Lt. Gov. Leslie Rutledge The Senate will be called to order. Are there any requests for leave at this time? Senator Caldwell, you're recognized.
Senator Ronald Caldwell Ask leave for Senator Hill and Senator Sullivan.
Lt. Gov. Leslie Rutledge Thank you. Madam Secretary, please call the roll. [Roll] Thank you, Madam Secretary. If everyone in the chamber and in the galleries would rise for a prayer. And Senator Love will be introducing our pastor of the day. And then remain standing for the Pledge of Allegiance. Senator Love, you're recognized.
Senator Fredrick Love Thank you, Governor. And Pastor Featherstone, I'm asking for leave for my pastor, Pastor Featherstone. You all are in for a treat. If he was preaching, I would say you're in for a treat. But you know what? I'm going to tell you this. Pastor Featherstone is a God fearing pastor, a man on fire for God. And he only teaches the word. He only teaches the word. And I'm happy to say that I'm part of his flock. And so I present to you, Pastor David Featherstone.
Lt. Gov. Leslie Rutledge Thank you, pastor, for those uplifting words. Good to have you with us today. Ladies and gentlemen, in the galleries. Welcome to your Arkansas State Senate. It is our expectation that each of you will exercise proper decorum and govern yourselves accordingly during today's proceedings. Without objection, the rules will be suspended and the Senate will dispense with the reading of the journal. The morning hour has now begun. I would like to ask Senator Caldwell to introduce our pages for the day. Senator Caldwell.
Senator Ronald Caldwell Thank you, Madam President. Members, I would like to recognize our Senate pages for the day. When I call your name, please, if you would come down the front and be recognized. Jurnee Sanders from Whitehall Middle School. Constituent of Senator Ben Gilmore. You come right here. And Avery Cavallo from Fayetteville. Come over to me. That's right. Thank you. Please help me welcome them. Thank you, Madam President. [Prayer and Pledge]
Lt. Gov. Leslie Rutledge Thank you, Senator Caldwell, and welcome our pages to the Senate. Before we ask for any other announcements or introductions, I would remind members to please stand either before or immediately after you are recognized by the presiding officer. So that way, not only for those of us in the chambers, but also online. So remember to please stand before you begin speaking. Now, are there any other announcements or introductions before we go to the business agenda or before we read items at the desk? Announcements, introductions? I don't see any. Madam Secretary, are there items at the desk?
Secretary [Engrossed Bills, Senate Bill 12]
Lt. Gov. Leslie Rutledge State Agencies.
Secretary [Engrossed Bills, Senate Bill 89]
Lt. Gov. Leslie Rutledge Education.
Secretary [Engrossed Bills, Senate Bill 90]
Lt. Gov. Leslie Rutledge Education.
Secretary [Engrossed Bills, Senate Bill 140]
Lt. Gov. Leslie Rutledge Insurance and Commerce.
Secretary [Engrossed Bills, Senate Bill 147]
Lt. Gov. Leslie Rutledge State Agencies.
Secretary [Education, SB 59, Do Pass]
Lt. Gov. Leslie Rutledge Calendar.
Secretary [Judiciary, House Bill 1204, Do Pass]
Lt. Gov. Leslie Rutledge Calendar.
Secretary [ Public Health, Senate Bill 50, 134, 136, 137; Do pass]
Lt. Gov. Leslie Rutledge Calendar.
Secretary Senate Joint Resolution 10 by Senator King, a constitutional amendment concerning efficiency in government and to provide for the creation of the Department of Government Efficiency. Senate Joint Resolution 10.
Lt. Gov. Leslie Rutledge State Agencies.
Secretary Resolution 11 by Senator Petty to commemorate the 100th anniversary on February 13th, 2025, of the Robert W Jack Veterans of Foreign Wars post 1322, in the city of Van Buren, the oldest Veterans of Foreign Wars post an Arkansas. Senate Resolution 11.
Lt. Gov. Leslie Rutledge Calendar. Any announcements and or introductions? Seeing no other, any further business to come before the body in the morning hour? If not the morning hour has expired. We will now begin the business agenda beginning with Senate Resolution 10.
Secretary Senate resolution 10 by Senator Wallace in honor on February 5th, 2025, the sesquicentennial of the founding of the City of Osceola. Senate resolution 10.
Lt. Gov. Leslie Rutledge Senator Wallace, you're recognized.
Senator David Wallace Governor, I'd like to ask for leave for the mayor to join me. Mayor Joe Harris. Members, Governor, today we're recognizing Osceola. It has a proud history. It was incorporated in 1875, 150 years ago. It was actually a village before then. 1837. It's a proud river town. Mark Twain used to talk about Plum Point in Osceola when he was a steamboat captain and how difficult it was to traverse that part of the river.
Also has a proud history of blues. We've had numerous individuals that have been singers. Kevin Frazier, Albert King, Harvey Scales and Son Seals. We've also had more modern singers. Buddy Jewel, you may remember, may have heard of. Billy Lee Riley, Jimmy Thomas and Reggie Young. Osceola has a beautiful town square. They have a beautiful town spirit. They gather there with a farmer's market and they have musicals. There are bands and it's just a real good community.
