The Arkansas General Assembly has informally adjourned, meaning that the time to pass new bills is over. They will reconvene in May to formally wrap up the session, but the major action is now concluded.

Prior to the session, ACRE put together a Top 10 List of policy ideas based on our research. And throughout the session, ACRE researchers were watching relevant bills and in Little Rock whenever our research could help inform the debate. So how did our Top 10 List turn out?

Occupational Licensing

ACRE Policy Analyst Zachary Burt

Major improvements were achieved in terms of interstate cooperation and lowering barriers for professionals who wish to move to Arkansas, through . This act provides for automatic license recognition for any out-of-state license holder who moves to Arkansas, allowing them to get to work after moving here much more quickly. License holders will be granted Arkansas licenses upon moving to the state as long as they have held the license in their previous state for one year and are in good standing. The bill was weakened to some extent from its original form, changing from saying licensing boards “may” administer an Arkansas-specific exam to an out-of-state , but the final bill says that they “shall” administer the exam. This change takes away flexibility from the licensing boards and slows down what would have been a more efficient recognition process, but the reform is still good and significant overall.

Three bills this session joined Arkansas to existing licensing compacts. These compacts are a related, but distinct, concept to universal licensing recognition. joined Arkansas to the Occupational Therapy Licensing Compact, joined the state to the Counseling Compact, and joined us to the Audiology and Speech Language Pathology Interstate Compact. These three acts are excellent steps towards getting more qualified healthcare and mental healthcare professionals to move to Arkansas.

In addition to these good steps forward, Arkansas also created or expanded at multiple occupational licenses, such as a new license for behavioral analysts (note: Governor Sanders recently ) and an expansion of the existing auctioneer license. These licenses will only add to the burden of licenses in Arkansas, and is especially worrying given that according to Arkansas already has the .

Taxes and Spending

ACRE Policy Analyst Joseph Johns

Changes to tax and spending policy can take both large and small forms. This session saw a number of small reforms pass with regard to state income taxes, but there were also some major reforms of local sales taxes.

ACRE’s big idea for tax and spending reform on our Top 10 list was a “tax and expenditure limit,” a policy that about half of US states, including all of Arkansas’s neighbors, already have. While a big change like this can take a long time to build public support – as it should for a major change – there was an important first step. Rep. Wayne Long proposed a constitutional amendment that would establish a TEL in Arkansas, which he called the Arkansas Taxpayer Bill of Rights. The legislature did not refer that amendment to the voters this year, but we are optimistic that it will start future conversations about this kind of tax and spending reform.

On state income taxes, the legislature passed another slight reduction in both personal and corporate income tax rates, lowering both by two-tenths of a percentage point (the top personal rate is now 4.7 percent). While this was a small reform, it is still important, and continues along the path that the legislature has taken in almost every session since 2015. Cumulatively, these small tax cuts have created large reductions in income taxes for middle class families of almost a thousand dollars per year.

One other major set of tax reforms was passed that will limit local sales tax increases. Through the passage of two bills this year, Arkansas both required local A&P taxes to be approved by the public (before this, no public vote was required) and set strict limits on when all local tax elections can be held. Cities, counties, and school districts will now have just two fixed dates each year (in May and November) to hold local tax elections. This reform was not on our Top 10 list, but it is one that ACRE has been working on for years. Additionally, another good corporate tax reform was enacted – repealing the throwback rule – which Arkansas has suggested for years beginning with our 2016 book on tax reform.

Government Transparency

While none of ACRE’s proposed Top 10 ideas for government transparency were passed, this doesn’t mean that we weren’t busy in this area. To the contrary, there were several bills proposed during the session which would have reduced local government transparency, and ACRE followed all of these bills, testified before the legislature multiple times, and explaining why these bills would reduce transparency.

ACRE Policy Analyst Dr. Joyce Ajayi

Even though no bills were passed from our Top 10 list, towards the end of the session, two bills were filed that would have greatly expanded theof public meetings and the for cities in Arkansas. Given how late the bills were filed, they didn’t end up becoming law, but we look forward to similar bills being filed in future sessions that will establish the same transparency in Arkansas cities that ACRE helped in 2019.

