Circuit Judge Mackie Pierce today granted a partial summary judgment in favor of a taxpayer lawsuit over payments by the cities of Little Rock and North Little Rock to chambers of commerce.
Pierce held that the payments violated the state constitutional prohibition against municipal appropriations to private corporations and enjoined any further payments.
Little Rock, for example, gives $200,000 a year to the Little Rock Regional Chamber of Commerce in support of its business development activities. It amounts to a taxpayer subsidy of chamber operations. Since a legal question was been raised about the practice, the city has attempted a procedural fix by calling the payment a service contract, even though the amount has been fixed and unrelated to any specific services. The North Little Rock City Council has provided similar subsidies to the local chamber and other economic development agencies.
Pierce’s ruling after a hearing today was on the core question of a constitutional violation. He did not reach other parts of the lawsuit over the amount of illegal exactions in the payments and violation of bidding ordinances. They were not part of the motion for summary judgment. In recent years, the city has declared an emergency as a pretext for waiving competitive bidding on the payments.
City Attorney Tom Carpenter indicated at the hearing that the city would appeal the ruling, said Sam Ledbetter, one of the attorneys for plaintiff Jim Lynch, a retired UALR faculty member, former city employee and long-time political activist. The cities and their mayors were defendants.
The suit was supported by the Arkansas Public Law Center, a nonprofit group on whose board I sit. It was established to bring lawsuits in the public interest. The practice of sending taxpayer subsidies to private chambers of commerce is widespread in the state, so the final outcome of the case could have ramifications beyond Pulaski County.
The chamber resists freedom of information requests about its use of the money and the city has never provided a specific accounting beyond pro forma financial statements from the chamber. The chamber has conceded that the money goes to help pay for salaries of employees who have activities beyond industrial recruiting and include lobbying the state and national legislatures on issues important to the business community (but not necessarily working people). The suit also challenged the $100,000 paid to the Metropolitan Little Rock Alliance, also run by the Chamber of Commerce with money from various governments. It likewise gives no accounting and the money again goes to pay salaries of chamber employees.
North Little Rock paid $250,000 a year from 2009 to 2011 in support of the North Little Rock Economic Development Corporation as well as other payments to the North Little Rock chamber and the Metropolitan Alliance. No specific purposes are given in agreements and there is no accounting of the spending.
The brief for summary judgment states the case in full.
The city argues, among others, that at least since 2013 the city has entered “legitimate” sole source agreements with waived bidding and that it was too late to sue over payments in prior years because the contracts had been concluded. The city says the services are legitimate. Lynch argued that the chambers would be doing the same work with or without the city’s money.