And with that, I would ask you that whereas to celebrate the rich heritage of Osceola Main Street that we recognize the Osceola heritage music festival since 1998, and that we recognize Osceola and South Mississippi County today. And my friends from Osceola and South Mississippi County are up here right now. Hello, folks. And be it resolved that the Senate of the 95th General Assembly of the State of Arkansas, that the Senate honors on February the 5th, 2025, the sesquicentennial of the founding of the city of Osceola.
And be it further resolved upon adoption, a copy of this resolution and this flag, which is flown over the state Capitol, be presented to the also of Mayor Joe Harris, Jr. by the Secretary of State. And Mayor Harris, with that, I'd like to present you with this flag.
Lt. Gov. Leslie Rutledge All those in favor of Senate Resolution 10 to honor on February 5th, 2025, the sesquicentennial of the founding of the city of Osceola, please signify by saying aye. Any opposed. Ayes have it and Senate Resolution 10 is adopted.
Senator David Wallace And I would like to ask for leave for our mayor to say just a few words.
Lt. Gov. Leslie Rutledge Absolutely. Mayor, you're recognized to say a few words per the senator.
Mayor Joe Harris Thank you, madam, and thank you, my Senator Wallace. We have a great senator over there in Mississippi County. And to this chamber, I want to thank you for allowing me this time to recognize the city of Osceola. But I want you to keep one thing in mind. Osceola is the ideal place to live, work, and play. Thank you.
Lt. Gov. Leslie Rutledge Next, we will take up Senate Bill 77.
Secretary Senate Bill 77 by Senator Mark Johnson to require the Arkansas Medicaid program to reimburse for physical therapy provided in a clinic based setting.
Lt. Gov. Leslie Rutledge Senator Mark Johnson, you're recognized.
Senator Mark Johnson Senator Wallace. He left his bill here. Thank you, Madam President. Members, Senate Bill 77 is a simple bill. It amends our physical therapy law to allow that Medicaid patients can receive their therapy in a clinic based setting, not just in a hospital setting. We have cases where people would be forced to drive past a physical therapy clinic to get their Medicaid reimbursed therapy. In some cases, that's many miles to have to go to the hospital based clinic.
This was a problem that came up. And they asked that we correct that. Again, these professionals are the same licensure, whether they're working in a hospital setting like my brother does in Conway, or working in a clinic based setting like my PT that I saw after I had my injury four years ago in North Little Rock. So they're the same thing and they can be reimbursed. I will say some questions that come up about it, and I wanted to read quickly letter from Elizabeth Pitman from DHS about it.
And she said DHS has looked at potential impacts to this point, did not see a fiscal impact. While we do believe there may be a slight increase in utilization because of increased access, the cost of services will not increase. She says, additionally, all research we've done indicates that there should be savings from patients not needing additional surgeries or drugs if they were able to access physical therapy more readily. And that's from Elizabeth Pitman, director, Division of Medical Services. So this is a good bill, and it'll help patients. I'll be happy to answer any questions.
Lt. Gov. Leslie Rutledge Any questions for Senator Johnson? Seeing no questions, anyone wish to speak against or for? Senator, you're recognized to close.
Senator Mark Johnson I'm closed. Appreciate a good vote.
Lt. Gov. Leslie Rutledge Senator has closed. Any objection to rolling the vote? Hearing and seeing no one, madam Secretary, please roll the vote. [Vote] Any senator wish to change his or her vote? Seeing no one, please cast up the ballot. By a vote of 33 yea, zero nay, Senate Bill 77 passes. Please transmit to the House. Senate bill 146.
Secretary Senate Bill 146 by Senator Crowell to amend the definition of recreational purpose as used in relation to the liability of a property owner who makes land available to the public for recreational purposes.
Lt. Gov. Leslie Rutledge Senator Crowell, you're recognized.
Senator Steve Crowell Thank you, Governor. Tourism being the second largest industry in the state, we have many state parks, lands, waterways, attractions. But we've always wanted to encourage private land owners to allow the public to recreational property. This is a 59 year old bill. And we are just simply adding some activities to this so that they have coverage of liability under this.
Lt. Gov. Leslie Rutledge Any questions for Senator Crowell? Seeing no questions, does anyone wish to speak against or for the bill? Senator, you're recognized to close.
Senator Steve Crowell I appreciate a good vote. Closed.
Lt. Gov. Leslie Rutledge Senator has closed. Any objection to rolling the vote? Hearing and seeing no one, madam Secretary, please roll the vote. [Vote] Any senator wish to change his or her vote? Seeing no one, please cast up the ballot. By a vote of 33 yea, 0 nays, Senate Bill 146 passes. Please transmit to the House. Senate Bill 150 with Senator Blake Johnson.
Secretary Senate Bill 150 by Senator Blake Johnson to amend the law concerning the State and Public School Life and Health Insurance Program, and to amend the powers and duties of the director of the Employee Benefits Division.
Lt. Gov. Leslie Rutledge Senator Johnson, you're recognized.
Senator Blake Johnson I want to know who didn't run their bills because I thought this was further down. Thank you, members. This bill is pretty simple. Whenever our retirees it's kind of predatory these Medicare Part C and D programs. And one of our retirees, you know, go into one of those, they roll out of our program, and there's no good way for them to get back in. And this will allow the director to be able to get those retirees back into our system rather than be manipulated by TV commercials and things like that. Because pretty much what it is, is just made for him to be able to take care of those retirees that mistakenly go into programs, which is less advantageous to them.