The challenges with government transparency in Arkansas were demonstrated in many ways, including several attempts to limit Arkansas’s FOIA law, which is generally regarded as among the best in the nation. ACRE’s advice to policymakers doesn’t always involve recommending new legislation, but often takes the form of preventing bad changes from happening.

The 2023 Legislative Session has seen a flurry of occupational licensing-related bills over the past two months. Many of these bills make small tweaks to licensing rules or board compositions, but several bills with a potentially large impact have either already been passed or stand a high chance of doing so. Three of these bills would join Arkansas to interstate licensing compacts.

Interstate compacts are agreements between two or more states that allow states to enter into agreements with one another with the approval of Congress. These compacts allow states to work together to address common issues and problems that cross state boundaries. They can cover a wide range of areas, including transportation, natural resources, public safety, education, taxation, and healthcare.

Once an interstate compact is in place, it becomes legally binding and enforceable, with each state required to comply with its provisions. The terms of the compact may include a range of provisions, such as requirements for cooperation between states, funding mechanisms, and dispute resolution procedures.

Interstate compacts are sometimes used for professional licensing, allowing professionals to practice their licensed professions in member states without having to obtain a separate license in each state. These compacts are designed to increase the mobility of professionals, while ensuring that they meet the standards of each state they practice in.

The first interstate compacts for occupational licensing were . They are , and have been expanding to include compacts for mental healthcare professionals in recent years. Arkansas is currently a member of , covering a variety of issues such as education, law enforcement, resource management, and licensing, among others.

Interstate compacts for professional licensing provide a number of benefits for both license holders and the public. Professionals are able to practice in multiple states, which can expand their career opportunities and provide greater flexibility. In Arkansas, this would make it easier for residents of Texarkana to work on both sides of the city in Texas and Arkansas, or for professionals in Memphis to serve clients on our side of the Mississippi River. The public benefits from increased access to qualified professionals, as well as greater consistency and reliability in the standards for licensing and regulation across states.

The three interstate compact bills to come out of the legislature so far this session all deal with healthcare or mental healthcare licenses. will join Arkansas to , which 21 states are currently party to, with legislation pending in 14 states. will join Arkansas to the , with 17 current members and pending legislation in 21 states. Finally, will join Arkansas to the , with 23 states currently joined and 16 states with pending legislation. HB1082 and HB1181 have already passed both chambers and are awaiting the governor’s signature. SB91 has passed the full Senate and the House committee, but has yet to be heard by the full House. These bills will allow skilled professionals who hold licenses in these areas to move to Arkansas much more easily. This is all around a good thing for Arkansas.

Critics of the bills and of similar licensing policy tend to say that this will effectively make Arkansas’s licensing standards equal to those of the least restrictive state, but this is an over-simplification. Interstate compacts are formed around national standards for licensed professions, and these standards tend to reflect the norm for the field as a whole.

In the most recent edition of their report, , the Institute for Justice ranked Arkansas as the 9^th most burdensome state for licensing in the country. While Arkansas’s licensing requirements are not far from the national average, the state licenses far more occupations than most states do. Out of 102 occupations covered in the report, Arkansas licenses 71 percent, compared to the 53 percent national average. As long as this is the status quo in Arkansas, interstate compacts and universal recognition policies will be particularly effective here, since these reform strategies together encompass nearly all professional licenses

Interstate compacts are also a distinct policy from Universal Licensing Recognition. Interstate compacts establish common standards and processes for a single professional license, while universal recognition establishes standards and processes for occupational licenses as a whole. To learn more about Universal Licensing Recognition, take a look at this previous blog post. These policy options should not be seen as conflicting. They are complementary options lawmakers can use to fit different needs for licensure reform. Most universal licensing recognition bills, including the one currently on the table in Arkansas, , have provisions that exclude licenses handled under interstate compacts from the legislation. This way, interstate compact licenses are not handled under two separate legal processes.

Between joining three new interstate licensing compacts, and the promising outlook for passing a universal licensing recognition bill,  joining the interstate compacts will allow several kinds of healthcare professionals to move to the state more easily, and enacting universal recognition will do the same for a variety of professions, particularly low- and middle-income careers. More and more states are joining interstate compacts and enacting universal licensing recognition, and Arkansas must do the same to ensure we remain a competitive, attractive option for people choosing to relocate their careers.

