Gov. Hutchinson tells state Municipal League: Time to end GIFs, unfunded mandates

In a strongly-worded pronouncement to city leaders and municipal officials from across the state, Gov. Asa Hutchinson on Thursday (Jan. 12) said he will urge the legislature to do away with General Improvement Funds (GIFs) to local communities and threatened to veto any “unfunded mandates” that crossed his desk during the 2017 general session.

Hutchinson was the keynote speaker at the annual state convention of the Arkansas Municipal League, where he combined snippets of his recent “State of the State” address to the 91st General Assembly on Monday with a fast-moving overview of economic and policy successes of his administration in the past two years.

Halfway through his 20-minute address at the downtown Little Rock Convention Center, Hutchinson appealed to the overflowing crowd of more than 1,000 Municipal League members that it was time to end the disbursement of GIFs through the legislature after Rep. Micah Neal, R-Springdale, pleaded guilty last week to one count of conspiracy to commit honest services fraud.

“I understand what we call the GIF funds, and that many of you have come up to me and said, ‘that has been so helpful to our community or we might not have gotten it otherwise,’” the governor said. “But today, our state revenue needs to be utilized for state purposes first of all, and secondly, we understand that GIF money has been abused.”

Hutchinson continued: “It is undeniable because we just had an indictment, actually a guilty plea, that a legislator – to our great chagrin and to the chagrin of all the legislators who deal honestly with it – passed out that GIF money with great corruption and it was a federal offense.”

Last week, the U.S. Department of Justice (DOJ) said Neal conspired with an unnamed Arkansas state senator to use their official positions to appropriate GIF money to two nonprofit organizations in exchange for bribes. The DOJ indictment said 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 nonprofits. 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.

Although the identity of the two nonprofits was not named, Hutchinson said he fully expects more people will soon be indicted in the federal case.

“There are going to be more charges coming in that area,” he said. “So, I am setting the stage that I do not support legislative money in the GIF budget this year. Now, I want to say that because I see some legislators out there who have done it the right way and I respect them for it.”

Hutchinson, who has not included any GIF funding in his $5.5 billion budget, said his administration and the legislature is focused on funding statewide needs through the Rural Services Department that aids local communities. He said if this year’s “tight budget” has an any additional funding after statewide priorities are addressed, he will ask lawmakers to target those funds to local community needs across the state.

“So there is a proper way to get those resources to communities who need it,” he said. “As we have additional funds …, I am open to that discussion, but we have to do it in the right way.”

Hutchinson also received applause from the audience of local community leaders  and municipal officials when he said he would seek to halt the practice by state legislators of Introducing bills affecting local communities and cities that don’t include funding.

“While we all want to have good statewide policy, I want to continue to push against the unfunded mandates on our cities that have to bear the burden of it,” the governor said. “When a bill comes to my desk, I am going to look at it in [this] prism: ‘What does this do in terms of local control? Is there a necessity for statewide policy, and is it mandate that costs more money that we are not helping you with?’ So, I assure you that I listen to you, I want to hear your voice in terms of the legislation as it is developing during this session of the legislature,” Hutchinson said.

After his speech, Hutchinson told reporters he has not targeted any specific legislation that fits the criteria of an unfunded mandate, but noted there was legislation filed in the 2015 and the current session that are not necessary.

“I’ve noticed there is a trend that the state says: ‘We don’t want the cities doing this, we don’t want the cities doing that,’” the governor explained. “So, there’s a number of bills filed and they generally have merit for discussion, but as I have always said my inclination is to give that to local options for local governments.”

In advance of the 2017 session, a number of bills were filed affecting 2nd amendment rights, sanctuary cities, bus safety, local school requirements and other controversial issues some critics say impose unfunded mandates on local communities.

Earlier in his Municipal League address, Hutchinson also thanked city leaders from across the state for their strong backing in the Nov. 8 election of Issue 3, the initiated act that removed the cap on debt financing for so-called “super projects” and allows local governments to use public funds to obtain assistance and services from third parties designed to enhance economic development.

Hutchinson also asked members of the state organization that represents more than 500 cities and towns across the state for its backing for his $50.5 million tax cut and other policy initiatives outlined in his recent “State of the State” address.