Lt. Gov. Leslie Rutledge Any questions for Senator Blake Johnson? Seeing no questions, anyone wish to speak against or for the bill? Senator has closed. Any objection to rolling the vote? Hearing and seeing no one, Madam Secretary, please roll the vote. [Vote] Any senator wish to change his or her vote? Seeing no one, please cast up the ballot. By a vote of 33 yea, zero nay, Senate Bill 150 passes. Please transmit to the House. Senate Bill 182.
Secretary Senate Bill 182 by Senator Gilmore to require a local government to continue to operate under the annual appropriation ordinance for the previous year until a new appropriation ordinance is adopted and to declare an emergency.
Lt. Gov. Leslie Rutledge Senator Gilmore, you're recognized.
Senator Ben Gilmore Thank you, Governor. Members, I think I've had a chance to visit with most of you, if not all of you. And let me just say, this bill comes as a result of what's transpiring in Jefferson County. I, first of all, want to say thanks to my colleague, Senator Flowers, for stepping up for her county as well, and the whole delegation in Jefferson County for their work on this, because it is so vital that we get that county back to operating.
Members, the bill is pretty straightforward. Basically says that they will operate under a previously adopted budget. And if they don't do that, the consequence of that the quorum court will lose per diem, and the county judge will lose salary for every day that they don't adopt a budget. Pretty straightforward bill. The reality is what we're dealing with. There's about 300 plus county employees that haven't been paid.
This has been going on for a little over a month, and these are people who are struggling to make ends meet. These are people who are missing their mortgage payments. These are people who are not able to pay their utility bills. So the reality of this is staggering when you think about it. They had a quorum court meeting last night. I watched the quorum court meeting. It was troubling, to say the least. There's a lot of bickering. And just let me just say, there's wrongs on both sides of this whole issue.
But we, as public officials, are called to rise above that. We're called to cancel out the noise and do what we're supposed to do for the people that we represent. So that's what I'm asking. I'm asking for a good vote on this. Understanding the issues that have arisen and understanding that hopefully none of y'all have to deal with the situation like what we're dealing with in Jefferson County. But if you do, this piece of legislation would target that. So with that, I'm not going to belabor the point. I'm happy to take any questions.
Lt. Gov. Leslie Rutledge Questions for Senator Gilmore? Senator Love, you're recognized for a question.
Senator Fredrick Love Thank you, Governor. Senator Gilmore, I'm right in line with the spirit of this. But let me ask you, do you know if that quorum court passed a budget last year?
Senator Ben Gilmore I've been told that they did.
Senator Fredrick Love Okay. I just wanted to check on that.
Senator Ben Gilmore Thank you. And so I've been discussing that with the county association, their language, so that we get it right to address. You know, we don't want unintended consequences with this bill. And so considering all of that, their language was suggested and is in the bill. One of the things that was brought up in the course of this is we don't want a county to operate with a deficit. They can't do that per operation of law. So we've tried to work through any of the possibles that may arise with this.
Senator Fredrick Love All right. Thank you.
Senator Ben Gilmore Thank you.
Lt. Gov. Leslie Rutledge Any other questions for Senator Gilmore? Senator Clark, you're recognized for a question.
Senator Alan Clark Senator Gilmore, did I hear you say there was a penalty for the quorum court members and county judge in this bill?
Senator Ben Gilmore Yeah. There is.
Senator Alan Clark Good. Thank you.
Senator Ben Gilmore Thank you, sir.
Lt. Gov. Leslie Rutledge Any other questions for Senator Gilmore? Senator Blake Johnson, you're recognized for a question.
Senator Blake Johnson I'm sorry, Senator. You know where we've been for the last 2.5 hours.
Senator Ben Gilmore I'm well aware.
Senator Blake Johnson Had a question while we were in there about this also including municipal mayors and council. Is there a particular case that we have at this time?
Senator Ben Gilmore No, we just didn't want to single out any particular. We just wanted to include local government just in case. Because this may come up in many, many cases. So we're just trying to be inclusive.
Senator Blake Johnson So I mean it'll help protect those employees.
Senator Ben Gilmore And then for any future case.
Senator Blake Johnson Contracts or anything.
Senator Ben Gilmore That's correct. Thank you.
Lt. Gov. Leslie Rutledge Senator Mark Johnson, you're recognized for a question.
Senator Mark Johnson Thank you, Madam President. Senator Gilmore, I'm very supportive of this bill. I had a question about the loss of turn back and other funds. Is that something that would be prorated if, let's say, they don't pass their budget by the end of the year, and a week late, they pass it. Does that bring them back to the turn back they would get for that full month, for example? Or is it prorated by how long they, in this case, drag it out over a month?
Senator Ben Gilmore Well, to be clear, this bill doesn't take away turnback. The teeth in it would affect their per diem and salary. And yes, it's prorated based on how long it takes over the period of time it takes them to get a budget passed.
Senator Mark Johnson The longer they procrastinate, the more it would hurt them.
Senator Ben Gilmore That's correct, and I hope that they move expeditiously.
