A $2.9 million state-funded economic development program is legal, Pulaski County Circuit Judge Chris Piazza ruled Tuesday, as he dismissed a lawsuit that accused Arkansas legislators of using the 47-year-old program as a "money-laundering machine" to fund pet projects.
Piazza said he has the authority to decide only whether the program conforms to requirements established in the state constitution on how the General Assembly spends public money.
Only the voters have the authority to decide whether the money in question is being used appropriately, the judge said, after about an hour of legal arguments.
Mike Wilson, a Jacksonville attorney who spent 12 terms as a Democrat in the state House, sued in February to cut off funding to the Central Arkansas Planning and Development District. He also wanted to force the district to repay the state money it had received.
A 2005 state Supreme Court ruling on another Wilson lawsuit over a similar matter barred lawmakers from using state funds to pay for projects within their districts if those projects cannot be shown to benefit the entire state. But the high court has adopted a broad interpretation of a statewide benefit.
Lawyers for the development district and the state pointed out that the laws under which the district operates are specific enough to meet the Supreme Court's constitutionality test.
With headquarters in Lonoke, the agency administers a $2.9 million appropriation to fund grants that must foster economic development in Faulkner, Lonoke, Monroe, Prairie, Pulaski and Saline counties.
The district and seven sister districts, which together encompass every county, get their money from the state's General Improvement Fund, which holds surplus tax revenue and interest on state funds.
Piazza's ruling had the potential to affect all of the districts, which were established in 1969 to promote economic development. Each received $588,750 to $2.9 million in the most recent allocation from the Legislature, for a total of $16,975,000, Wilson told the judge.
The issue at Tuesday's summary judgment hearing was whether one side could prevail over the other without the need for a trial.
Lawyers for the districts and the state told the judge that they had the law on their side as long as the money was being used as the law requires to promote economic development. The statute that established the districts, the legislation that funds them and regulations on how the money is used ensures the program is legal, they said.
Colin Jorgensen, assistant attorney general, said that as long as the district adheres to its economic-development mission, the only way the judge could find its operations are unconstitutional is to conclude that there is no way the district ever could operate legally.
Even if Wilson's accusations that legislators dictate how the district awards grants were true, Jorgensen told the judge, it would not matter as long as the district operates under those laws and regulations.
Sam Jones, the lawyer representing the district, accused Wilson of cherry-picking funding decisions he disliked to defame the entire grant program as illegal. He also denounced the accusations of improper legislative influence.
"There is nothing in this record but inferences and interpretations and ... innuendo," he told the judge. "They've got to show ... the prevailing monolithic way this [program] operates [is illegal], and that's just not the case."
Each application is vetted by the district's staff to make sure it meets the standard for promoting economic development, he said. When considering Wilson's accusations, Jones said, the judge should take into account that the district actually has no connection to some of the programs that Wilson said it funded.
State and development-district lawyers were quick to distinguish Wilson's 2005 litigation from the current lawsuit, telling the judge that the Supreme Court ruling found that vaguely worded legislation controlling spending is prohibited under the state's 14th Amendment.
The laws that created, fund and regulate the development districts as economic-development agencies do so with enough specificity on how their funds should be spent to ensure the districts are constitutional under the standards established by the Supreme Court, Jorgensen told the judge.
Wilson had petitioned the judge to side with him based on the evidence, including emails and testimony, that he and attorney John Ogles, also of Jacksonville, had collected during the nine months of litigation.
"This is cold, hard evidence about what is going on with taxpayer money," Ogles told the judge.
Wilson had earlier been unsuccessful at persuading the judge to halt the districts' spending. At a March hearing, Piazza concluded there was no evidence of wrongdoing that would justify forcing the district to stop spending the money.
Wilson said each of the Legislature's 135 members controls a portion of a district's spending: $70,000 for each of the 100 representatives and $285,000 for each of the 35 senators.
He asked the judge to consider the way the Central District operated as evidence of illegality. Wilson said the district never has been audited, submitted a budget, sought out matching funds for its allocation or returned any unspent money because it always gives out all of its funds.
The only endorsements for individual grant applications the district receives come from legislators, he said, and the district's board approves every application that comes before it, typically with little or no discussion.
"The only people who are asking about the money being spent are the legislators who make the appropriations," Wilson said.
A Section on 11/02/2016