Arkansas Business reported recently that because of bankers’ objections, the Arkansas Federal Credit Union has not been allowed to participate in a lender consortium financing $17 million in initial property acquisition and development for the Little Rock Technology Park.
Bankers have long feuded with credit unions, which enjoy a tax exemption. Said the article:
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“Bankers also object to a tax-exempt credit union earning interest from a borrower supported by taxpayers via a sales tax approved by voters.
“Arkansas banks paid $258+ million in taxes in 2014,” [Bankers Association CEO Bill] Holmes wrote. “AFCU and 80 other Arkansas credit unions paid $0.00 in taxes. An individual taxpayer pays more in taxes than all credit unions combined.”
Bankers said the Tech Park couldn’t be a member of the credit union because credit unions are supposed to serve groups of people with common bonds. The bankers may or may not have a technical point on the lending activity. But they walked into a minefield when they started talking about public subsidies of private outfits.
The Little Rock Regional Chamber of Commerce is a tax-exempt organization (no taxes on $2.8 million in revenue, according to the most recent tax report available). It nonetheless got hundreds of thousands of dollars in taxpayer subsidies annually until a judge ruled the practice unconstitutional this year. More pertinently, it ran the 2011 campaign to increase the Little Rock sales tax and, in return, got its wish for $21 million plus in taxpayer money to subsidize the Tech Park, a dream of chamber leaders.
The Tech Park is a municipal agency that so far hasn’t received a dime except from taxpayer financed sources: the city, Children’s Hospital, UAMS, UALR. The chamber refused, by the way, to reveal how it spent money raised in the tax campaign. I object to giving public subsidies and control over big pots of money to an opaque organization with a political agenda that happens to often vary with that of the public at large. Think workers compensation, unions, health insurance, tax policy.
So, there was at least a little irony in hearing bankers objecting to a tax-advantaged organization benefiting from public tax dollars, since the taxpayer-subsidized, tax-advantaged chamber has been engineering this tech park train from day one. I’d be willing to bet the Arkansas Bankers Association will support Sen. Jon Woods’ proposed constitutional amendment to reverse Circuit Judge Mackie Pierce and again allow tax money to be shipped to chambers of commerce such as the one in Little Rock.
But of larger concern is the evidence that political considerations are already having an impact on Tech Park operations. I won’t speculate too much on the other possibilities, though they are easy to imagine. Would Sen. Jason Rapert (R-Conway) and others of his stripe allow the tech park to provide a taxpayer-subsidized home for companies that do stem cell research? Would legislative forces prohibit the tech park from having a policy against doing business with people who discriminate on account of sexual orientation? If a willing lender can be excluded from loaning money on account of an old business feud, it seems reasonable to worry about other possibilities.
The tech park is a public enterprise. I’ve never thought it was a good idea for government to get into private business. Better to let the free market work, except to the extent that we build a city people want to live in. But if it must participate, it should treat all would-be participants equally. Members of the chamber of commerce shouldn’t hold a veto on who qualifies.