Senator Mark Johnson That's the way it should be.
Senator Ben Gilmore Thank you sir.
Senator Mark Johnson Thank you, Madam President.
Lt. Gov. Leslie Rutledge Any other questions for Senator Gilmore? Seeing no other questions, does anyone wish to speak against or for the bill? Senator Gilmore, you're recognized to close.
Senator Ben Gilmore Thank you, madam Governor. Members, again, I just want to thank you for your support on this bill. I appreciate a good vote. And again, I appreciate my colleagues in Jefferson County and their support. I know that this matters greatly to folks like myself and Senator Flowers and the representatives that are on the bill as well. So again, with that, I'm closed. I appreciate a good vote.
Lt. Gov. Leslie Rutledge Thank you. Senator Gilmore has closed. Any objection to rolling the vote? Without objection, Madam Secretary, please roll the vote. [Vote] Any senator wish to change his or her vote? Seeing no one, please cast up the ballot. By a vote of 33 yea, 0 nay, Senate Bill 182 passes and the corresponding emergency clause is adopted. Please transmit to the House. House Bill 1271.
Secretary House Bill 1271 by Representative Warren and Senator Penzo to amend the law concerning mechanics and materials liens and clarify the priority of liens in mortgage construction loans.
Lt. Gov. Leslie Rutledge Senator Penzo, you're recognized.
Senator Clint Penzo Thank you. House Bill 1271 clarifies the priority of liens in construction loans. Currently, if a person starts construction on a home, they have a hard time getting a construction loan because the construction process has already started. So a bank can't secure the loan to the property because they have to be at the very end of all of the liens that have been filed. Mechanics liens, material liens. So that's from digging the footings from the very start to the touch up painter at the end.
Doesn't matter where the bank comes in in the process, they would be after the touchup painter at the very end. So banks are very reluctant to put loans on homes that have already started. What this bill does is it allows the bank to, if somebody thinks they've got enough cash to build a house, they would get started, get about halfway through and realize that they don't have enough money to finish. This bill would allow them to go to a bank, the bank to verify that all the liens have been satisfied that have been filed up to that point, allow them to file their lien for the mortgage and then continue the construction process.
And then it would just be like it was a new construction home from that point forward. So it helps people that have thought they could start a house and didn't have the money to finish it, be able to go out and get a loan to finish the construction of the home. This is a land title bill. Bankers, Realtors are all on board with it. So to my knowledge, there isn't any opposition from anybody. I'd be happy to take any questions.
Lt. Gov. Leslie Rutledge Any questions for Senator Penzo? Senator Caldwell, you're recognized for a question.
Senator Ronald Caldwell Thank you. I've been in the building business a long time. And normally when this takes place, if a material supply company or plumber or anyone else goes on the job and starts a job first, and then the bank fails or mortgage, then everyone is ahead of the bank. I understand where we need to get to. The real question is when you say that they have the opportunity to satisfy all liens and the bank can file their mortgage, if a mechanic person, a plumber, electrician or a material supplier and has material on that job has not filed a claim, is this going to take their ability to file a lien or get paid?
Senator Clint Penzo There's a provision in there where they're supposed to check four days before or four days after, within that window, to make sure there are no materials on the job site.
Senator Ronald Caldwell Fair enough. Thank you.
Lt. Gov. Leslie Rutledge Hold on. Let me get going here. Senator love, you're recognized for a question, and then, Senator Hickey, you will be recognized.
Senator Fredrick Love Okay, Senator Penzo, I'm just kind of on the same lines as, I'm thinking of what Senator Caldwell is saying. So if I'm a contractor and just say I've done the plumbing and I haven't gotten paid, they go and get this mortgage, where do I fall in line of getting paid? Because if this becomes a superior...
Senator Clint Penzo In the current construction process, the mortgage is the superior lien because it's filed prior to all workman's or material liens. Correct? I mean, if somebody pulls a construction loan, that property has, the bank has their first place. So if construction has already started and the plumber has done his work before, the bank files because they want to verify and make sure they're in the first place position. They're going to make sure the plumber and everybody has been paid off that had liens on the property.
Senator Fredrick Love Okay. I get that.
Senator Clint Penzo And then so they're going to become the first place lien position. And then any lien that's filed after that would be in that order. So it allows them to get a position. Under current statute, their position is last place no matter what. In between workmen. Doesn't matter if the work's been done or not, if the bank files their mortgage and then a month later, the painter comes in to paint, the painter is before the bank. That's why banks won't loan money on construction projects that have already started, because they can't secure their interest in the property.
Senator Fredrick Love Okay, so I think I'm getting what you're...
Senator Clint Penzo Because the plumber is going to be one of the first guys in and then he's going to be one of the last guys out too, because he's going to come in and finish out the fixtures. But he's going to be there before they pour the foundation to do the plumbing work that's there. And then so he's going to have a lien at that spot, but then he's also going to be at the end of the process too. So I mean, anything he did before the bank filed their mortgage, they're going to make sure he was paid off. Because the bank's going to want to ensure that they're in their first place position before they loan money to finish the home.
Senator Fredrick Love So with this bill, does that mean the bank jumps to the front even if these liens have not been satisfied?
