The Arkansas Supreme Court today ordered dismissal of the city of Little Rock‘s appeal of Judge Mackie Pierce’s finding that past payments of $300,000 a year to the Little Rock Regional Chamber of Commerce were unconstitutional handouts to a private corporation.
The Supreme Court sent the case back to circuit court for dismissal because a constitutional amendment adopted by voters in 2016 made the issue in the case moot. That amendment legalized payments to private groups such as chambers of commerce for economic development activities.
City Attorney Tom Carpenter had tried to keep the appeal alive. For one thing, he wanted to get an expanded ruling on city payments to other private organizations that continue in the form of service contracts that might be challenged in the future. Said the opinion by Justice Jo Hart:
However, this court does not have before it these hypothetical cases challenging such appropriations and service contracts that would in tum necessarily require this court to interpret the amendment as well as service contracts not in the current record.
The case was returned to circuit court with instructions that it be dismissed and instructions to Pierce to lift the injunction against prospective city payments to the chamber of commerce in light of the new amendment.
The taxpayers lawsuit also successfully challenged payments made by North Little Rock to a local chamber of commerce. The judge said they were just shams for subsidies, not meaningful service contracts. The ruling set off fears statewide because taxpayer subsidies of private chambers of commerce — which often serve as political lobbying agencies — have become widespread. Sen. Jon Woods, who didn’t seek re-election in 2016 in expectation he’d soon be indicted in a kickback scheme, sponsored the amendment to restore payments to chambers of commerce (his Springdale chamber had long been a major beneficiary) and also to expand the amount of money the state could provide to private companies in the name of economic development.
PS: One legal authority I’ve spoken with thinks the new amendment did NOT give carte blanche for unlimited handouts to chamber of commerce at the mere invocation of the words “economic development.”
To date, the new Little Rock subsidy of the Little Rock chamber is just a continuation of the old practice of paying $300,000 for work the chamber was already doing. In return, it gets a pro forma balance sheet accounting and some limits recitation of talks with industrial prospects. Virtually none of the spending is open to pubic inspection. The chamber’s records are secret. Representations it makes to prospects about education, political, tax, worker rights and other issues are similarly secret.
The McMath law firm won the case for plaintiffs Jim Lynch, Tony Orr and Glen Miller. Pierce enjoined the payments in 2015, so the chamber was deprived of its taxpayer subsidy of agenda for two years.