Little Rock's proposed slush fund UPDATES | Arkansas Blog

Thursday, July 7, 2011

Little Rock's proposed slush fund UPDATES

Posted By on Thu, Jul 7, 2011 at 2:20 PM

OFFICIAL SECRETS: City Hall wants $38 million for economic development. But they dont want to explain.
  • OFFICIAL SECRETS: City Hall wants $38 million for "economic development." But they don't want to explain.

Since the vote has been arranged to keep public comments to a minimum, I guess it's left to me to complain about Mayor Mark Stodola's tenacity in preserving a fat "economic development" slush fund in the revised city sales tax proposal (worth a half-billion over 10 years) to be voted on Monday night for a possible September special election.

He's lowered his sights to a 5/8ths-of-a-cent increase in the current half-cent tax for operations. He wants another 3/8ths of a penny for 10 years for alleged "capital" projects, though many don't really fit the traditional definition and will not be bonded. That is, the city can spend this money just about any old way it chooses and therein lies the rub. Particularly when it comes to the slush fund. Stodola proposes to preserve a whopping $38 million for these purposes:

* $6 million — "Job recruitment and ED infrastructure."
* $32 million — "Port expansion and research park."

That's it. No further explanation has been offered and Stodola has been repeatedly asked by me and others for more details.

Who would allocate the money? Would taxpayers be privy to the terms on which the money is extended? Would we be guaranteed clawbacks of money spent for promises not delivered? Will the FOI law apply? Who will recruit for the city and what will they be paid? If the Chamber of Commerce spends any of this money will there be more accountability than now given (virtually none) on the taxpayer subsidy the chamber receives? The port expansion buys what land? Who runs the research park? How much will be spent on each and for what? And on and on it goes. There are dozens of questions and no answers so far except, "trust us."

Sorry, no, this city hasn't earned that level of trust. Fully 20 percent of the capital money is devoted to the slush fund. The $38 million is $7 million more than the city plans to spend on police capital needs. It's $33 million more than planned on Fire Department needs. $21 million more than planned on park capital needs. $37 million more than planned on neighborhood and community capital needs. Per year, at $3.8 million, it's more than the city plans to spend annually on the sum of new fire, code enforcement and street repair jobs.

It's proposed by a city with a lacklustre record on job creation, a pursuit that doesn't always translate to much trickle-down for Little Rock, not when the workers come from outside the city for low-pay jobs but put demand on our facilities. We've been living on this faith too long with little to show for it other than stagnant population and declining sales tax revenues. At least when the money is spent on direct city services, you can see the results. Sometimes, a city with smooth streets, safe neighborhoods, wonderful parks, vigilant code enforcement, good schools and productive youth programs attracts more business than a one-time welfare handout.

Will the city board send this proposal to voters without more details, more accountability and more transparency? Probably. Will it matter? We'll see come September.

UPDATE I: The mayor is perhaps reluctant to mention it, but what do you bet this LR Chamber of Commerce study on a research park, depending on heavy public funding, is a template for the plan.

UPDATE II: This post generated an e-mail response in the form of a fact sheet being distributed by Arkansas Community Organizations. Many good points, the kinds of things you KNOW the chamber of commerce would HATE or gladly trade away in secret negotiations for funneling taxpayer money to corporate subsidies. I encourage you to read on. This is the sort of thing the City Board should adopt as guidelines for spending the $38 million, if it is to be included in the tax vote. But insisting on good jobs and working conditions in change for taxpayer welfare? It's just not the chamber's way.

High Road Economic Development in Little Rock

The City of Little Rock uses taxpayer provided funds as incentives to businesses to locate to the city. However, the city does not provide taxpayers a guarantee that their money is being invested in quality jobs for Little Rock residents.

As taxpayers, we want to see our money invested wisely and accountably with the goal of maximizing the benefit of these investments for the people of this wonderful city. Currently, we do not know how many Little Rock or Pulaski County residents are working for companies who have received either state or local tax incentives. We do
not know how much they make per hour, whether they have health benefits and if they have paid sick leave. We do not know whether these taxpayer-subsidized workplaces are safe. It’s clear we need greater accountability to the public so that the public can decide whether its investment is paying off.

It’s time that we adopt a high road strategy for our city’s economic development program. The high road strategy includes:

First Source Hiring

Many cities have adopted a First Source Hiring Ordinance that requires the city and any company receiving city funds for contractual work or from city grants and/or subsidies to agree to use agencies and organizations that work in economically distressed communities in Little Rock as their first source for new hires. The ordinance should also
contain language that ends discrimination against ex-felons in hiring.

Clawbacks

In order to benefit from Little Rock taxpayer subsidies, companies should sign agreements that would require them to return the subsidies to the taxpayers if they do not comply with First Source, Minimum Job Standards and minimal job creation goals.

Job Standards

All employees of the City of Little Rock, employees of companies receiving service or project contracts from the City, and employees of companies receiving tax subsidies or grants from the City should be guaranteed these basic workplace standards:

* Living Wage — At the very least all employees must earn a wage that can support a family of four at the federal poverty level. The wage should be indexed to the CPI. Currently this wage would be $10.75 per hour. We encourage the city to look at a higher wage level such as the wage needed to support a family at 130% of poverty or $14 per hour.

* Health Insurance — All of the above employees must have access to affordable, employer paid health benefits.

* Paid Sick Leave — All companies receiving city funds must give their employees at least five days of paid sick leave.

* Workplace safety — All companies receiving city funds must demonstrate that they have a good record of work place safety and must show the city they are in compliance with

Transparency

All agreements between the city and companies on First Source and Job Standards must be available to the public in the form of a report. The terms of all local grants, subsidies and contracts between the city and companies must be kept in one central location. The city should issue a report every year on compliance with First Source and Job Standards.

The state Freedom of Information Act should be extended to cover all economic incentive agreements between corporations, the state and local governments.

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