For more information about occupation licensing in Arkansas, visit this past blog post.

For more information on ACRE’s labor market regulation research, visit this page.

The Arkansas General Assembly has now completed 7 weeks of its 2023 Regular Session. While there is still a lot more work to be done this year, we’ve already seen some major developments, and at ACRE we are closely watching several pieces of legislation where our research can help inform the debate and legislative process. I wanted to provide a summary of what has happened so far, and what to look forward to in the remainder of the session.

The biggest news last week was the release of the full details the LEARNS Act (), which is Governor Sanders’ major initiative to reform K-12 education in Arkansas. Not only is this bill important in its own right, but it will also be important for allowing other parts of the legislative agenda to move forward. Given the potential fiscal costs of the education reform, other spending and taxation changes were partially on hold until the details became clear. I recently spoke with about how all of the proposed spending and tax changes in Arkansas might fit together this year.

The education reform bill has already made it through the Arkansas Senate and is expected to come up in the House next week. ACRE has published a variety of research on K-12 education and school choice in the past. In particular, several of our research papers address an important question in the current debate: does school choice hurt traditional public schools? Dr. Thomas Snyder summarizes his research and the research of other economists in a recent ACRE blogpost. In brief, most of the research suggests that school choice programs do not hurt student performance in traditional public schools.

Here are a few of the other pieces of legislation ACRE has been following.

Joseph Johns testifies on HB 1027

While there has not been a major tax reform bill filed yet for Arkansas income taxes, there have been several bills related to the issue of local taxes. ACRE Policy Analyst Joseph Johns summarized the relevant local tax issues in another ACRE blogpost. The first bill Mr. Johns discussed would ban local governments in Arkansas from enacting income taxes, and it has already been enacted into law as . Another bill would require A&P taxes to be put before voters before they can be enacted or increased. These are local sales taxes —  primarily enacted by cities — on hotels, restaurants, and other similar businesses, but do not require a vote of the citizens. has already passed through the Arkansas House, and Mr. Johns testified before the House committee presenting ACRE’s research relevant to the bill.

Dr. Joyce Ajayi testifies on HB 1318

Several bills have also been proposed which would improve local government transparency in Arkansas, and our Policy Analyst Dr. Joyce Ajayi has testified on several of them. would improve the bidding process for city governments in Arkansas, making the process more transparent, and it has passed the Arkansas Senate. Another transparency bill is even more closely aligned with ACRE’s research. HB 1399 would give city governments the option to publish budgets online, rather than in newspapers, which has the potential to save cities money, and would also improve their scores in ACRE’s web transparency index. ACRE’s index already planned to include cities in our new 2023 report, and this bill would give them an immediate improvement in their scores for fiscal transparency. Dr. Ajayi testified before the House committee on this bill as well, but it is currently on hold awaiting a fiscal impact statement.

We’ve also seen a major bill proposed related to ACRE’s research on occupational licensing. Policy Analyst Zach Burt explained in a blog post how SB 90 would improve opportunities for work in Arkansas by establishing “universal licensing recognition.” A law like this would mean that workers could move to Arkansas and not need to go through a lot of red tape to start working if they were already licensed in another state. The bill has not been presented in committee yet, but ACRE is prepared to share our research with the legislature when it is presented, potentially in the very near future.

Thank you for continuing to follow ACRE’s research and our educational outreach to the legislature. Be sure to continue checking our blog and subscribe to our newsletter (go to the bottom of this page: /acre/) as we will continue to provide weekly updates throughout the session.

If you’re a license-holding professional, it may be harder than you’d expect to move your out-of-state license to Arkansas. Licensed workers from other states often have to go through the same licensing process all over again when relocating to Arkansas. These are unnecessary barriers that could convince you to move to other states. A solution many states, including neighboring Missouri, Mississippi, and Oklahoma, along with 16 other states, have recently implemented is a process known as universal licensing recognition (ULR). ULR refers to a system in which the licenses and certifications obtained by professionals in one state are recognized and accepted as valid in another state. This eliminates the need for professionals to obtain separate licenses and certifications in each state they work in, which can be a time-consuming and expensive process.

