Ruling on tax money for chambers of commerce gets statewide notice | Arkansas Blog

Saturday, January 10, 2015

Ruling on tax money for chambers of commerce gets statewide notice

Posted By on Sat, Jan 10, 2015 at 7:13 AM

I wrote last week that there'd be statewide ripple effects from Circuit Judge Mackie Pierce's ruling that Little Rock and North Little Rock were unconstitutionally providing taxpayer subsidies to local chambers of commerce and a chamber-run development organization

Pierce ruled that the Arkansas Constitution prohibits municipal payments to private corporations and that the cities' effort to call the money service contracts was an artifice — lipstick on a pig in his memorable words.

The ruling likely will be appealed. 

Meanwhile, th
e Arkansas State Chamber of Commerce has sent an alarm to chambers of commerce around the state. I've obtained a memo sent by Susie Marks, senior vice president for programs at the State Chamber:

Attached and below is excerpt from a ruling from Circuit Judge Mackie Pierce concerning local chambers and economic development organizations that receive funding via contract from their local municipality.

Circuit Judge Mackie Pierce today granted a partial summary judgment in favor of a taxpayer lawsuit over payments by the cities of Little Rock and North Little Rock to chambers of commerce. Pierce held that the payments violated the state constitutional prohibition against municipal appropriations to private corporations and enjoined any further payments.

Although this ruling was made from a case involving chambers and economic development organizations in Little Rock and North Little Rock, there is a high probability this ruling will have a ripple effect across the state. We need to know as soon as possible if you have a contract with your local municipality for economic development, marketing or any other services. This is of high importance and we would like to gather this information as soon as possible.

When responding please let me know the type of contract (ED, A&P, etc), the amount, staff paid from the contract and the reporting you provide back to the municipality.

The taxpayers' lawsuit, supported by the Arkansas Public Law Center, of which I'm a board member, and argued by the McMath Law Firm, has already brought a number of inquiries from people around the state anxious to be sure their cities fall in line. I've received reports of at least two cities that continued subsidy payments to local chambers this week. With the lawsuit pending and a hearing for summary judgment scheduled, the city of Little Rock authorized a continued $350,000 subsidy of Little Rock Regional Chamber of Commerce in its 2015 budget.

Reporting is a key element of the legal dispute. The city gets no meaningful accounting for how its money is spent. The lawsuit argued that the money provides no specific services, but merely subsidizes the salaries and expenses of Chamber employees who'd be doing the same work anyway, along with their political lobbying on a variety of topics on which there is, to put it mildly, sharp differences of opinion among those who provide the city its tax money. The city is friendly to the chamber because it provides the structural support and money for tax-increase campaigns.

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