A legislative panel on Wednesday endorsed a plan that will give the State Fair access to nearly $1 million in state rainy-day funds to help reduce operating losses from a rain-soaked 2018 event.
One Northwest Arkansas lawmaker called the move a bailout.
Gov. Asa Hutchinson asked legislators to transfer up to $911,050 in rainy-day funds to the state Department of Agriculture for a grant to the State Fair.
Hutchinson also asked the Legislative Council's Performance Evaluation and Expenditure Review Subcommittee to transfer another $150,000 from the rainy-day fund to the Department of Higher Education for a grant to the nonprofit Arkansas Community Colleges.
After about 10 minutes of discussion on the money for the State Fair, the subcommittee recommended that the Legislative Council approve the governor's request during its meeting Friday.
Doug White, secretary-treasurer of the Arkansas State Fair and Livestock Show Association board, told lawmakers that the primary reason for the fair's operating shortfall this year is "really due to the fact that we had six days of rain" during the 10-day run in October.
"Two of our weekend days were completely washed, and that really hurts," he said.
Rep. Mary Bentley, R-Perryville, pressed White about whether there were any expenses that fair officials didn't expect in the past few months that contributed to the funding shortfall.
White maintained that the major reason was the rain, but he said that he, Sen. Bruce Maloch, D-Magnolia, and officials with the Department of Finance and Administration also are reviewing some of the fair's contracts with an eye toward savings.
Maloch is chairman of the fair association board. He is also co- chairman of the subcommittee that was considering the governor's fund request and recused himself during the discussion.
"We are having a board meeting tomorrow and the operating budget is much, much thinner," White assured lawmakers.
After the meeting, White said he's now the interim director and general manager of the fair's nonprofit organization, called the Arkansas Livestock Show Association, as a result of the board's Dec. 4 meeting.
Ralph Shoptaw, the groups' general manager and president, is retiring, effective at the end of this year, White said. Shoptaw, 71, has been in his post for 13½ years and decided to retire on his own, he added.
The association has an annual operating budget of $4.2 million. About 60 percent -- $2.7 million to $2.8 million -- is dependent on the annual fair and the rest on other events held at the fairgrounds during the year, White said in an interview.
Fair officials anticipated a profit from this year's event but lost about $600,000 because of the weather, White said.
The association has already cut the number of full-time employees from 18 to 13, he said. Some of those workers had intended to leave, and a few lawn-maintenance jobs will be contracted out, he said.
State budget administrator Duncan Baird told lawmakers Wednesday that finance department Deputy Director Paul Louthian has been reviewing the fair organization's finances since officials were made aware of its financial difficulties.
"Their expenditures exceeded their revenues over the last few months," he said. "Since this issue was brought up, they have made some changes. They made some personnel reductions. They've looked at their expenditures. I think some of the contracts have really adjusted, so they are in a better position going forward.
"But there are still those expenses that have come in in the last few months that need to be paid," Baird said. "Essentially they have these dollars that are owed, so this rainy-day release would fund that."
The fair wouldn't get a blank check, he said, but would have to certify to the finance department "that any money that we release is actually [for] the purpose that we believe it is for."
That led state Rep. Jim Dotson, R-Bentonville, to ask if Baird "is confident, then, they aren't going to be coming back and asking for a bailout again?
"We already [give] close to $1 million or something annually to the State Fair. This is like doubling what the state is going to give them...," Dotson said.
Baird said the fair currently gets nearly $1 million a year from state government.
The request for $911,050 in rainy-day funds "is a number we calculated probably close to the end of November that would catch them up through the present time period," he said.
Baird said that there may be more expenses that will need to be covered, but "I think they would be much smaller than this amount."
"Right now ... everybody is kind of pulling in the same direction to make sure it doesn't happen again," he said. But if some additional funds are needed, "we would obviously come back here for it if we had to."
Dotson noted that Little Rock also contributes some funds to the fair each year, and he questioned whether the city contributed less money than in the past and "helped contribute to the hole they are in now."
White said that Little Rock's contribution doesn't go for operating expenses. The Arkansas Livestock Show Association receives part of the funds raised by the city's 0.375 percent sales-tax increase in 2011 for capital improvements, he said.
"Some of the things that we receive city money for would be for expansion of our limited grounds ... buying up dilapidated buildings, expanding our footprint for parking and stuff like that," White said. "We are looking right now at a security gate enclosure for that entire facility that would qualify for the city funding as well."
The State Fair is eligible for a projected $3 million from Little Rock over a 10 year-period.
"We still have about $1.6 million left of that fund, and we are in year seven," he said.
In 2011, the association board members voted to keep the fairgrounds on Roosevelt Road, turning away relocation proposals from Jacksonville and North Little Rock.
Sen. Joyce Elliot, D-Little Rock, said she wants information about how other similar-size states finance their fair and livestock shows because "it doesn't always come before this body, but it has been a constant struggle many times for that whole operation to work."
Baird said he would get the figures that Elliott wants.
The subcommittee also recommended the Legislative Council approve Hutchinson's request for the $150,000 transfer to the Higher Education Department.
In a letter to Legislative Council co-chairmen Sen. Bill Sample, R-Hot Springs, and Dotson, Hutchinson said the $150,000 is intended to help the two-year colleges association provide matching funds for the Strong Start to Finish program that assists students.
According to the Bureau of Legislative Research, the state's rainy-day balance currently totals $22 million and would be reduced to $20.8 million if the Legislative Council approves Hutchinson's two requests.
A Section on 12/20/2018