Tuesday, May 05, 2009

No Honor Among Thieves on GIF Money?


Something is amiss in our state’s General Improvement Fund (GIF). GIF money comes from the interest paid on deposits of the state’s surplus tax collections. The state has such an enormous pile of excess tax dollars collected that the interest on the money alone was about $58 million dollars last year. This money was traditionally spent on local projects favored by individual legislators, sometimes called “pork”. An example might be that the state would pay for a new roof on a community center.

Getting people around the state to pay for a project that is solely for the benefit of their district has always been popular with legislators. That is why all calls to return the state surplus to the taxpayers in the form of a tax cut has never gotten traction. The ledge wants to over-collect and maintain a huge surplus in order to earn huge interest payments. The legislators then divvy that up in pork barrel projects.

Who does the divvying becomes really critical. In the days before term limits, a few “old lion” legislators manipulated the process so that they and their buddies got the lion’s share of the GIF money. In that system, northwest Arkansas got “used”. The legislators from up here were in the minority party, and the majority party had the idea that if someone else has more than they did, that was justification enough for the government to take it.

Finally in 2004 most Republican legislators made a deal with “outsider” conservative Democrats to break the grip of the cabal of favored (mostly liberal) Democrats. They then agreed to divide the GIF money evenly. This new group was often referred to as “The Brotherhood”. After “The Brotherhood” took over, every Senator got the same amount and every Representative got the same amount to spend. Given that there had to be a GIF fund, it seemed like the most-even handed way to do it.

The guys who used to run things did not like being out-voted, so they did what is becoming the American way- they took it to court. The court ruled that the whole way the GIF funds were distributed (which had gone on for years without challenge) was “unconstitutional”. After the ruling, the legislature made a change in their GIF distribution. A panel that represented competing interests would now divvy up the money. The pork didn’t go away in this system. Rather, the Governor and a few key legislators were able to determine who got the pork.

There was still an informal agreement among the legislature that the panel would honor legislator’s requests for funds so that the money was split pretty much evenly among the districts. It now appears that this deal has not been honored.

It turns out that Governor Beebe and another key member of the panel (Republican Senator Gilbert Baker from Conway) both wanted the same thing. They both wanted a new interchange built in Conway where a new plant was going in. It seems that Baker used his role on the panel to siphon over 10 times his share of the money to a project in his district, and Beebe sent a matching amount to the same project. It appears that central Arkansas Republicans like Baker are cutting deals with the Democrats in the rest of the state and leaving Republicans in NWA high and dry. I am afraid it is starting to look like the bad old days, with a lot of tax money collected from NWA that winds up being spent in the rest of the state.

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