boundary high school (the school they would traditionally attend had they not been participating in the 'New Tech' program). So students from the Rogers High feeder pattern can go back to play football or be part of the band or orchestra. The same goes for Rogers Heritage."

As for how students become a part of the new school, Siwiec said it was based solely on students who want to attend the school. Each entering freshman class is limited to 150 students, meaning if there are more students wanting to attend each year, a lottery system will determine who gains entrance.

While officials with Rogers Public Schools have praised the program, one area school district exploring the construction of a third high school has said the program would not work for its students.

NOT A FIT FOR FORT SMITH
Superintendent Dr. Benny Gooden of Fort Smith Public Schools said the district did investigate the learning model.

"FSPS investigated the model 2-3 years ago and determined that it would not significantly expand opportunities," he wrote in an e-mail. "Some of the programs being used duplicate learning opportunities which FSPS students have at the Western Arkansas Technical Center (WATC) at UAFS (University of Arkansas at Fort Smith). The ongoing digital conversion of the total curriculum in FSPS is achieving many of the purported 'new tech' goals at a considerably lower cost."

Gooden added that while Rogers was able to convert an existing building for use as a new campus, he said doing so in Fort Smith would not change the need for a new school campus or campuses in the district.

"All such options are are a possibility, but do not address the space issues currently experienced and anticipated in the future at both elementary and secondary levels. There are no buildings that the school district owns which would meet this need."

While Gooden said there were no buildings available to meet the need in the Fort Smith district, Siwiec said Rogers was able to fill an immediate need by thinking creatively.

"We looked at it as an alternative to building a third high school," she said. "We know that we will eventually grow to that point, but we knew we wanted something different to offer to high school students. Each type of school has advantages, but certain characteristics or courses or the approach to learning may appeal to students. We just wanted to offer options for them to consider."

Sitting pretty on fat balance sheets, the nation’s two largest chicken companies are it again, strategically planning to grow market share in the highly fragmented poultry industry.

Tyson Foods is ranked No. 1 in market share with 22% of the nation’s chicken production. No. 2 ranked Pilgrim’s has 20% of the market, according to Watt Poultry USA.

Both companies recently announced plans to expand their prepared foods segments and are investing heavily in international ventures – Tyson Foods in China and Pilgrim’s in Mexico. Industry analysts applaud the efforts and say the U.S. market is likely facing overproduction which could result in lower chicken prices for the consumer and lower chicken revenue for the industry.

PREPARED FOODS PUSH
Tyson Foods recently acquired Bosco’s Pizza Co., in its expanding prepared foods portfolio. Last year the meat giant acquired Circle Foods and Don Julio Foods giving it more access to Latino and Indian marketed products sold in the prepared foods segment. The meat company also is reportedly interested in Michael’s Food Group, an egg and dairy company being sold by a Goldman Sachs private equity arm. Tyson did not confirm a bid on Michael’s saying it doesn’t comment on rumor or pending activity.

Tyson Foods CEO Donnie Smith has said the prepared foods segment is the growth engine for the meat company and he recently split the unit away from the chicken segment which had previously shared leadership.

Donnie King was recently placed in charge of the prepared foods segment and given the go-ahead to grow the segment’s sales an estimated 7% to $3.553 billion by the end of 2014. That would be a 9.76% growth rate over the total segment sales in 2012. King previously served as president of the combined segment of chicken and prepared foods since 2009.

Smith told investors and analysts in the recent earnings call that this segment is already starting to contribute more to the company’s bottom line and by the end of this year to early 2015 many of the recent investments will be paying off.

Pilgrim’s CEO Bill Lovette told analysts during a Feb. 21 earnings call that Chad Baker, a former Smithfield Foods executive, was joining Pilgrim’s to head up the prepared foods segment. Lovette is a former Tyson Foods executive. Lovette said Pilgrim’s prepared foods, valued-added sales had decreased about 10% over the past three years. He said some of that business was not paying off which prompted the company to readjust.

“In order to make that business more impactful from a margin perspective, we set a strategy ... now we're going to bring on the resources to grow that business in the right way in right implying are more profitable,” Lovette said in the call.

Pilgrim’s estimates about 30% of its sales are valued-add/prepared foods. That would equate to $2.52 billion. Lovette expects that number to grow in the next couple of years, but he did not give an estimate.

INVESTMENTS ABROAD 
Tyson has ramped up efforts to become fully integrated in China over the past year. Tyson operates three ventures and employs about 4,300 people in China, and first opened operations there in 2001.

In China, Tyson processes chicken sold wholesale into food service for clients such as Yum Brands! and McDonalds. Tyson also sells fresh chicken to Wal-Mart and Sam’s Clubs in China, extending those longtime U.S. relationships abroad.

Tyson said last fall it was processing about 1.3 million birds per week in China with a goal  to reach 3 million per week in 2014. Smith recently said the company was slowing the pace because there is an excess supply of chicken due to demand volatility from spikes in avian flu and other food safety concerns. He said Tyson is not giving up on China but is prepared to wait until market conditions improve before building out the rest of the chicken farms. He said the company will continue to acquire land rights and process the birds it owns. At this time Tyson’s two plants are running one shift with company originated birds. 

