Little Rock prepared to resume taxpayer subsidies of LR Regional Chamber of Commerce | Arkansas Blog

Little Rock prepared to resume taxpayer subsidies of LR Regional Chamber of Commerce


WHERE IT BEGAN: Jim Lynch was a plaintiff in the lawsuit that stopped city tax subsidies of the Little Rock Regional Chamber of Commerce (headquarters in background). That led to a constitutional amendment to legalize the subsidy and the city is poised to resume payments. - ARKANSAS BUSINESS
  • Arkansas Business
  • WHERE IT BEGAN: Jim Lynch was a plaintiff in the lawsuit that stopped city tax subsidies of the Little Rock Regional Chamber of Commerce (headquarters in background). That led to a constitutional amendment to legalize the subsidy and the city is poised to resume payments.

The city of Little Rock has quietly been working to renew annual taxpayer payments of $300,000 a year to the Little Rock Regional Chamber of Commerce in the name of economic development.

The payments were halted after Circuit Judge Mackie Pierce ruled in January 2015 they were illegal, a violation of the constitutional prohibition of city tax payments to private corporations. The city and chamber argued the arrangement amounted  to a service contract to provide economic development work. The judge ruled in a taxpayer lawsuit that the arrangement was a sham. The chamber merely did what it already did for its members, but got city money to subsidize its operation. North Little Rock's payment of subsidies to a local chamber also was ruled illegal by the judge.

This Arkansas Business article provides a broad summary of the lawsuit and how the Pierce ruling (which remains on appeal for complicated procedural reasons) instilled fear in chambers of commerce around the state. The scheme to get tax money to support chambers had become widespread and the Pierce ruling threatened them all, if upheld. As a result, the 2015 legislature put a constitutional amendment on the ballot in 2016 that, in addition to expanding the amount of tax money that could go to private businesses generally, rewrote the constitution to legalize tax payments to private groups in the name of economic development. Voters approved the amendment.

That amendment spurred enabling legislation signed last week by Gov. Asa Hutchinson. It won't take effect for three months. But City Attorney Tom Carpenter told me last night the approval of the amendment legalized the payments after the vote in  November was certified, without need for enabling legislation.

I learned of the plan to resume tax payments when the city board agenda was released late yesterday afternoon. The Board will put the payment on its agenda for its meeting April 18. I hope there's some discussion.

I haven't yet found if the city board authorized taking of bids for an "economic development" contract or if it was an administrative action. City Manager Bruce Moore responded to none of my questions last night. The bid was placed in February with a March 1 deadline, but the city website no longer contains the full request for proposals.

The agenda item says:

The City issued a Request for Proposals, Bid No. 17109, to expand its economic base by contracting with an organization for Economic Development Consulting Services, and the Little Rock Regional Chamber of Commerce was the only respondent. The selection committee appointed by the City Manager scored the technical proposal as qualified and recommends that this contract be awarded to the Little Rock Regional Chamber of Commerce.
Until the lawsuit, the city paid $300,000 in total to the chamber, but only $200,000 went directly to the chamber. Another $100,000 went to the Metropolitan Alliance, another chamber front that works for regional economic development. We have seen that creating jobs in other cities in the region is not necessarily a boon to Little Rock. It takes people from our schools, takes business from our retailers and, at best when it brings workers, creates traffic demand that the chamber of commerce thinks best solved by widening the city-destroying concrete freeway gulch through the center of downtown.

Paying the chamber will require an amendment to a city budget that is strained by revenue shortfalls, which city directors want to blame wholly on Internet commerce and not migration of people and business to suburban cities. The contract can be extended for three years. A copy of the contract was not provided with the city board agenda.

The item is on the City Board's consent agenda. It should not be. Taxpayers are owed a full and frank discussion about taxpayer subsidies to this political lobbying organization, including on transparency. In the past, the chamber wouldn't specify what work was done for the money, other than to file a generalized brag sheet about the work they would have been doing anyway, as opposed to specific government-related duties. They wouldn't disclose expenses. They wouldn't disclose the sorts of representations they made in private  to potential businesses about, for example, public schools. The chamber worked for the state takeover of the Little Rock School District and continues to support its operation by the state, even as the state continues to do harm to the district with unbridled charter school expansion.

We do know from past reporting that the city money DOES subsidize salaries of chamber workers who engage in political pursuits and work in concert with the Arkansas State and U.S. Chambers of Commerce. Most of the chamber's members no doubt approve of their business-friendly lobbying. Others might not be so sanguine. Business lobby work in the recent legislative session was aimed at 1) curbing compensation to injured workers; 2) reducing unemployment benefits; 3) discouraging public protests with stiffer penalties for 1st Amendment activities (even Asa Hutchinson wouldn't go along); 4) closing the courthouse door to lawsuits over medical and nursing home abuse and malpractice; 5) providing more taxpayer subsidies for private business, and lots, lots more.

The chamber is undoubtedly proud of this work. It undoubtedly is warmly received by most of its members. But many in the city view these issues differently. The chamber is certainly free to do these things, but many would prefer they did it with their own money, not the sales tax pennies of people who not only oppose but will be directly harmed by chamber initiatives.

One question arises from the resolution. Will the chamber get $300,000 for 2017, though only eight months will remain in the year? And then $300,000 a year thereafter? It's not clear. City Attorney Carpenter said he thought the usual arrangement was to pay monthly on an annualized basis.

I'd like to know as well if further additional payments are envisioned to the Metropolitan Alliance, in addition to how the $300,000 was computed as the cost of the work. I wonder, too, if County Judge Barry Hyde will start pumping county money into the chamber. Former County Judge Buddy Villines, recognizing the political differences between the people and the chamber, had always resisted a county contribution.

Footnote: The amendment to legalize taxpayer subsidies of chambers of commerce statewide was authored by Sen. Jon Woods, who always looked after the interest of the Springdale Chamber of Commerce, long fattened by tax money. Woods left the Senate in advance of his indictment for taking kickbacks from state money shipped to a Bible college in Springdale. Woods also was the prime mover behind the so-calledethics amendment that gave legislators longer terms in office, dramatically higher pay and loopholes from the nominal limits imposed on lobbyist wining and dining. One of the biggest free feeds of the legislative session was thrown by  the Arkansas State Chamber of Commerce and friends.

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