Senator Clint Penzo No. Because they would go in after any existing liens. It just allows them to take a position. Right now they can't take a position. So if there's liens in place already, like there's three liens and then the bank files the mortgage, they're the fourth. So they're in fourth position.
Senator Fredrick Love I understand what you're saying. I just don't-- I may not agree with it, but okay. All right. Thank you. I get what you're saying.
Lt. Gov. Leslie Rutledge Senator Hickey, you're recognized. And then Senator Stone.
Senator Jimmy Hickey Right. And believe me, I agree with what you're trying to do here. I just want to make sure I have the full feel of the way this really works, because this has been an issue. I've dealt with this for years. I don't have to anymore. But I guess this is my thing with what you're saying. So you mentioned the materials not being there, but let's just say that somebody has their property paid for. They have a couple hundred thousand dollars. They thought they can build their house.
So they went out and tried to build their house. Of course they couldn't, inflation, whatever, cost overruns. So they need another $100,000. What you're trying to do, of course, is to make it so that they can go to the bank to borrow the 100,000, correct? Okay. Because right now they really can't. All right. So that's appreciated, and I think that's a great deal for consumers. I guess I just want to make sure I fully understand is this part on page two, where it says that the lender and the finance company, I guess the person whoever's going to hold the security interest or the mortgage that they can rely on this licensed appraiser, surveyor or engineer. So they're going to go out and look.
And what I understood you to say, they're going to say, well, there's not any materials on site. But the thing would be if that house had already been built, there would be materials on site from that partially finished house and the possibility of labor that was there. Are we saying that the appraiser, surveyor, engineer, they're going to assume that liability to say that plumber or that those materials that are already standing, that framing package standing up, are they going to assume the liability that those have already been paid for? Are they going to research that to make sure those materials have been paid for? Whose job is it to say that that framing package have been paid for, that plumber or that electrician on that partially completed home?
Senator Clint Penzo Well, are you saying there's a framing package that's been set out on the driveway and it hasn't being set up yet?
Senator Jimmy Hickey One that's standing up.
Senator Clint Penzo So it's already been erected?
Senator Jimmy Hickey Well, it's a partial build house. Or let's just say that the plumbing's roughed in the slab, so somebody's got in there and wherever we're at in that partial completion of the house. We could use whatever. So let's just say that the roof's on, so the wiring is stretched. Who's going to say that that electrician has already been paid because the work has commenced, he's done his work? Is that on the holder of the security interest or is that liability now going to be on the appraiser, surveyor or engineer, the three here who are actually going to go out and look at it?
Senator Clint Penzo The way I see it, the appraiser, surveyor, engineer are going to state what they see. The burden is going to be on the lender to verify that those items have been paid for is the way I see it.
Senator Jimmy Hickey Okay. And if that's the way it is, I mean, I guess that's fine. I guess my next thing is, and I heard what you said on the bankers and that's fine. You said they were good with it. I don't know why they would have to have an appraiser or a surveyor or an engineer, which is someone that's going to have to be paid, because it could be that they send out one of their employees who would be knowledgeable in construction work, and they could see that we're at this stage of the house and know that they need to go check and make sure that the dirt work had been paid for, that the plumbing roughed in have been paid for, the slab, the framing, the plumbing top out. So I didn't know why we were narrowing it down to those three if they weren't going to have any assume any liability.
Senator Clint Penzo Well, I guess it would depend if it was a good local bank or if it was one of the nationwide banks, because I'm sure the local banks are going to send their own guys out to verify.
Senator Jimmy Hickey I just didn't know that they're going to have the option here. I know it says 'may,' but maybe they don't have to. But again I just I don't know who the liability is going to fall back on if that electrician, if he's not actually been paid and that appraiser goes out and does that, like you say, I guess maybe at that point maybe the bank has to go find out who did the work and get a signed affidavit from each one of those subcontractors.
Senator Clint Penzo I mean, my understanding is the liability would fall on the bank to verify that they were in the lien position.
Senator Clint Penzo Fair enough. Okay. All right. Again, there is an issue and I appreciate you bringing it. I just hope it's done the right way. Again, I appreciate you bringing it. Thank you, sir.
Lt. Gov. Leslie Rutledge Senator Stone, you're recognized, followed by Senator Clark and then back to Senator Caldwell.
Senator Matt Stone Senator Penzo, I basically had the same concerns that Senator Hickey had, and I think my questions have been answered. But you're just saying that the banks are going to have to verify that all the contractors have been paid. Is that correct?
Senator Clint Penzo Yeah, the whole purpose is for them to be in a first place lien position. If they don't verify, that's on them, because then they might be in second, third and fourth position.
Senator Matt Stone So I guess if they're going to verify that everything has been paid, I still don't understand the purpose of the inspector going out there. But if everybody's good with that-- it's not adding up to me, honestly. But I've asked all the questions I want asked. Thank you.
Senator Clint Penzo Okay. Thank you.
Lt. Gov. Leslie Rutledge Senator Clark, you're recognized for a question.
