Rep. Micah Neal, R-Springdale, pleaded guilty Wednesday (Jan. 4) to one count of conspiracy to commit honest services fraud. The news may result in a change in how Arkansas legislators return taxpayer dollars back to their respective districts.
According to a news release issued by the U.S. Department of Justice, Neal, 42, conspired with an unnamed Arkansas state senator to use their official positions to appropriate General Improvement Funds (GIF) to two nonprofit organizations in exchange for bribes.
Specifically, according to the release, the two legislators authorized and directed the Northwest Arkansas Economic Development District, which was responsible for disbursing the GIF, to award a total of $600,000 in GIF money to the two nonptofits. Of the $600,000, Neal personally authorized and directed a total of $175,000 to the organizations. In return for those actions, Neal received approximately $38,000 in bribes from officials at those nonprofit organizations.
The identity of the two nonprofits was not named.
Neal’s family owns popular Springdale restaurant Neal’s Café. He was first elected to the chamber in 2012 and chose not to seek re-election in 2016. His term ends Sunday (Jan. 8).
The Federal Bureau of Investigations and Internal Revenue Service investigated the case. Sentencing will be scheduled at a later date.
REACTION (Updated info)
Gov. Asa Hutchinson said Wednesday he found the news about Neal troubling, and said it does raise questions about GIF funding.
“The news about Micah Neal saddens me a great deal. It is absolutely unacceptable for public servants to engage in this conduct as it weakens public trust of our system of democracy. It is very troubling, and I hope that all legislators and public servants are not judged by the situation,” Hutchinson said in a statement. “However, this brings to light additional concerns about GIF funding. Although the original intent of GIF was to fund different needs across the state, this funding method is susceptible to abuse, as is the case in this most recent situation. That is one of the reasons why I presented a balanced budget that does not contain GIF funding.”
Sen. Jake Files, R-Fort Smith, chairman of the Senate Revenue and Taxation Committee, said, “GIF funding was beneficial in many different areas, but I don’t see it being around this session or in the future. The governor had already talked about doing away with it, and with today’s revelations, I think it is hard to argue for it.”
Senate Majority Leader Jim Hendren, R-Gravette, pointed out that Hutchinson has proposed a budget without any GIF funding. Part of any surplus would have to go to highways to meet federal matching funds. Only then could any money be left over for GIF.
“The likelihood that there’s going to be very much GIF, if any at all this time, is pretty thin because of the governor’s budget proposal, which I think has got a good chance of being modified very little,” he said.
Hendren said GIF funding should be ended, with surplus funds placed in a trust fund that would be disposed of in the next General Assembly using the normal appropriation process. Funding for special projects should be done in an open process, he said.
“I think we’re going to see some efforts to dramatically change the process and eliminate it as we know it today,” he said.
GIF dollars are now distributed mostly through developmental districts, with those districts conferring with their legislative representatives. Hendren said legislators should play a role in distributing funding to meet certain needs, but the process should be transparent. He said his GIF funding has been directed toward foster children’s programs, to repair washed out bridges, for parks, and for vans that deliver meals to senior citizens.
Hendren said when he was serving overseas with the military, he received more requests for GIF dollars than any other legislative issue “to the point where it was annoying.”
“I told some colleagues … ‘If I do one more thing, it’s going to be change this GIF process when we get back because it’s almost like a drug with some people,’” he said. “They just can’t get enough of it, and it’s become overused and abused. But also like a drug, when it’s used right, you can do great things with it.”
Hendren said, “Right now, I just don’t think there’s a good method for making sure that no funny business goes on.”
Americans for Prosperity Arkansas used the news to again call attention to its effort to end the practice of appropriating funds through the GIF process
“Today’s unfortunate news confirms that the process of allocating taxpayer money through unaccountable General Improvement Funds breeds a culture of public corruption,” David Ray, state director of Americans for Prosperity Arkansas, said in a statement. “The legislature and the Governor should abolish this practice, much like Congress has put an end to earmarks at the federal level.”