Lawsuit filed over chamber of commerce spending | Arkansas Blog

Thursday, January 24, 2013

Lawsuit filed over chamber of commerce spending

Posted By on Thu, Jan 24, 2013 at 6:09 PM

A taxpayers' lawsuit has been filed challenging expenditure of tax money by the cities of Little Rock and North Little Rock — cumulative millions over the last 20 years — to support local chambers of commerce.

The lawsuit contends that the Arkansas Constitution prohibits payments to private corporations by municipal governments. It also says both Little Rock and North LIttle Rock have violated state law on bidding procedures in the course of funneling money to Little Rock and North Little Rock organizations in the name of economic development.

Little Rock, particularly, has defended the practice over the years as a service contract with the Little Rock Regional Chamber of Commerce. It says it can't afford to operate its own economic development office, as it once did. But the arrangement has functioned as a financial subsidy to existing chamber operations and the contract has been unaffected by changes in the city allotment based on budgetary restraints. It currently is $200,000 a year. The Chamber only provides general information on the spending, not specific accounting how and on whom the money is spent. It says the state Freedom of Information Act does not require it to disclose specific spending on travel, entertainment and other costs. North Little Rock has similar arrangements with the North Little Rock Chamber of Commerce. It of course doesn't disclose what political representations it might make in the course of recruiting businesses. The money to the chamber helps pay the salaries of employees who lobby the legislature on political issues important to the business lobby, though not necessarily to working people.

A news release follows. As I've disclosed before, I'm a member of the board of the Arkansas Public Law Center, which is backing the legal action. The Center earlier brought a successful lawsuit over the Arkansas legislature's practice of enhancing members' pay with undocumented "expense" reimbursements. The nonprofit group has also intervened in support of open court records and has attorneys working on several other potential public interest matters, including the city's threat to take private property by eminent domain for a development to be used by private businesses in the proposed Little Rock Tech Park.

TThe Arkansas Public Law Center today filed a lawsuit in Pulaski County Circuit Court to stop the annual city appropriations to the chambers of commerce in Little Rock and North Little Rock.

Some years ago, chambers of commerce were encouraged to seek annual appropriations from their local governments with the justification that they were helping attract industry and commerce to the cities and counties. Many cities did so although Article 12, Section 5 of the Arkansas Constitution prohibits cities, counties and municipal corporations from appropriating money to private corporations.

The city of Little Rock appropriates $200,000 a year to the Little Rock Chamber of Commerce for performing economic development, and the budget for 2013 appropriates another $100,000 to the Metro Little Rock Alliance, which is run by the Chamber of Commerce. North Little Rock appropriates $250,000 a year to the North Little Rock Economic Development Corporation, which is housed with the North Little Rock Chamber of Commerce, and the city appropriates a smaller sum directly to the Chamber of Commerce.

The suit alleges that the cities are illegally donating tax revenues to and subsidizing private organizations. It contends that the payments are an illegal exaction because people are taxed and their money illegally spent.

The cities also violate their own codes and contracting procedures in making the annual appropriations, the complaint says.

The plaintiffs are Jim Lynch and Tony Orr of Little Rock and Glen M. Miller of North Little Rock. The McMath Woods law firm and Sonia Eileen Fonticiella Rios are the attorneys.

The Arkansas Public Law Center is a non-profit corporation established in 2009. It engages in litigation for the public interest.

Here's a link to the full lawsuit. The link is corrected.

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