Ernest Dumas has written a column for next week on Issue 3, the constitutional corporate welfare amendment, and I pass it along early since absentee voting is already underway.
Bottom line: Hate taxpayer giveaways to private companies and corporate lobbyists? Vote NO on Issue 3.
By Ernest Dumas
Who could object to a constitutional amendment “concerning job creation, job expansion and economic development,” which is the condensed title for Issue No. 3 for Arkansas voters on Nov. 8?
Invoking “jobs” is how you sell anything nowadays, whether it’s casino gambling, legalized marijuana, tax cuts, deficit spending, gas fracking, coal burning or a border wall.
But what if the title of Issue 3 read “an amendment to allow government to raise unlimited taxes and spend them to help businessmen and industrialists turn a profit and to reward those who help them”? Might taxpayers take a jaundiced view of the proposition?
The second is actually a fair description of the amendment, which the Republican state legislature, with some Democratic help, put on the ballot. But there will be no money spent to tell voting taxpayers what the amendment would do to their pocketbooks and how it would control the way their tax dollars are spent. The amendment is flying as a noncontroversial proposition rather than the treasury raid that it is. Corporate welfare is the new definition of conservatism. There was little courage in the legislature to risk being called job killers by voting against the referral of Issue 3. Twenty-seven legislators voted “no” and another eight ducked the roll call.
Issue 3 has four components, only one of which is relatively benign. It would allow cities and counties to issue bonds for anything that could be called “economic development,” not just a factory. They could borrow money in the taxpayers’ name for a call center or corporate offices.
The other provisions erase the old limits in the Constitution on levying taxes and incurring government debt to support industries and other commercial enterprises and on spending taxpayers’ funds for almost any business purpose. Technically, the legislature could spend all the revenues of the state to assist businesses, leaving nothing for highways, colleges, prisons, health care, fish and wildlife programs and the rest of government.
No one would expect the legislature to ever do such a thing, but Issue 3 would at least allow them to throw fiscal caution to the winds.
In the interest of full disclosure, I have to reveal that the amendment’s first objective is to reverse a court order in a lawsuit that I instigated in 2013 as a director of the Arkansas Public Law Center. Article 12 of the Constitution prohibits cities and counties from appropriating money to private corporations and associations, a provision the drafters put in the charter in 1874 to stop cities from turning over their meager incomes to the railroads.
In the 1990s, the state Chamber of Commerce told local chambers they should ask their local government to give them an operating grant every year because the chambers helped economic development. Dozens of cities, including Little Rock and North Little Rock, began doing it. Pulaski Circuit Judge Mackie Pierce ruled last year in Lynch v. Stodola that Art. 12 had to be interpreted literally. Appropriating tax money to the chambers was illegal.
Issue 3, using the ruse of “amending” the provision, actually would repeal that constitutional law and allow cities and counties not only to fund chambers of commerce but to finance whole “economic development projects” with tax funds, including furnishing land, improvements, buildings, infrastructure, job training and environmental mitigation for almost any kind of commercial venture. Anything.
But all that is minor stuff. The amendment would clear the way for cities and counties to levy any kind of taxes to support new industries and businesses, not just the 5 mills of property taxes that are now allowed, and remove all the restrictions on financing super projects that were imposed in constitutional amendments in 2004 and 2010, which allowed the state to go deeply into debt to finance infrastructure and other aids for large manufacturing projects, like the Mississippi County steel mill.
Now, the legislature cannot borrow more for a new industry than 5 percent of the state’s general revenues the previous year, which would be $268 million. If voters ratify Issue 3, the lawmakers could ring up a state debt of $268 billion. If you want to be silly but still technical, $268 trillion, which is 14 times the current national debt. All of it, remember, would be to enhance business profits, not national defense, health care and education, the principal purposes of the national debt.
If you have serene confidence in the sanity and probity of all future legislatures, Issue 3 may still be for you.