ULR allows licensed workers from other states to automatically or expeditiously become licensed in a new state. Exact processes differ slightly between states, but typically as long as applicants have one year of experience, are in good standing, and intend to establish residence in the new state, their licensing qualifications are recognized. When someone moves to Arkansas, we don’t make them pass additional qualifications to get an Arkansas driver’s license, since we know the rules don’t differ significantly between states. The same is true of licensing, yet we often do make individuals meet licensing requirements that exceed national standards before they can work in the state. Under the current status quo, Arkansas risks losing talented professionals to neighboring states with friendlier licensing recognition policies.

One of the primary benefits of ULR is increased mobility for professionals. With their licenses and certifications recognized across state lines, they are free to work in any state they choose, without the need to go through a cumbersome licensing process. This can be particularly beneficial for individuals who are looking to relocate their careers to a new job market, as they can take advantage of opportunities in other states without the added hassle of obtaining new licenses. While state ULR laws are fairly new, that residents of counties that border states that have enacted ULR policies are more likely to seek employment in neighboring counties across state lines, suggesting that friendlier licensing policy does have an effect on where people choose to work. 

Another benefit of universal licensing recognition is the improvement of standards in the industry. By establishing a universal set of licensing standards, it becomes easier for organizations to identify and recruit top talent from around the country. ULR also helps reduce the economic burden of licensing, since license holders moving to a new state will not have to pay the often high initial licensing and exam fees another time. 

Universal licensing recognition is a powerful tool that can benefit professionals, organizations, and consumers alike. By promoting mobility and lowering barriers to good jobs, it creates a more level playing field for professionals and helps to drive progress in the industry. State and many local governments spend millions of dollars each year on “economic development incentives” to try to attract jobs and businesses to Arkansas. ULR could do just that, without spending a dime of taxpayer money .As the world becomes increasingly interconnected, ULR will become increasingly important, and it is a concept that should be embraced by all stakeholders. A legal precedent for universal recognition already exists in Arkansas, since was enacted in the legislative session of that year for the spouses of active duty military personnel. It makes sense that if universal recognition benefits military spouses, it would also benefit other individuals who are either interested or compelled to move states. 

As of February 2023, 19 states have enacted universal licensing recognition legislation. 

1. Arizona (2019)
2. Colorado (2020)
3. Idaho (2020)
4. Iowa (2020)
5. Kansas (2021)
6. Mississippi (2021)
7. Missouri (2020)
8. Montana (2020)
9. Nevada (2017)
10. New Hampshire (2018)
11. New Jersey (2018)
12. New Mexico (2016, 2020)
13. Oklahoma (2021)
14. Ohio (2023)
15. Pennsylvania (2019)
16. South Dakota (2021)
17. Utah (2020)
18. Vermont (2020)
19. Wyoming (2021)

In a recently released study by the Institute for Justice, a public interest law firm, Arkansas was ranked as the 9th most burdensome state for licensing in the country. That’s compared to neighboring states like Mississippi and Louisiana at 44th and 45th most burdensome respectively. This is in part because Arkansas licenses more occupations on average than most other states. Out of a sample of 102 licensed occupations, Arkansas licenses 71 percent, compared to the 53 percent national average. Universal licensing recognition would therefore be a particularly efficient method for effective licensing reform in Arkansas. 

Arkansas should enact universal licensing recognition legislation comparable to laws passed already in the neighboring states of Missouri, Mississippi, and Oklahoma. Fortunately, there is a bill currently under consideration by the Arkansas State Legislature that would do just that. , sponsored by Senator Ricky Hill (R-Cabot), entitled “To Create the Automatic Occupational Licensure for Out-of-State Individuals Act” would be a massive improvement over the status quo in the state. 

SB90 would require Arkansas licensing boards to recognize out of state licenses provided the license holder has been in good standing for one year. If a professional is moving to Arkansas from a state that does not license their occupation, but Arkansas does license it, the bill requires that they have at least three years of experience in the occupation to be granted licensure in Arkansas. Additionally, licensing boards would be allowed to administer jurisprudence exams to out-of-state license holders where relevant. SB90 takes it one step further than some other states, since it does not contain a residency requirement – but only 5 of the current ULR states require residency to be established (see Table 1 of ).

