Discretionary spending, corruption, and waste in AR

General Improvement Funds (GIF) has been plagued with fraud and waste. GIF gives politicians discretion over how to spend a pile of money. A few months ago, former State Representative Micah Neal pled guilty to taking kickbacks for awarding GIF.  Last week former State Senator Jon Woods was indicted by a federal grand jury for the same scheme.

Governor Asa Hutchinson commented on the indictment saying:

“Charges of corruption and bribery undermine the rule of law that is the underpinning of our system of government. The charges are unproven at this point, but the indictment is a reminder to all in office of the public trust we hold,” he said. “The charges also reaffirm my concern about legislative GIF money and why we need to end it. I will work with the Legislature on better ways to handle any surplus, including the idea of directing surplus to a reserve fund.”[i] (emphasis added)

While the Governor is concerned about the discretionary spending of GIF by legislators, he still likes his pile of money for discretionary spending.

Bad Experiment

Giving Governors discretionary funds is a relatively new (and bad) experiment.  The Governor has the “Rainy Day Fund” (now called “Long Term Reserve Fund”) to use for “his priorities”.[ii] Only Governors Mike Beebe and Asa Hutchinson have had the discretionary Rainy Day Fund. All other Governors have had to get their funding priorities passed by the House and Senate as appropriation bills. At least Governor Beebe used the fund much more sparingly than Governor Hutchinson.

Governor Hutchinson’s spending of Rainy Day Funds in the first eighteen months of his term exceeded the spending of Governor Beebe in the previous six years.[iii]

To spend tens of millions of dollars, the Governor merely needs the rubberstamp of one committee.  Instead of using this procedure to go around the constitution, the money should be appropriated for a specific purpose by law with the required 3/4th vote of each house.  This is what the constitution envisioned.

In 2015, the Governor used his discretionary spending procedure to reverse the legislature’s decision rejecting the Division of Agriculture’s request for an additional $3.5 million. In July 2015, he gave the division $3 million in Rainy Day Funds. His request for funding only had to be approved by the Legislative Council and not by the full legislature.

GIF can be used for good purposes, but discretionary spending is bad

Many cities, counties, fire department, etc., have benefited from receiving GIF.  Conduit for Action does not oppose these uses. CFA opposes the distribution through discretionary spending.  Most needs can be met using distribution formulas that can be set in appropriation bills, and this takes individual politicians out of the process.

What’s sauce for the goose is sauce for the gander

  • If you are concerned a legislator might use discretionary funds to enrich himself or herself, …. you should be concerned a Governor might do the same.
  • If you are concerned a legislator may use discretionary funds as payback to supporters or to win friends, …. you should be concerned a Governor might do the same.
  • If you are concerned about legislators giving taxpayer money to a private college, …. you should also be concerned about Governor Hutchinson giving taxpayer money to a private taekwondo association for its headquarters.

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End discretionary spending by legislators and the Governor.

Senator Trent Garner’s SB325 would end GIF for legislators, BUT, it is a bad bill because it would merely shift more GIF discretionary spending to the Governor.


[i] Indictment: 3 state grants key in scheme, Arkansas Democrat Gazette, 03/04/2017

[ii] Rainy-day’s $122,084 shifted to Parole Board, Arkansas Democrat Gazette, 02/20/2016

[iii] http://www.conduitforaction.org/rainy-day-spending-skyrocketing-under-governor-hutchinson