Amendment would let Arkansas cities contract for economic development

Voters will consider up to nine ballot issues in November, members of the Arkansas Municipal League were told Thursday at their Annual Convention, including one that would allow them to contract with private entities for economic development.

Issue 3 would amend Article 12, Section 5 of the Arkansas Constitution to allow city and county governments to obtain and appropriate money for private entities for economic development projects and to provide economic development services. It also would amend Amendment 62 so local governments could issue bonds for “economic development projects.” Currently, the wording is “industrial development purposes.”

Article 12, Section 5 says, “No county, city, town or other municipal corporation, shall become a stockholder in any company, association or corporation; or obtain or appropriate money for, or loan its credit to, any corporation, association, institution or individual.”

Kristin Higgins with the University of Arkansas Cooperative Extension Service’s Public Policy Center told attendees the issue defines some terms broadly.

“Economic development services” can mean planning, marketing, supervision of industrial parks and other responsibilities. “Infrastructure” can mean everything from land acquisition to railroad spurs to environmental mitigation.

The issue would amend Amendment 82 by removing the dollar limit on state bond issues for  economic development projects, which currently is 5 percent of state general revenues, or about $317 million, she said. The amendment includes other provisions, including one that would allow the General Assembly or local legislative bodies to use other taxes beyond special taxes to retire bonds. It also repeals a requirement that bonds be sold only at public sale. The Legislature can amend the amendment with a three-fourths vote in each house.

The proposed amendment grew from a court case, Lynch v. Stodola, decided last year, said Little Rock City Attorney Tom Carpenter. The Pulaski County court decided that a contract between the city and the Greater Little Rock Chamber of Commerce wasn’t a contract because it violated Article 12, Section 5. The case is under appeal. Carpenter said the ruling potentially affects how municipalities do business.

“A lot of us recognize that we can’t give money to an individual in Arkansas or a corporation in Arkansas, so we contract for services that we want provided to our citizens but that we don’t have the ability or the resources to provide ourselves,” he said.

Those would include a contract with a Boys and Girls Club or a contract with entities that serve the elderly, he said.

Carpenter said the amendment “opens wonderful opportunities for local governments. The Chambers have worked with the League to make sure that there is statutory language that is going to be introduced at the next General Assembly and support it, and our hope is, is that it will get in unscathed because it’s got safeguards and protections in there.”

However, he warned attendees to be cautious, saying that it something sounds too good to be true, it probably is.

Issue 3 is one of three amendments referred to the voters by legislators. Issue 1 would increase the terms of county officials other than justices of the peace and constables from two years to four years. It also would prohibit elected officials from being appointed or elected to a civil office, and would allow unopposed candidates to not appear on the ballot. Issue 2 would allow the governor to keep his or her powers when traveling out of state.

Higgins offered a review of five potential constitutional amendments and one initiated act for which various citizen-led groups are collecting signatures. The deadline for collecting those signatures is July 8.

Three deal with medical marijuana, including two that would allow it for medical use. One, the Arkansas Medical Cannabis Act, is an initiated act, meaning it would have the force of law but not be enshrined in the Constitution. It would allow patients and caregivers living more than 20 miles from a dispensary to grow their own marijuana. Another, the Arkansas Medical Marijuana Amendment, would be a constitutional amendment and would not allow users to grow their own plants. The third marijuana-related initiative, the Arkansas Cannabis Amendment, legalizes marijuana entirely and would release from jail, probation or parole all state prisoners convicted of marijuana-related crimes, and expunge their records of these state crimes.

The other three amendments being circulated by citizens are:
• The Arkansas Term Limits Amendment, which would reduce the total number of years a legislator could serve from the current 16 to 10, with House members allowed no more than three two-year terms and senators allowed no more than two four-year terms.

• One that would limit attorney contingency fees in medical injury cases to 33.3% of recoveries and would require the Legislature to set limits on noneconomic damages of no less than $250,000. Higgins said the amendment allows legislators to pass laws regarding the value of periodic payments, whether life expectancy should be considered in medical lawsuits and other issues.

• An amendment that would allow three entities to operate a casino in Miller, Washington and Boone Counties.