Corporate welfare amendment revived, passed | Arkansas Blog

Friday, April 1, 2011

Corporate welfare amendment revived, passed

Posted By on Fri, Apr 1, 2011 at 10:22 AM

As I predicted yesterday, the House made another run at SJR 5, Sen. Jake Files' proposed constitutional amendment that would set up a corporate welfare scheme for retail stores, hotels and restaurants. They could be subsidized by bonds paid off by local sales taxes collected in redevelopment districts.

It was killed yesterday with only 19 "ayes," but Rep. Ed Garner successfully moved for expungement of the vote. He then argued for its passage first on the strength of a minor police and fire pension fund element. This pension issue was just the Trojan horse for the real aim — to set up yet another tax giveaway to private business. The national record is littered with a) gifts such as these to companies like Walmart that don't need public subsidies and 2) failed shopping centers built with such money, notably a number with Bass Pro Shops as anchors.

Rep. Jim Nickels noted again that the amendment allows use of existing sales taxes to benefit private interests without a vote and that it also allows the state or local governing bodies to impose taxes to pay for bonds without a vote.

The bull is running deep. Garner and Rep. Jon Woods claimed this would redevelop blighted areas. The record doesn't offer much encouragement for that. The bonds would be obligations of local government if projects failed. The money can be spent without limit on anything, including a building for a private business. You could call it socialized retail, except that the government pays the costs, the private business keeps the profit.

Nickels also objected to the state stepping in to bailout underfunded local pension promises. He further raised a good question about a portion of the amendment allowing eased financing for local governments. He said none of this had been debated in committee.

The amendment would allow a city board to declare the entire city a redevelopment district to capture all sales tax revenue for diversion to private economic development. "If it's such a good economic development project, where's the private sector" Nickels asked. "Why do they have to come to the public trough to get their money?"

Why? Because that's the Arkansas way. Working people pay full price. Corporations get subsidies from the toil of working men and women.

The amendment was approved 51-39, exactly the number required. The critical Democratic votes that passed the amendment included several from cities with developers aching to score some free cash for their projects — Jonesboro, West Memphis and Fort Smith. Speaker Moore's decisive vote was a real disappointment given his otherwise sterling session.

PS — Sponsor Files is a real estate developer. Look for him to have some nifty ideas on how to use taxpayers money if Arkansas pigeons approve it.

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