House approves corporate welfare amendment over pointed opposition | Arkansas Blog

Thursday, April 2, 2015

House approves corporate welfare amendment over pointed opposition

Posted By on Thu, Apr 2, 2015 at 1:58 PM

The House today approved Sen. Jon Woods' SJR 16 70-22, which means Arkansas voters will consider a constitutional amendment in November 2016 to take the cap off the amount of bonds the state can issue to finance private industrial development and also legalize taxpayer subsidies of local chambers of commerce.

The debate was notable for some sharp opposition from two Republicans — Rep. Doug House and Rep. Nate Bell — and persistent questioning from Democratic State Rep. John Walker.

House said the proposal was "corporate welfare, pure and simple." He said state officials liked to say the state had spent $120 million on the Big River Steel plant in Mississippi County (a plant opposed by a local competitor that got no state assistance.) He said the cost was more like $600 million, counting interest, land donations and other expenses.

He said the proposed amendment was "morally repugnant" and "outlandish." He said it was one thing to invest in a project and make money, but such projects didn't offer an opportunity for a rate of return.

Bell said it was hard for him to speak against the bill, but he said "corporate welfare is wrong. It's wrong to take the money of taxpayers and give it to private corporations." Bell said the state Economic Development Department had compiled some figures for him once that showed the state had spent $120 million on projects that created 8,000 jobs. He said that wasn't a good return.

"Just to give away money in hopes things will work out great is a disaster waiting to happen," Bell said. Bell said legislators talked about the free enterprise system. "As long as government is in the business of picking winners and losers, deciding which get benefits and which don't, we are moving away from free enterprise," Bell said.

Rep. Dan Douglas defended the bill as an imperative to compete with other states for jobs. So, too, did Rep. Deborah Ferguson, who said her district had lost a Toyota plant to Mississippi, which paid a substantial sum. (She didn't mention that Toyota had doubts about the education level of workers in her area.)

John Walker questioned them both closely about the experience in Louisiana — "bankrupted," he said — which has given lavish money to the film industry. He said studies there showed the state paid $4 for every $1 in benefits it got back. 

Walker asked Douglas: "Are you in favor of just opening up the entire treasury of state without any kind of limitation in order to attract jobs at any price?"

Douglas said the legislature would have oversight. Walker also pressed Ferguson for any empirical evidence of the value of giveaways. She said she didn't have any at hand, but was sure the spending was valuable. She said the Louisiana experience wasn't comparable.

Gov. Hutchinson had said he wanted this amendment.

Rep. Mark Lowery defended the part of the amendment that would re-enable city and county taxpayer subsidies of chambers of commerce, struck down as unconstittuional in a recent Pulaski Circuit Court case. Lowery depicted these payments as "partnerships" that enable cooperative job recruiting. In fact, they amount to taxpayer subsidies of chamber of commerce lobbying operations, often against the interests of working taxpayers.

Hats off to Doug House, Nate Bell and John Walker. They identified this spade for what it is — a corporate welfare shovel. The Republican legislature generally hates welfare — for the poor. The rich are another matter.

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