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State tap still open on local projects

Legislators hold sway in 5 districts by Chelsea Boozer, Sarah D. Wire | October 13, 2013 at 5:13 a.m.

Correction: The Abilities Unlimited Inc. in Van Buren received $3,000 of state surplus tax money to buy a paper shredder. This article incorrectly stated the city in which the nonprofit group is located.

Over the past two years, state taxpayers have footed the bill for a number of local-level projects - like soccer uniforms, horse feed, a $3,000 paper shredder and a flat-screen TV - partly at the urging of Arkansas lawmakers.

Seven years ago, a legislator sued to keep his colleagues from handing out surplus tax dollars for local projects in their respective districts, prompting the Arkansas Supreme Court to prohibit the decades-old practice and rule that it violated Article 14 of the state constitution, which forbids “local and special” legislation.

Since then, a new system has developed. It aims to give groups an opportunity to compete for the money by having them apply for grants that are awarded through the state’s eight planning and development districts, but what gets funded often depends on the wishes of lawmakers.

For five of the eight planning districts, a letter of support from a legislator is either required or strongly recommended and is considered in the grant evaluation process.

No state government entity monitors how those funds are spent.

“It’s a corrosive example of pigging out at the public trough,” said Jacksonville attorney Mike Wilson, who filed the 2006 Supreme Court case.

In fiscal 2013, legislators and the governor split $172 million for special surplus-funded projects. The governor typically spends his portion - about $102 million that fiscal year - on projects that benefit the entire state.

The Legislature does two things with its share. A portion is earmarked for particular categories like fire departments, and then thatmoney is distributed to local fire departments across the state. The remaining amount - about $37 million this fiscal year - is allocated to the state’s eight regional planning and development districts.

Cities, counties and local-level nonprofit groups submit funding applications to a planning and development district’s board - made up of officials like county judges and mayors from the counties within the district - and then the board decides whether to allocate money to the applicants. According to Arkansas Code Annotated 14-166-205, the decision on allocating the funds “shall be solely within the discretion and control” of that board.

But that isn’t always the case because support from a lawmaker is given weight in the application process in the majority of the planning districts.

The Arkansas Democrat-Gazette reviewed all grants awarded by the districts statewide in fiscal 2012 and 2013 after the Central Arkansas Planning and Development District was criticized in early July for awarding a $5,000 grant for fireworks in Benton with the encouragement of state Sen. Jeremy Hutchinson, R-Little Rock.

Also, the district granted more than $120,000 in September, which is considered fiscal 2014, to another Saline County project spearheaded by the wife of state Rep. Andy Mayberry, R-Hensley. Mayberry and other lawmakers wrote letters in support of the park project.

Wilson said the new process of funneling funds through planning districts is an attempt to get around the Supreme Court’s ruling.

“The Supreme Court case said basically that the Legislature cannot appropriate money to a specific local use, like Benton [fireworks], for example. So nowadays they figured out the appropriation can go to some state agency like the districts, and they can in effect launder [public funds] through there … which is an around-the-horn way of avoiding the opinion of the Supreme Court,” Wilson said. “It’s a rotten, nasty business.”

In 2008, Gov. Mike Beebe weighed in on the local projects after a state senator pushed the state Athletic Commission to give $100,000 in general improvement money to Boys and Girls Clubs in El Dorado and Camden.

“[Legislators] certainly have the right to lobby, but [commissions] can’t be bound by what a legislator says is his intent. That’s not relevant. Local projects cannot be dictated and designated by the Legislature. You just can’t do it,” Beebe saidat the time.

LETTERS OF SUPPORT

State senators and representatives often make public speeches in which they refer to the general improvement funds as theirs to donate.

News releases from several groups that received the funds in the past two fiscal years have specifically thanked lawmakers for providing the money.

State Sen. Bruce Maloch, D-Magnolia, said he has witnessed legislators tell a group that they are donating the general improvement fund money, so some lawmakers may not understand that the 2006 state Supreme Court ruling prohibits that.

“I’ve seen [legislators make] those statements. If those statements are how those funds are being directed and that’s absolute, then it is a violation of Wilson vs. Weiss,” he said. “It’s inviting another lawsuit if it’s handled in that manner.”

