Legislature: Corporations pitch a shutout | Arkansas Blog

Tuesday, March 29, 2011

Legislature: Corporations pitch a shutout

Posted By on Tue, Mar 29, 2011 at 8:58 AM

A few more days of torture are left, but it's not too soon to declare winners and losers in this year's legislative session. Ernest Dumas does so in his column for us this week, posted early, on the jump.

The same winner as every session: Corporate Arkansas. Did they lose a single round?

A perfect coda today was a weirdly misfocused AP story on the battle over the SWEPCO power plant down in Hempstead County. It's a colorfully written little piece that suggests this is little more than a battle between hunting club elites and honest sons of toil scraping for jobs in tough times. It all but ignores the unproven need for the plant, the plant's rejection by Texas and Louisiana, the ominous effects of greenhouse gases, the lax regulatory process, the inadequate environmental review, the near-universal turn against coal-fired power plants and the current legislature's usurpation of legal due process. A giant national power company, aided by the 800-pound local utility gorilla, the Arkansas Electric Coop, runs roughshod and a reporter sees it as a handful of "elites" versus good ol' boy temporary construction workers? All truly may be lost.

Read on for Ernie's summary:

By Ernest Dumas

The jury is still out on whether the 88th Arkansas General Assembly will be celebrated chiefly for its occupation with trivia or with serving corporate interests.

Why not both? Those two impulses, after all, have defined state legislatures for a hundred years, and this legislature has abandoned itself to them more than any in memory. Having settled the war over the state nickname in its first month, the House battled last week over whether churches should arm the foes of infant baptism or the other side or just let them all carry heat to worship services. The House voted to let church leaders decide which parishioners to arm.

But I think the corporate agenda is the big winner. Corporations have not lost one, nor has a single issue been in doubt. They got tax cuts, staved off environmental regulation and consumer protections and got the legislature to reverse unfavorable court decisions.

Every lobbyist can report a 1.000 batting average back to corporate. But then they always do.

Let’s review some of the record.

• Although corporate profits are setting records, times are sort of tough so manufacturing and processing companies wanted some kind of tax cut. The legislature obliged by slashing the sales tax they pay for energy. The factories already pay less for their electricity and gas than small businesses and homeowners and a lower sales tax as well, but they wanted more. The big winners: The big national paper and wood-products companies, Tyson Foods and the gas-burning power producers. The power companies had lost a court fight on their taxes so they had the legislature take care of it. The tax savings will improve the companies’ bottom line by $20 million a year.

• A North Little Rock lawmaker introduced a bill to close a loophole that allows the nation’s biggest companies to escape paying taxes on their profits in Arkansas by diverting the income to subsidiaries registered in the Cayman Islands or in postoffice boxes in Delaware or Nevada. His bill would require multistate corporations to use an accounting rule known as combined reporting. Like their small homegrown competitors, they would pay Arkansas taxes on the percentage of their national profits generated in the state. Most states now do that. The new Republican governor of Rhode Island included combined reporting in his budget last week. Lobbyists filled the committee room in Little Rock to warn of dire consequences if the bill passed. It was crushed. The biggest beneficiary of the current system? Probably (no one can be sure) Exxon Mobil. Its profits last year were a measly $31 billion. Thanks to your generosity at the gas pump, their profits will be lots more this year but their tax bill will be trifling.

• Subject to a popular vote next year, the legislature raised the diesel tax to support a highway bond issue, but it had to give the big trucking companies that rip up the highways something in return. They will be exempt from the sales tax and use tax on their big rigs. The effect is to shift money from the public schools and medical services for the aged and disabled to the Highway Department. You will pay for the rest of the highway program with more sales taxes on everything you buy.

• American Electric Power, one of the world’s largest electric utilities, was upset that the Arkansas courts invalidated a permit to build a big coal-burning plant in southwest Arkansas. It got the legislature to change the law so that it and other power generators will never again be denied. In the future, the major decisions will be made without a necessary notice to the public. The plant will primarily serve Texas and Louisiana, which did not want it in their states because it will blast 6 million tons of greenhouse gases a year into the atmosphere. The company hopes the legislature’s action will make the courts change their minds about the McNab plant, too.

• The energy industry did not like the idea of the climate-change forces to encourage the development of clean energy sources in Arkansas, so the Senate killed the bill by sending it off to be studied for a couple of years.

• If you detected a degree of public outrage over the destruction of roads, land, streams and water sources from the gas exploration companies, you must have been wrong. Seven bills that would impose some regulation and oversight of the drilling to increase the protection of landowners and the general public were crushed in a House committee. The exploration companies filled the room with people who worried that if the companies had to meet the standards imposed in other states they would pick up their rigs and leave. They need not have bothered. The legislature would never impose such restrictions.

• A bill to make the exploration companies pay the full 5 percent severance tax rather than 1.5 percent on their production (they pay 7 percent in Texas) was stopped in committee.

How, you may ask, can corporate lobbyists be so effective? It is not as if they arrived at the Capitol to find the legislature in rapt contemplation of the public interest. For most state legislators, rural or urban, commercial interests are their real constituency. Who’s paying attention? As V. O. Key observed 60 years ago, “The American people are not boiling with concern about the workings of their state government.”

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