SB325 – Ending legislator slush fund BUT creating a slush fund for Governor

SB325 by Senator Trent Garner would end the practice of giving individual legislators General Improvement Funds (GIF) to spend.  His bill would have been a major reform if it had stopped there, but it became a bad bill when provisions were included to transfer the money to a slush fund for the Governor.

GIF slush funds for legislators MUST end

General Improvement Funds (GIF) for legislators has been a fraud-ridden re-election slush fund that currently allows a legislator to direct taxpayer money to private persons and to the projects of political friends. Not all legislators have abused the use of GIF, but discretionary funds is a bad policy.

GIF for legislators is a major problem that must be ended. In recent news concerning GIF, former Representative Micah Neal pled guilty of taking kickbacks for directing many millions in GIF to Ecclesia College which is a small private college. Legislative GIF has been used for such things as – a fireworks show at a time when the county was struggling financially and needed help with providing basic services. Many legislators use GIF as a reelection tool, making sure to have photo opportunities when handing out checks to organizations.

Giving the Governor a huge discretionary fund

SB325 doesn’t stop at ending legislative GIF slush funds.  It creates a new one for the Governor.

The bill sets up the “Taxpayer Long-Term Protection Fund.” The supposed protections on spending the money are: 1. The money is to be spent only in case of emergency or deficiency; and 2. The expenditure must be approved by a 2/3rds vote of the committee, Arkansas Legislative Council. This may sound like a protection but it is not. Instead it is a path for the Governor to avoid the rigorous standards of the constitution for spending money. It also undermines the authority granted to the legislature by the constitution.

Although the fund name uses the words “long-term” and “protection” there is nothing long-term about it and there is not much “protection” for taxpayers. Spending money from the new fund will be at the request of the Governor. (Note the bill was careful not use the word “Governor.”)

  1. Are the “protections” meaningful? No.
  • The first supposed protection in the bill is – the money can only be requested for “an emergency or to address a deficiency in the state budget.” There are NO STANDARDS for what may be declared as an “emergency” or a “budget deficiency.” With no standards, anything goes.
  • The other supposed protection is that the Governor’s administration’s request to spend the money must be approved by a 2/3rd vote of the Legislative Council. The 2/3rds vote of a mere committee is extremely weak considering the constitution’s standard for appropriating money is a 3/4th vote of the full membership of both the House of Representative and 3/4ths of the full Senate! We repeat – the bill lets the Governor bypass the rigorous standards of the constitution and it undermines the power reserved to the legislature as a whole.
  1. Should the Governor have a huge discretionary fund? No.
  • The idea there should be discretionary fund for the Governor is a relatively new and dangerous experiment. Until 2009, Governors had to get the legislature to pass a new appropriation act to get approval for any new spending.
  • In 2009, governors were given a discretionary fund called the “Rainy Day Fund.” Spending the money only requires approval of one legislative committee, the Legislative Council. The Legislative Council has NEVER said “no” to spending requests. This bill is the Rainy Day Fund on steroids.
  • Under Governor Asa Hutchinson spending of the Rainy Day Fund has skyrocketed. (See In Governor Hutchinson’s first eighteen months as Governor, he spent more Rainy Day Funds than was spent in the previous six years combined. This bill gives him hundreds of millions of dollars more to spend.
  1. Who should set spending priorities?
  • Under the normal appropriation process the legislature is responsible for passing the spending priorities of state government. Under discretionary spending, the Governor can spend anywhere, which means the Governor sets spending priorities. For example, less than three months after the legislature adjourned in 2015, the Governor reversed 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 a legislative committee and not by the full legislature.
  • With hundreds of millions of dollars at stake, the bill allows the Governor a much easier path to bypass the full legislature. For example, he could use it to bypass opposition to: 1 Creating new and controversial funding for the Highway Department; 2. To pour all of the money into the bottomless pit of Arkansas’ Obamacare Medicaid Expansion costs; 3. Give it all away to big corporations, etc.
  • During the Governor’s 2016 fight to continue funding Obamacare Medicaid Expansion, he said he was asking his staff to look for a way around the 3/4th vote requirement for appropriations. This does it.
  1. Does Arkansas really need to give the Governor a big discretionary fund?
  • As mentioned before, Governors did not have a discretionary fund until 2009 and Arkansas ran fine without one. They managed at a time when the legislature only met once every two years unless called into a special session by the Governor.
  • We now have annual legislative sessions which is a tremendous help to let the legislature meet budget needs in a timely fashion.
  • Governor Hutchinson has not been shy about calling special sessions. In his first two years, he called more special sessions than any governor since Bill Clinton, and Arkansas didn’t even have annual sessions when Bill Clinton was governor.

As written, SB325 is bad policy. It needs major revision to eliminate discretionary spending from the Taxpayer Long-Term Protection Fund. Spending should be ONLY upon the legislature passing an appropriation for a specific purpose. The legislature should take back its budget power and end the Governor’s discretionary spending.