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A no vote on bonds 

Just call me Count Donatien de Sade. The head of the businessmen and promoters who are pushing proposed Amendment 2 to the state Constitution said he couldn't imagine anyone opposing the giant corporate subsidy because it would bring jobs to Arkansas. "I think you'd have to be horribly sadistic to be against this amendment," Jim Pickens said. If Amendment 2 were to get much airing, which isn't likely, voters would be asking who the sadists really are. The promoters are putting $250,000 into an advertising campaign for the amendment, and since there is no organized opposition that sum should be ample to keep the voters witless on this sweet-sounding proposition. If voters ratify it in November, Amendment 2 would selectively end forever the power of Arkansas people to vote on whether the state can go deeply into debt and obligate their taxes to pay off the debt. Oh, voters would still have a say in whether the state could borrow money to build schools, highways, hospitals and the like as they have since 1934 but not if their taxes were going instead to help Microsoft, Mitsubishi or another giant corporation. A simple majority in the state legislature, which never met a corporate tax break or subsidy it didn't like, could borrow $220 million next year, hand it to Nissan and pay off the debt for the next 20 years with your income taxes. You are supposed to agree to that, see, because Nissan would say that it "planned" (the words in Amendment 2) to spend $500 million on a plant and "planned on" hiring 500 people sometime in the future. If they didn't follow through with all the jobs and plant, it would be too bad. The state would just shrug. More and more states are wising up and requiring some accountability of companies that project a certain number of new jobs to get a state subsidy or tax incentive and then don't deliver. A recent study of auto manufactures in South Carolina, which leads the South in industrial incentives, found that actual job and investment performance by companies taking incentives fell well short of the projections. That is our experience in Arkansas, too. For bond legislation, Amendment 2 is amazingly short, simple - and baffling. Since 1934, a statewide popular vote has been required before the state could go into debt and obligate the state's tax revenues. Voters have rarely approved general-obligation bonds - in 1949 and 1999 to build highways and twice in the last dozen years for local water and sewer projects. The amendment would remove the popular vote and let the legislature approve bonds as long they were to benefit an industry and not for direct public benefit. Does that sound like public policy turned on its head? The legislature could authorize the state Arkansas Development Finance Authority to borrow up to 5 percent of the amount of the state's general revenues the previous fiscal year. Next year, that would mean ADFA could borrow $220 million to help a company buy and develop land, train workers and buy its equipment. As general revenues grew from year to year, the maximum that could be borrowed would increase. A literal reading of the amendment would let the legislature borrow $220 million or more every year, but the Arkansas Supreme Court surely would find a way to restrict it permanently to an aggregate of 5 percent. You never know. But the amendment is full of such perplexities. Bond lawyers around Little Rock are scratching their heads, and it is a sure bet that none of them would issue a favorable opinion on a bond issue until the Supreme Court took a test case and settled some of the questions. If bond lawyers are skittish, the rest of us should be jumping out of our skins. Voters can get a clue about the public spiritedness of the promoters by the campaign. The theme, the sponsors say, will be: "For Amendment 2: Increase Jobs. Not Taxes." The message is that if you hate taxes but like jobs, Amendment 2 is your ticket. But if there is anything on the ballot that is a sure bet to increase taxes, it is Amendment 2. The money to pay off mega-bonds would be skimmed straight off the top of state tax collections. Ordinarily, most of that money would go to the public schools (the state is under court order to fund them properly, remember), colleges, prisons, law enforcement and medical services for the needy. Proponents will argue that the new industry would more than offset that loss at some future date by the increased income and sales taxes generated by the investment and jobs, to whatever extent they actually materialized. But states always find that there are hidden costs to these wonderful incentives. The legislature would have to find a way to make up the instant loss for schools and other mandated services. Corporations that take the state's offer to help build their plants for them also will take advantage of other state income and sales tax breaks as well. Poor South Carolina, which has been the front rank in the war between the states over industry subsidies, has the highest tax burden in the southeastern United States. And the taxes are on people, not business. If Amendment 2 passes, we will all be sadists some day.
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