He writes letters of support for local groups applying for funding through the planning district in his region, but he makes sure to tell them that the allocation is up to the district board and that he has no say in whether an applicationis accepted, he said.

“I think it’s fair for a legislator to write a letter of support. It is not within the parameters of the decision in Wilson vs. Weiss, however, for a legislator to be able to specifically direct [money] to a local project,” Maloch said.

But that’s exactly what Rep. Ann Clemmer, R-Benton, said she does. In a phone conversation Thursday, Clemmer said she has money “allocated to me to make the determination” on where it is spent, but then she clarified that she can only recommend where the money is spent. Then she added: “But it’s really like a determination.”

“When that money is distributed, we basically are informed that we have sway over X amount of dollars,” she said.

Clemmer said she didn’t remember how she was informed. She views the process as lawmakers helping smaller groups that don’t often receive statewide funding, she said.

“I understand Mr. Wilson’s concerns with the process, but I don’t think it’s anything new. … I think if you look back the last few [legislative] sessions it’s been more or less the way it’s been done. That may not be appropriate, in which case I guess another decision and further discussion may be required,” she said.

Hutchinson, who supported some of the surplus being used for fireworks in Saline County, said he tells people that he is only recommending that the district board in his region allocate money for their project. He said he doesn’tthink that just because he recommends something the board is required to approve it.

“I get calls from board members and the director, and they inquire about the project. They question it,” he said. “I think it’s certainly not a foregone conclusion. You have to defend the recommendation. And I’ve had money not disbursed before … not allocated in the direction I wanted it to go.”

The letters of support, Hutchinson said, make sense because legislators “know our districts better than anyone else and know the needs.”

Three planning and development districts require letters of support from lawmakers before presenting application requests to their boards. They are the districts for central Arkansas, southwest Arkansas and east Arkansas.

The Northwest Arkansas Economic Development District “strongly encourages” a letter of support and generally holds up a grant application until such a letter is submitted, according to Executive Director Mike Norton.

In the West Central Arkansas Planning and Development District, an application for funding isn’t considered complete unless it has a legislator’s letter of support.

“It would certainly not rank as highly as those that are complete and are supported by the legislator in a particular district,” Executive Director Dwayne Pratt said. “I would say certainly the fact that the money originates from the state and General Assembly,that that has some impact on it … [but] certainly in our case the board has approval authority.”

East Arkansas Planning and Development District Executive Director Melissa River said her board requires legislators’ letters of support partly because it adds a level of transparency to the process.

“This is money from the Legislature, so we want to make sure the legislators are informed about the applications that are being submitted,” she said.

Just three planning district boards don’t take letters of support into account when deciding what projects to fund, according to the executive directors. Those districts are the Southeast Arkansas Economic Development District, the White River Planning and Development District and the Western Arkansas Planning and Development District.

WHO OVERSEES THE PROCESS

Appropriations bills approved in the 2011 and 2013 legislative sessions include special language instructing the planning districts to notify the House speaker of the name and address of each grant recipient and the amount allocated at least 30 days before the funding is distributed.

But House Speaker Davy Carter’s office said that notification is supposed to happen only when a planning and development district receives funding from the state, not every time a district awards funds.

Districts have to provide receipts to the state Division of Legislative Audit proving that the surplus funds were spent during the fiscal year, but which entities get grants is not specified in districts’ audits.

Private accountants - not state auditors - audit the districts, which have duties other than handing out surplus money. Lawmakers review the audit reports yearly, Division of Legislative Audit Field Auditor Tom Bullington said. But, none of the 2012 audits provide any details about who received development district funding.

Bullington said that could be because the audits are handled by the private accountants - though the reports are held to the same professional standards as state audits.

“What those private auditors do, that’s really anybody’s guess,” he said.

State Rep. Duncan Baird, R-Lowell, is chairman of the Joint Budget Committee. He said it’s “pretty standard” for lawmakers to be updated on what the money generally went toward but not specifically what the money is spent on.

“We get a broad view, but unless we request something specific, I don’t know that we ever see anything more specific,” Baird said.

Front Section, Pages 1 on 10/13/2013

Print Headline: State tap still open on local projects

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