- Associated Press - Saturday, January 14, 2017

LITTLE ROCK, Ark. (AP) - A former Arkansas lawmaker’s admission to arranging kickbacks from government money earmarked for economic development is the latest black eye for a fund that the Legislature once eyed as a way to pay for vital projects back home. It also may help hasten the demise of the fund, once considered a hallmark of legislative politics in the state.

The investigation into former Rep. Micah Neal, who pleaded guilty this month, raises more scrutiny into the General Improvement Fund. Lawmakers have traditionally tapped the fund, a pot of money only available during a state surplus, for one-time projects and grants that usually would benefit their districts.

According to prosecutors, Neal conspired with others, including “Senator A” - whom they described as a ex-House member who later served in the Senate, and who sponsored a 2013 bill granting eight development districts up to $2 million each in state funds.

The fund has been a contentious issue since 1997, when legislators took away the governor’s authority to dole out surplus money to projects in communities around the state. The money traditionally went to lawmakers’ pet projects, which ranged from local sidewalks to a military museum. Former Gov. Mike Huckabee once derided the Legislature’s use of the fund for local projects as “irresponsible and reckless.”

The state Supreme Court in 2006 said the way the Legislature was handing out the money violated Arkansas’ constitution by funding strictly local projects. In response, lawmakers in following years steered the money toward areas that serve more of a statewide purpose including colleges and universities, and grants that would be distributed around the state.

But that system has still drawn criticism from many who have called it a thinly veiled attempt for lawmakers to keep delivering pork to their districts. A state judge last year dismissed a lawsuit by Mike Wilson, the former legislator who brought the 2006 case over GIF funding local projects, that sought to cut off the surplus funding for the Central Arkansas Planning and Development District. Wilson had claimed that legislators were using the district as a “money-laundering machine” to fund pet projects.

Neal’s guilty plea may not only validate that criticism. It now expands it to a fear that the surplus funds aren’t just being used to curry favor with constituents.

Gov. Asa Hutchinson has long been pushing for an end to the practice of setting aside surplus money for lawmakers’ pet projects. The Republican governor’s proposed budget for the coming fiscal year doesn’t include any legislative GIF, something he’s noted in the wake of the Neal case. Legislative leaders in recent years have said they’d rather have surplus money go toward other needs, such as building up Arkansas’ rainy day fund and retiring some bond debts.

“I’m setting the stage that I do not support legislative GIF money in the budget this year. … We have to utilize our state resources for statewide needs,” Hutchinson told members of the Arkansas Municipal League at its convention. Hutchinson acknowledged that many local communities around the state had relied on the fund to help pay for needed projects.

“I recognize that many of these needs are out there, fire departments, local needs, but we have a system in place where we can fund, whether it’s Rural Services or another agency and it’s a competitive grant application process that might be geared toward fire departments or it might be geared toward municipalities,” Hutchinson told reporters. “But it’s not subject to legislative prerogative. It is subject to a competitive statewide need basis based upon the amount of money.”

The Neal case may bolster Hutchinson in trying to win support not just in the communities that have benefited from the GIF money, but also the lawmakers who been protective of the fund.


Andrew DeMillo has covered Arkansas government and politics for The Associated Press since 2005. Follow him on Twitter at www.twitter.com/ademillo

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