by Max Brantley
A couple of months ago this column predicted that the 2015 legislature would be one of the rare Arkansas assemblies that would claim a place in history, this time for having enacted the Republican Party’s entire political strategy, commonly known as God, guns, gays and tax cuts for the well-to-do.
That needs amending. Why mince words? This will be known as the Great Corporate Legislature of 2015. The legislators—and not merely the Republicans—worked hard for that honorific and they should get it. In the regular session and the quick special session that followed it, the legislature made corporate welfare Arkansas’s first policy.
The evidence is not merely the $87.1 million debt (much more when you calculate 20 years of interest) that the state promised last week to incur to help Lockheed Martin win a big defense contract from the Obama administration against two smaller competitors. In one of its last acts in the regular session in April, the legislature referred a constitutional amendment that will lift virtually all limits on the debt that the state can pile on taxpayers to help large corporations. It also will allow cities and counties to incur large debts and levy new taxes to make new and expanding industries more profitable. All of that will be done without a vote of the people, which was once the constitutional safeguard against such extravagance but will be no more.
That is not all the amendment will do once the voters in 2016 approve it, as almost certainly they will when all the ads say the new law is essential to create vast numbers of new high-paying jobs that will make us all richer.
The amendment also will effectively repeal the 1874 law that prevents cities and counties from subsidizing corporations like chambers of commerce with the taxpayers’ money. A Pulaski circuit judge ruled once more Monday that cities like Little Rock and North Little Rock that began subsidizing chambers of commerce a few years ago to compensate them for striving for “economic development” were doing so illegally. Judge Mackie Pierce had issued the ruling first in January and the legislature inserted language in the amendment to overturn his ruling.
The Lockheed Martin subsidy and the amendment that would put the taxpayers at risk of far greater burdens passed easily in a legislature that enjoys the cachet “conservative” because they employ the word “jobs.” The amendment will appear on the ballot as “An Amendment to the Arkansas Constitution to Encourage Job Creation, Job Expansion, and Economic Development.” Arkansas needs jobs—what state doesn’t? We are a generous people. Even if we have good jobs ourselves, we want others to have them, too.
If Lockheed Martin wins the contract for a new protective troop vehicle, it will mean several hundred jobs in Ouachita and Calhoun counties.
But most new jobs that will be created in Arkansas are by small businesses rather than the Lockheed Martins and they come from other investment streams. To use an unpopular example: Obamacare and the Medicaid
expansion. Government labor statistics show that thousands of new jobs in the healthcare business have been created since the Medicaid expansion and insurance reforms were implemented in 2013.
That $87.1 million and interest for Lockheed are the taxpayer dollars that would be used starting in 2017 to pay the state’s small share of the job-creating Medicaid expansion to poor adults. That is not nearly so popular in the conservative legislature.
Let’s not forget what the Lockheed Martin subsidy does. It guarantees a higher profit if the company beats out the other contractors. What the bidding is all about is who is willing to take the smallest profit. The Arkansas subsidy will allow Lockheed to lower its bid a trifle so that it is a shade under the others and still realize a marginally higher profit. History shows these defense contracts are immensely profitable.
The 2016 amendment soared under the radar in the last days of the session because it was reported that legislators were so divided that they wouldn’t refer any constitutional amendments. SJR 3 then sailed out easily.
Voters will know little about the amendment when they go to the polls except that it’s for jobs and was the work of their conservative Republican legislators.
If they knew, most would be horrified. Voters lifted the old restrictions on state indebtedness in 2004 when they approved the legislature’s amendment to allow the state to borrow money for economic development projects as long as the bonds did not exceed 5 percent of the state’s general revenues. The 2016 amendment removes the limit altogether so that, theoretically, the legislature could issue bonds exceeding all the state’s general and special revenues. The corporate subsidies would come ahead of the state’s obligations to education, health, prisons and everything else. I perhaps raise a needlessly scary specter simply because it is only theoretically possible. You judge whether some constitutional protection is wise. City councils and county quorum courts could levy property taxes and other kinds of taxes to help industries.
Then there are the chamber subsidies. The state Chamber of Commerce sent local chambers a message in the 1990s: If you need more money you don’t need to assess members higher fees, but go to your government leaders who are eager to listen to you anyway and ask them to compensate you for your historical role in business development.
Article 12, Section 5 of the Constitution seems to clearly prohibit it—the constitution writers in 1874 wanted to stop cities from subsidizing the powerful railroads—but who would dare question it? What court would rule against both government and business leaders, especially when you say it’s for jobs and who would vote against jobs? In 2015, it’s a good question.