Smith said they had hoped to double that production by year end, using only company birds, but it is going to take longer than they thought.

Rob Moscow, analyst with Credit Suisse, said Tyson has a three- to four-year head start on other poultry companies wanting to invest in China. He said it’s a tough market and he has yet to see an agribusiness company successfully enter and make it big in China. However, he does credit Tyson with having an experienced Chinese national leading their operations. Arex Lee has 25 years of experience with one of Tyson’s Chinese poultry competitors. Moscow said it was Lee who initiated Tyson’s vertical control from egg to processed chicken in the retail channel.

Pilgrim’s recently announced plans to expand its footprint in Veracruz, Mexico. Lovette said the project will begin with live sales and work toward a new processing facility expected to come online by late 2015. Pilgrim’s has committed about $70 million toward expansion opportunities this year. They said the Veracruz area is showing increased chicken consumption along with robust population growth. It is also located near a port where grains are shipped. Pilgrim’s is staking out land for this new operation. 

“We'll build our feed mill and a hatchery, import hatching eggs and then build out our breeder supply there. And then the next step is we'll build a processing plant as the needs tell us to,” said Fabio Sandre, chief financial officer at Pilgrim’s.

MORE CHICKEN
Moscow is one of the analysts who expects domestic chicken excesses this year. He said after high levels of profitability in 2013 and many breeders now in the middle stages of rebuilding their grandparent stocks, chicken processors will be in position to substantially increase their production by early 2015.

He expects chicken prices to fall this year given rising egg set numbers and the 5.7% more poultry sitting in cold storage. The last time the industry faced declining chicken prices from over production was 2006 — a disastrous year for the industry. Tyson Foods lost $196 million for the year, and $127 million in the second quarter alone.

While Moscow said there has been many changes at Tyson since then, the meat giant is still vulnerable to falling chicken prices. He estimates that if chicken prices fall 10% and corn costs were to suddenly rise $2 per bushel the downside to Tyson Foods earnings would be 65 cents per share. For that reason he is neutral on Tyson Foods shares.

The U.S Department of Agriculture data show eggs set were up 5% from the prior year during the last four months of 2013. Broiler production is expected to increase about 3% this year across the industry. Analysts said heavier bird weights alone add 1% to the total production in pounds and lower grain costs this year are also likely to encourage higher weight per head. 

Smith has said many times the company will err on the side of caution and slightly under produce the chicken it needs, knowing it can buy the difference in the open spot market. 

While Tyson’s restraint is applauded, there is still a majority of the market where smaller processors may not hold back the temptation to grow more chicken coming off some very profitable quarters.

EARNINGS GUIDANCE
Tyson recently gave annual earnings guidance, an usual move given the volatility seen in grain and other commodity costs in recent years.

"While we don't typically provide earnings guidance, we do think we'll deliver at least $2.78 in fiscal 2014, which would be in excess of 23% earnings per share growth, and we're poised for at least 10% EPS growth in 2015 and beyond," Jon Kathol, Tyson's vice president of investor relation, said this past week at an investor conference.

Kathol said Tyson's business strategy centers on accelerating growth of domestic value-added products and international chicken production and innovation of products and services that customers want.

Moscow said the guidance is a little too aggressive for his modeling given the headwinds he predicts from overproduction. That said, Wall Street investors are bullish on the shares.

Tyson Foods (NYSE: TSN) shares closed Wednesday (March 5) at $40.42, flirting with its 52-week high price of $40.80. Tyson shares have rallied 73% in the past 12 months. 

Pilgrim’s (NASDAQ: PPC) shares closed Wednesday at $18.20, up 29 cents. The stock price has ranged between $7.82 and $19.23 during the past 52 weeks. Pilgrim’s shares are up 98% year-over-year.

The outlook for two trucking operations that employ more than 1,000 in the Fort Smith region – and many of those being good-paying jobs – is improving. Fort Smith-based Arkansas Best Corp. is arguably beyond “the challenges of the past few years,” and Van Buren-based USA Truck is “in the early innings of its turnaround story.”

It’s safe to assume that shareholders, employees and execs at both companies are looking forward to financial and operational stability.

Arkansas Best, a transportation holding company whose largest subsidiary is national less-than-truckload carrier ABF Freight, has lost more than $82.3 million in the past five years – not including an unusual $64 million accounting charge to reflect goodwill impairment. And for almost a year, the company and the International Brotherhood of Teamsters worked to hammer out a new five-year labor agreement that was eventually ratified on Oct. 30, 2013.

The new contract covers about 7,500 employees of ABF Freight System who are members of the union. Most of those workers are drivers. The company has said the agreement will result in savings of between $55 million and $65 million a year, with about 75% of the savings coming from wage and benefit reductions, and the remainder coming from flexible workplace rules and facilities consolidation.

