ASA’S SHELL GAME … AND THE EFFORT TO INCREASE HIS SLUSH FUND
WHY THE SHELL GAME WAS NOTICED
Governor Asa Hutchinson wants to take $105 million out of a state trust fund for health issues and put it in the Long Term Reserve Fund. The Governor claimed he needed the money transferred so Arkansas would have enough in a reserve fund to help Arkansas’s bond rating. But Conduit for Action saw that the money was going into the Governor’s discretionary spending account – a slush fund. The Governor can use the money in the fund as long as it gets approval of one legislative committee, the Legislative Council. That is a much easier route to spending discretionary money than having to get an appropriation bill approved by three-fourths of the House of Representatives and three-fourths of the Senate.
Then Monday, May 1, the Governor claimed he needed the money to be transferred to the Long Term Reserve Fund to use for economic development. Which is it a fund to build up a reserve or a spending account?
GOVERNOR’S SLUSH FUND
Conduit for Action pointed out that the “Long Term Reserve Fund” is the Governor’s discretionary fund for his priorities. The fund used to be called the “Rainy Day Fund” until 2016 when the name was changed to Long Term Reserve Fund. There was no change in how the fund could be used.
The Governor’s spokesman, J.R. Davis took exception with our analysis. He tweeted “Long Term Reserve Fund is completely separate from Rainy Day Fund — an important fact that should not be neglected.”
His assertion is both a deception and has an element of truth in it. Hang on, this is going to be confusing but once you see the shell game the Governor’s Office is playing you see how prevalent the culture of deception is in Little Rock.
THE SHELL GAME
Mr Davis’ statement is a deception in that it gives the reader the impression the Long Term Reserve Fund is not the Governor’s slush fund, but it is. In a sneaky way, the deception also has an element of truth in it. Earlier this year a new fund was created reusing the name “Rainy Day Fund” but having nothing to do with the purpose of the old Rainy Day Fund (now Long Term Reserve Fund). Told you this would be confusing, but here is a simple outline of Asa’s shell game.
- Rainy Day Fund (old). The fund was established to give then Governor Beebe some discretionary funds for emergencies and his priorities. In the first eighteen months of the Hutchinson administration, Governor Hutchinson spent more money from this fund than former Governor Beebe did in six years.[i] Governor Hutchinson admitted the fund is for emergencies and special needs he determines and for his priorities that aren’t included in the state’s general revenue budget.[ii] As the public became aware of his spending, the Governor was increasingly criticized for using the Rainy Day Fund (old) as a slush fund.
- Renamed as “Long Term Reserve Fund” In 2016 without explanation the Rainy Day Fund (old) was renamed as the “Long Term Reserve Fund”. The name change was tucked into section 15 of a bill concerning highway funding – a place where few would notice.[iii] With no reason for the fund being renamed and no changes in the fund’s use, we assume it was done as a way to hide the fund for a while. The media would still be looking for discretionary spending from the Rainy Day Fund.
- New fund created using the name “Rainy Day Fund.” Earlier this year the Governor and legislature reused the name “Rainy Day Fund” for something completely different and to hide something else.[iv] In previous Regular Sessions there would be a General Improvement Fund (GIF) distribution bill. GIF is extremely controversial with one former legislator pleading guilty to taking kickbacks for directing GIF to a certain entity and another one under indictment.[v] This year there was no bill called a GIF distribution bill. In its place was the newly created fund also called the “Rainy Day Fund”. The new fund included the GIF money plus some other money, primarily from settlements received by the Attorney General. This scheme accomplished two things. First, if you were looking for the GIF distribution bill it was going to be hard to find because of the new name (Rainy Day Fund). Second, if you were looking for the Governor’s discretionary spending using the old name Rainy Day Fund you would instead find this new “Rainy Day Fund” which is the GIF distribution.
The renaming of the old “Rainy Day Fund” to the “Long Term Reserve Fund” helped hide the Governor’s discretionary spending fund (slush fund) from scrutiny. The creation of a new fund reusing the name “Rainy Day Fund” helped hide the controversial GIF distribution bill.
This is the kind of shell game our Governor plays. Maybe this is how they did it during his many years as a federal employee and congressman, but this is not how Arkansans expect their public servants to do business.
[ii] Rainy-day’s $122,084 shifted to Parole Board, Arkansas Democrat Gazette, 02/20/2016
[iii] Act 1 of the 3rd Ex. Sess. 2016
[iv] Acts 1084 and 1123 of 2017