Senator Alan Clark Senator Penzo, it seems, and maybe I'm reading this wrong, but it seems that we're assuming that somebody that is owed has filed a lien. And I appreciate what you're trying to solve, but let me tell you what I have seen over 50 years, how this normally happens. Like I said, somebody starts out thinking they can build a house. They get almost finished usually and find out they can't. And if you're 30 days late, I ain't filed a lien. If you're 60 days late, I haven't filed a lien. If you're 90 days late, I'm getting ready to file a lien because I only got 120 days and at 110 days-- at 10 days before, I have to follow a notice 10 days before I file the lien. So I really got 110 days if I want to get up there. So really, most of us have not filed a lien until we get to 90 days. But you know, I may have provided the lumber, the plywood, the windows, the insulation, the flooring, the drywall, the siding. I could have supplied one of those things or all of those things. So there's a good chance that I'm owed a lot of money. But I ain't filed a lien. And the material is there. It ain't stacked up somewhere because it's all been installed. And I don't see that I'm protected there. I see if I filed a lien that I'm protected. But if I haven't filed a lien, I don't see that I'm protected.
Senator Clint Penzo Okay. So let's say under current, without this bill passing, are you protected?
Senator Alan Clark No. Well I'm protected. Because yes, if I want to go as far as forcing the sale of the house to perfect the lien, then, yes, I have a protection there. I want them to be able to get the loan. So I appreciate what you're trying to do. There was a time 40 years ago, 30 years ago, maybe even 50 years ago, when if somebody had a loan, let me come back to somebody got a loan on the front end. If they say they've got a loan, I could open an account. Because the bank's going to call me and make sure. This was way back in ancient history. The bank is going to call me and make sure I've been paid before they give the next draw. They don't do that anymore. They just give them the draw. And if they don't pay me, that's tough. And so being in that situation and now I've already supplied this material. And the bank comes up and says, Well, we're at the front, and we didn't know you were owed any money. I've been in that place before.
Senator Clint Penzo So let me ask you what the difference is in the scenario you just laid out. If the bank is in first position or fifth position, what difference in that scenario?
Senator Alan Clark What difference does it make for the bank to get in the first position? There has to be a way that they assure whether I file a lien or not, that creditors have been paid. That's the whole reason they're supposed to be given the loan.
Senator Clint Penzo But it doesn't change anything from what you're saying. Because if the bank on a new construction house, no work's been done--
Senator Alan Clark Let me tell you how it changes. If I'm owed a lot of money-- because if I'm owed a little money, I file the lien and hope that someday the house sells and I can get paid. But if I'm owed a lot of money, I'm going to follow through. I'm going to perfect the lien. I'm going to force that house to be sold, and I'm going to be at the front because I don't know if the house is going to go for a whole lot less than what it should have gone, especially if it ain't finished. And I'm going to be at the front of the list instead of the bank being at the front of the list. And so I'll get paid instead of the bank getting paid.
Senator Clint Penzo The bank is at the front of the list right now.
Senator Alan Clark Not if they haven't loaned money. Normally when they start out and they've loan money, yes. But at this scenario, that's why they won't loan money because they're not at the front of the list. So and then I get moved back and the bank has only got to protect theirselves. They don't have to worry about me at all.
Senator Clint Penzo Let me throw this scenario out there. What if they don't have the money to pay you? And if they got the loan, they'd have the money to pay you.
Senator Alan Clark If the bank make sure I get paid, I'll be fine. That's what I'm saying. I have no problem with being at the front, because if I've got a lien, they're gonna make sure I get paid. But I'm saying I'm owed money whether I file the lien or not. And that's not what we do. That's not what electricians do. That's not what plumbers do. We're patient. We just don't run to the courthouse and file a lien unless they really got behind. There's not any liens out there. But it's still gonna have to be the bank's responsibility to somehow make sure, other than liens, that everybody's been paid for them to get to the front of the list. Does that make sense?
Lt. Gov. Leslie Rutledge Senator Clark, perhaps you could have a concise question. I think we're going back and forth with hypotheticals.
Senator Alan Clark If you're in the business, it's not hypothetical. It's exactly what happens.
Lt. Gov. Leslie Rutledge Well, I understand what all of you all are saying. There have been several back and forth hypotheticals, and I just want to make sure that our questions that are being asked are ones that you all can understand, but also members of the public can understand as well.
Senator Alan Clark If they're members of the public who would be filing these liens, they very much understand. I'm asking questions directly on the bill, Madam Chair, and to do with the bill. And Senator Penzo, I would appreciate if you pulled it down so we can discuss these things. Because as it stands, I can't have a bank come in and leave me holding the bag.
Senator Clint Penzo I'll pull this one down today. We'll have some discussions, make sure we're all on the same page, and I'll bring it back tomorrow or whenever. Thank you.
Lt. Gov. Leslie Rutledge Thank you, Senator Penzo. House Bill 1271 has been pulled down. I would remind members that there is always time to speak for and against bills after a senator has answered questions. We will now take up House Bill 1273.
Secretary House Bill 1273 by Representative Warren and Senator Penzo to provide that a lien created by entry of certification or indebtedness issued by the Secretary of the Department of Finance and Administration is not superior to a purchased money mortgage.
Lt. Gov. Leslie Rutledge Senator Penzo, you're recognized.