BETTER BUSINESS ENVIRONMENT
Net income during 2013 for Arkansas Best was $15.8 million, much better than the $7.7 million loss in 2012 and the most earned by company in a year since 2008. Full year 2013 tonnage was up 3.4%, and tonnage for the first quarter of 2014 has continued on a strong path – up around 3% – despite winter weather that potentially shaved up to 3% from the tonnage increase. The company also said ABF billed revenue would have been up as much as 7% and tonnage would be up around 6% if not for winter storms that hit many parts of the country during January and February.

Arkansas Best President and CEO Judy McReynolds said during a March 4 Raymond James investor conference in Orlando that the “the business environment is better” with respect to conditions favorable for businesses under the Arkansas Best umbrella.

“I’ve been with the company for nearly 17 years, and  I can honestly say that I’ve never been so excited about the opportunities that lay in front of us today that are within our reach,” McReynolds said in opening her comments about “an evolving story” at Arkansas Best.

She noted later in her conference remarks: “We’ve weathered the challenges of the past few years, and our current financial position equips us to move forward with growth and investments that benefit our shareholders, our employees and our customers.”

Also on March 4, ABF officials announced a rate increase to be effective March 24. The increase is about 5.4%, but the rates vary depending on location and load.

BETTER FINANCIALS
The increased tonnage and move to push higher rates – rate hikes that may stick thanks to tightening capacity in the national trucking industry – is why Brad Delco believes Arkansas Best’s financials “will begin to shine” in future quarters. Delco, a transportation industry analyst with Little Rock-based Stephens Inc., has a $42 target price on Arkansas Best shares. Company shares (NASDAQ: ABFS) closed Wednesday (March 5) at $35.73, up 84 cents. During the past 52 weeks, the share price has ranged from a $36 high to a $9.62 low. (Stephens Inc., Delco’s employer, has a market position in Arkansas Best and USA Truck, and does investment and non-investment business with the companies.)

However, Delco estimates the company will post a 15 cent per share loss in the first quarter, down from his previous estimate of 5 cents per share loss. The loss of business from weather is the reason for the downward shift.

“We think the weather impact on transports this quarter is very well known, and we view the accelerating top-line trends very favorably. As bad weather abates, we think the earnings power of the Freight business will begin to shine through along with greater contributions from the non-asset businesses,” Delco said in his March 5 investor note.

Delco does estimate the company will report full year 2014 earnings of up to $2 per share, and 2015 earnings of $2.80 per share.

McReynolds spoke during the conference of the company’s goal to generate more revenue from operations other than ABF (non-asset based operations). Other subsidiaries include Panther Expedited Services (logistics), FleetNet (an emergency/preventative maintenance company) and a household goods moving company.

ABF Freight generated $1.761 billion in operating revenue in 2013, or 76.6% of total operating revenue. The percentage is down from 82.5% during 2012. The value of diversifying revenue is evident when comparing operating income of the segments. For example, ABF Freight generated 76.6% of the revenue during the year, and 52.5% of the operating income. Panther Logistics, the second largest subsidiary of Arkansas Best, generated 10.7% of operating revenue, but cranked out 36.4% of the total operating income among the five subsidiaries.

Revenue from the non-asset based subsidiaries was just short of $600 million in 2013. McReynolds said March 4 that the goal is for non-asset revenue to reach $1 billion by 2015.

With a little more than $194 million in cash and borrowing capacity, McReynolds also said the company is “very active in scoping and understanding acquisition opportunities.” She said “several teams” are now looking at such opportunities.

USA TRUCK
The outlook at USA Truck is better but considerably less rosy than that of Arkansas Best. USA Truck posted a net loss of $9.11 million in 2013. While an improvement compared to the net loss of $17.671 million in 2012, it marks the fifth consecutive year of losses for the trucking company.

In fact, the company has lost more than $47.9 million in the past five years. The last time the company strung together meaningful numbers was in the middle of the previous decade when 2004, 2005 and 2006 delivered net income of $7.432 million, $15.568 million and $12.441 million, respectively.

The resulting low share price created from the financial losses resulted in USA Truck fighting off two hostile takeover attempts by trucking companies who sought to gain USA Truck assets and business lines at near fire-sale prices. The latest takeover attempted ended in early February when Knight agreed to pull back from its $9 per share offer.

Athough Delco believes USA Truck will finally report positive income in 2014 – 25 cents per share – he said the turnaround toward more stable finances is a “likely several year
process” considering internal and external factors the company faces.

“After a recent visit with Management we have had an opportunity to take a deeper dive into the operational changes that have been put in place at (USA Truck), as well as what challenges and opportunities remain for the company to proceed along with its turnaround plan. In short, both opportunities and challenges are plentiful but progress is being made and more importantly will take time to translate into results,” Delco noted in a Feb. 25 investor note on USA Truck.

Delco has set a $12 target on USA Truck shares. The shares (NASDAQ: USAK) closed Wednesday at $14.80, down 70 cents. During the past 52 weeks the share price has ranged from a $16.38 high to a $4.37 low.

“In our opinion, the Trucking business is both difficult and complex with typically thin margins and in addition to both processes and investments that need to be developed/made, a cultural mindset shift is also required that may take time to materialize,” Delco wrote.

USA Truck President and CEO John Simone declined to comment for this story.