Our legislators should strongly consider enacting SB90. A growing wave of states are adopting universal licensing policies, and Arkansas should do the same, or risk lagging behind our neighbors. ULR is a good policy that improves professional mobility, improves industry standards, and lowers the economic and legal burdens of professional licensure. 

References:

Follett, T., Herman, Z., and Hentze, I. (2021). Universal licensure recognition. National Conference of State Legislatures.

Deyo, D. and Plemmons, A. (2022). Have license, will travel: measuring the effects of universal licensing recognition on mobility. Economics Letters. 219. 

Institute for Justice. (2023). State Reforms for Universal Licensing Recognition.

Knepper, L., Deyo, D., Sweetland, K., Tiezzi, J., and Mena, A. (2022). License to Work: A National Study of Burdens from Occupational Licensing. 3rd Edition. Institute for Justice.

The Arkansas General Assembly convenes for the 2023 general session on January 9, 2023. Over the weeks and months that follow, the Legislature will consider bills on a wide variety of issues affecting individuals and businesses in Arkansas. Researchers at ACRE have been hard at work since the last legislative session conducting basic research in our primary policy areas of government transparency, labor market regulations (especially occupational licensing), and fiscal policy (both tax and spending issues).

Based on our research at ACRE, we’ve also put together a list of our Top 10 Policy Goals for the next legislative session. These policy goals encompass major reforms that legislators could implement which our research and the research of other academics suggest will improve the economic fortunes of Arkansans. We invite you to take a look at our list of recommendations in the linked document which also provides references to the research supporting our ideas, but in brief here are our policy goals:

• Occupational Licensing
  1. Universal recognition of licenses from other states
  2. Lowering barriers to obtaining licenses such as unnecessary educational and training requirements
  3. Using less restrictive regulations than occupational licensing, such as registrations and certifications
• Taxes and Spending
  1. Structural changes to the state budget, such as a “tax and expenditure limit” which puts a limit on state government growth
  2. Continuing the reductions in personal and corporate income taxes that began in 2015
  3. Targeted spending reforms, especially by learning from other states that spend more efficiently than Arkansas
  4. Reducing state spending on targeted economic development incentives
• Government Transparency
  1. Expanding transparency at the local level
  2. Fiscal transparency for first-class cities in Arkansas, following successful transparency reforms for counties in Arkansas in recent years
  3. Transparency for federal influxes of funds, such as the various federal assistance plans passed during the pandemic

As the legislature gets under way and bills start to be filed and discussed, ACRE researchers are willing and excited for the opportunity to help educate lawmakers and the general public on the costs and benefits of potential policy changes in our research areas. As in past years, ACRE staff will appear before legislative committees to explain how our research informs policies under consideration, as well as work with local media to help explain to Arkansans how policy changes may impact them.

Finally, ACRE is also excited to announce the release of our Annual Report for 2021-2022. If you don’t know much about ACRE and our programs, this report is a great way to learning about all the things we do for students at UCA, and to help educate Arkansans generally about economics and public policy. We look forward to continuing this work over the next few months during the legislative session, as well as throughout the rest of the year after the session concludes.

The paper explores the phenomenon of “hidden sentences”, also known as collateral consequences of conviction. These are de facto additional punishments justice-impacted individuals experience even after they have completed the terms of their official sentence. The abstract of the paper reads:

ACRE Student Fellow Caleb Vines (right) receives SOBIE award from Doug Barrett, Professor and Department Chair from University of North Alabama

This study explores the legal barriers created by state governments for justice-impacted individuals and how it relates to the amount of criminal behavior, unemployment, and exodus from the labor force. States vary in their number of erected barriers for individuals with a criminal background. The laws are typically in place to prevent criminal behavior, but they may backfire. The more work barriers someone with a criminal history faces, the more attractive illegal activities become. We examine differences across states in the data set provided by the . We compare incarceration rates, unemployment rates, and labor force participation rates to the number of rules that affect someone with a criminal background. Our results predict that states with more collateral consequences will have higher per-capita imprisonment, higher unemployment, and lower labor force participation rates.

Vines was presented with a Student Research Award at the SOBIE conference for his presentation and work on the subject.

For questions on the subject or to read the working paper, contact Zachary Burt at zburt1@uca.edu.