Senator Clint Penzo Thank you. I think this one's non-controversial, but I thought the last one was. So let's see how this goes. House Bill 1273 clarifies the superiority of liens between the Department of Finance and Administration and a purchase money mortgage. This bill is just providing language where there is none for the state of Arkansas. This language will mirror what is currently in place with the IRS. When someone purchases a piece of real estate with any level of investment in it and secures a loan for the balance owed, the resulting loan is considered a purchase money mortgage. DFA has agreed that any lien they have is inferior to this type of mortgage, and they are actually mirroring the IRS on this right now. This will just put this practice in statute. So this has already taken place in the state right now.
Lt. Gov. Leslie Rutledge Any questions for Senator Penzo? Senator Love, you're recognized for a question, followed by Senator Dismang.
Senator Fredrick Love Senator Penzo, is this just for liens for DFA or are these all tax liens? Because I'm looking at the bill. Are these just the liens imposed by DFA?
Senator Clint Penzo Just DFA.
Senator Fredrick Love Okay. All right. Thank you.
Lt. Gov. Leslie Rutledge Senator Dismang, do you have a question?
Senator Jonathan Dismang Yeah, if you can. Walk me back through the purchase money mortgage. Is that just a traditional mortgage or what does that mean? What is that exactly?
Senator Clint Penzo Yeah. It's any loan for-- yes. Like if you put money down on a house and take out a loan, that's a purchase money mortgage.
Senator Jonathan Dismang So just make sure I understand, that's putting DFA ahead of that or behind it?
Senator Clint Penzo Behind it. They already consider their lien inferior, but there's nothing in code stating that. Because that's the practice of what happens at the federal level. So the state is currently mirroring that. It's just not in statute right now.
Senator Jonathan Dismang So if you buy a piece of property and someone else had an a lien placed on them by DFA, known or unknown, because there's no notice requirement by DFA when a lien is placed on someone. There's no green card. There can be a lien filed without anyone else being aware of besides DFA because there's no perfecting service.
Senator Clint Penzo But it's going to turn up the title search, right?
Senator Jonathan Dismang Not necessarily. Traditionally, but not necessarily depending on where it's filed, because you may have the property owner in a different place that it's more complicated than that. But what you're saying is if that lien exists from DFA, it will follow the mortgage. That's what I don't guess I understand. I mean, I almost think it reads the opposite. If I'm reading it right, it says they're superior to. I mean, it's the opposite, I think, the way that that's worded.
Senator Clint Penzo It's saying it's superior to other liens other than--
Senator Jonathan Dismang Okay, other than.
Senator Clint Penzo The purchase money mortgage.
Senator Jonathan Dismang Okay. Did this come from DFA or from the banking community?
Senator Clint Penzo Land Title.
Senator Jonathan Dismang Okay. All right. Thanks.
Lt. Gov. Leslie Rutledge Senator Hickey, you're recognized for a question.
Senator Jimmy Hickey Just again, I'm just making sure along the same lines as Senator Dismang. So DFA files a lien. We're saying that their lien is going to continue to be superior other than if it was for purchase money, right?
Senator Clint Penzo Right.
Senator Jimmy Hickey Okay. So if somebody had a second mortgage on their home, they'd purchased it for 200,000. So that's a purchase money mortgage. That's what they used. They purchased the house with that. So the 200,000 right there, we're going to say that DFA can not get ahead of that 200,000. Correct?
Senator Clint Penzo Yeah, if it's a purchase money mortgage, right.
Senator Jimmy Hickey That's what I'm saying. But if I understand this right, let's just say, which happens all the time, if somebody had come in and did a second mortgage for their home for, let's just say, for a home improvement. So they did that. Now DFA is still going to be able to get ahead of that particular one. So I think that might have been different than what you said, but the way I read it, the way I read it, is the only thing that I can't get ahead of is going to be the purchase money.
Senator Clint Penzo That's my understanding is the purchase money. The second mortgage could fall after. My understanding is that's what it would be.
Senator Jimmy Hickey I thought I understood that you had said all loans or whatever.
Senator Clint Penzo To purchase the property.
Senator Jimmy Hickey But any money that was used to do repairs on the house or whatever, they're going to be-- the purchase money, if it's a bank, would be first, then DFA. Somebody doesn't pay their taxes, they're going to wind up being second, even if there's a second mortgage on that. And that second mortgage then becomes third in all actuality.
Senator Clint Penzo If the second mortgage wasn't utilized to purchase the home.
Senator Jimmy Hickey That's correct.
Senator Clint Penzo Yeah.
Senator Jimmy Hickey That's the way I read it.
Senator Clint Penzo That's my understanding.
Senator Jimmy Hickey Thank you, sir.
Senator Clint Penzo Thank you.
Lt. Gov. Leslie Rutledge Any other questions for Senator Penzo? Seeing no further questions, anyone wish to speak against or for? Senator is recognized to close. Senator Penzo, do you wish to close? Senator has closed. Any objection to rolling the vote? Objection noted. Madam Secretary, please call the roll. [Vote] Any senator who wishes to vote who did not vote? I see Senator Gilmore, yes. Senator Davis, yes. Senator Love, present. Any other senators on this side? Senator Dismang, yes. Senator Hickey, yes. Senator Stone, yes. Senator Irvin, yes. Senator Hammer, yes. Any others? Senator English, yes. Any others? Please check the board. Seeing and hearing no others, please cast up the ballot. By a vote of 29 yea, 0 nay, 3 not voting, one present, House Bill 1273 passes. Please return to the House. We will now take up the budget calendar. Senator Dismang.
