Committee rejects bill phasing out surplus distribution

Backers cite fraud concerns on money tapped by leaders

The Joint Budget Committee’s Special Language Subcommittee defeated legislation Wednesday phasing out the General Improvement Fund’s use of surplus for state programs and projects.

In a divided voice vote, the subcommittee declined to recommend Senate Bill 325, sponsored by Sen. Trent Garner, R-El Dorado.

The bill “will stop the General Improvement Fund, including the rainy-day fund and the Long Term Reserve Fund,” Garner told the committee of the fund that relies largely on state general surpluses and interest earnings. “However, this will not affect the projects or monies for projects already approved by the General Assembly.”

The Legislature and the governor decide how to allocate the monies in the General Improvement Fund during legislative sessions.

In recent years, the state’s rainy-day fund has become a growing part of the General Improvement Fund, and it’s been used to finance emergency needs or priority projects approved by the governor and the Legislature.

The Legislature and governor also have allocated money in the General Improvement Fund for joint state projects, as well as discretionary money for the governor to pay for his state projects and for lawmakers to pay for their projects.

Gov. Asa Hutchinson has called for ending legislators’ projects from the fund.

Under the bill, surpluses and interest earnings would go into the bill-created Taxpayer Long-Term Protection Fund for use in case of emergencies or to address major statewide needs, Garner said.

Tapping money from the fund would require a threefourths vote of the House and Senate during a legislative session and a three-fourths vote of the Arkansas Legislative Council outside of a session, he said.

“I want to get rid of the bullying, the betting and the bribing out of our system of allocating money,” Garner said. “We all understand the allegations and the issues going up to Northwest Arkansas.

“I know the vast majority of the people on this committee [and] the vast majority of the people in the House and Senate use that money in the intended purpose with zero illegal activity. The vast majority of [the money] goes to good causes, goes to reputable causes [and] goes to good projects.”

According to a federal grand jury indictment released earlier this month, former Rep. Micah Neal and former Sen. Jon Woods, both Republicans from Springdale, received kickbacks on two General Improvement Fund grants to one business later returned. The two then redirected the returned grant money to a college from which more kickbacks were paid, the indictment alleged.

The indictment shed light on Neal’s Jan. 4 guilty plea to public-corruption charges. Neal is awaiting sentencing after he pleaded guilty to taking two kickbacks totaling $38,000.

Woods has been charged with 12 counts of fraud and one of money laundering, alleging he took one bribe of $ 40,000, plus an undetermined amount of cash in exchange for other such grants.

Rep. Jeff Williams, R- Springdale, who is the House sponsor of SB325, said he was elected to the House seat formerly held by Neal, who will continue to be his friend “regardless of his past actions, regardless of what he admitted to.”

“It is part of our responsibility to ensure that we do what we can do to remove any opportunities for misuse from those who might take advantage of the system,” Williams said.

A Joint Budget Committee co-chairman, Sen. Larry Teague, D-Nashville, said, “I don’t believe there is going to be General Improvement funds this session” with the state’s general revenue collections lagging the forecast for the fiscal year ending June 30. “So I don’t know that [the legislation] is as urgent as needing to be done right at this second.”