Senator Jonathan Dismang I'll go ahead and just kind of announce it. Members, on your desks you're going to find the budget calendar. If you can pull that out. I want to go through each one of these. And then if there's something that you'd like to pull out for an individual vote, just let me know. And so on those, all bills are fairly similar, except for the first one, which is the legislative liaisons for the session. There was no ask for an increase appropriation or position in that. So I'm going to read these out one at a time. And the rest are related to higher ed Institutions. So first Senate Bill 80, 105, 107, 108, 109, 112, 113, 114, 115. Senate Bill 125, 126, or 129. Would you like to pull any of those out to be voted upon separately? Seeing none, we'll vote those as a batch.
Secretary Senate Bill 80 by Joint Budget an act for the Office of Governor legislative liaisons. appropriation for the 2024-2025 fiscal year. Senate Bill 105 An Act for the University of Arkansas Community College of Batesville appropriation for the 2025-2026 fiscal year. Senate Bill 10, by Joint Budget an act for the Southeast Arkansas College appropriation for the 2025-2026 fiscal year. Senate Bill 108 by Joint budget an act for the SAU Tech appropriation for the 2025-2026 fiscal year. Senate Bill 109 by Joint Budget an act for the Southern Arkansas College appropriation for the 2025-2026 fiscal year. Senate Bill 112 by Joint Budget an act for the Arkansas State University Beebe appropriation for the 2025-2026 fiscal year. Senate Bill 113 by Joint Budget an act for the Arkansas State University Newport appropriation for the 2025-2026 fiscal year. Senate Bill 114 by Joint Budget an act for the Arkansas State University Three Rivers appropriation for the 2025-2026 fiscal year. Senate Bill 115 by Joint Budget an act for the University of Arkansas Community College at Morrilton appropriation for the 2025-2026 fiscal year. Senate Bill 125 by Joint Badge an act for the University of Central Arkansas appropriation for the 2025-2026 fiscal year. Senate Bill 126 by Joint Budget an act for the University of Arkansas Pine Bluff appropriation for the 2025-2026 fiscal year. Senate Bill 129 by Joint Budget an act for the University of Arkansas Monticello appropriation for the 2025-2026 fiscal year.
Lt. Gov. Leslie Rutledge Thank you, Madam Secretary. You all have heard the block of bills from Joint Budget. Anyone wish to speak against or for? Seeing no one, the Senator has closed. Any objection to rolling the vote? Without objection, Madam Secretary, please roll the vote. [Vote] Any senator wish to change his or her vote. I see Senator King not voting. Any other senator? Please cast up the ballot. By a vote of 32 yeas, zero nays, and one not voting, the batch of budget bills passed and the corresponding emergency clauses are adopted. Please transmit to the House. Are there items at the desk?
Secretary Senate Bill 200 by Senator Hammer to include textbooks and other instructional materials that are least in the exemption from the gross receipts tax. Senate Bill 200.
Lt. Gov. Leslie Rutledge Revenue and Tax.
Secretary Senate Resolution 13 by Senator Hammer to recognize the Bryant Hornets football team as the Class 7 A state champions. Senate resolution 13.
Lt. Gov. Leslie Rutledge Calendar.
Secretary Senate Resolution 14 by Senator Hammer and Senator King to recognize February 9-15, 2025, as Eureka Springs FBLA week. Senate Resolution 14.
Lt. Gov. Leslie Rutledge Calendar.
Secretary Senate Resolution 15 by Senator Hammer to honor retired director of the Arkansas Department of Transportation Lorie Tudor for her 41 years of service to the Department and to the people of the State of Arkansas and to congratulate her on her retirement. Senate Resolution 15.
Lt. Gov. Leslie Rutledge Calendar. Are there any announcements or introductions? Senator English, you're recognized.
Senator Jane English Thank you. I would just like to remind folks that the Pulaski County Chamber of Commerce will be holding their reception from five till seven at the Victory Building.
Lt. Gov. Leslie Rutledge Senator Hester.
Senator Bart Hester Hey, members, we're going to do something a little bit different tomorrow. We're going to come in at 10 a.m. I've spoken with all the chairs of the committees and they've made adjustments, but we're going to come in at 10 a.m. tomorrow. And then probably next week on Thursday, we will move to 1:30 probably depending on. Because it seems like things are getting busier. But tomorrow morning, 10 a.m.
Lt. Gov. Leslie Rutledge Any other announcements? Senator Caldwell, you're recognized.
Senator Ronald Caldwell Agri will meet 15 minutes upon adjournment tomorrow.
Lt. Gov. Leslie Rutledge Senator Blake Johnson, you're recognized.
Senator Blake Johnson Insurance and Commerce is canceled for Thursday.
Lt. Gov. Leslie Rutledge Madam Secretary, are there items at the desk?
Secretary Senate Resolution 16 by Senator Irvin to designate the month of February as National Children's Mental Health Month. Senate Resolution 16.
Lt. Gov. Leslie Rutledge Calendar. If nothing further, the Senate will stand in adjournment, subject to the clearing of the desk, until tomorrow, February 6th, 2025, at 10 a.m.
