Top Arkansas Cronies Say They Shouldn’t Have To Defend Cronyism
Last month, some of the state’s top cronies penned a letter to Arkansas gubernatorial candidates, asking them to pledge their support for continued taxpayer funding of their favorite pet projects. According to the authors of the letter, including State Chamber of Commerce CEO Randy Zook, they “shouldn’t have to explain” the benefits of the governor’s Quick Action Closing (Slush) Fund. They should just get the money because, well, they want it. And they want an unqualified promise from each gubernatorial candidate that they’ll give them what they ask for (from the taxpayers, of course).
Here’s a taste of this reality-detached letter:
We shouldn’t have to explain the tactical benefit this incentive plays. Thousands of jobs and dozens of projects in every corner of our state can be traced directly back to this incentive…Incentives are only a part of economic development. But it is short-sided [sic] to think that the targeted funding the closing fund offers is anything but essential to deal-making.
Thousands of jobs. Dozens of projects. How could anyone not support this program? Well, as it turns out, some of us have actually been paying attention to the “success” of this slush fund over the last few years. A lot of them have been abysmal failures. For example:
- There was that time that LM Wind Power got nearly $7 million from the QACF (and millions more from other taxpayer-funded sources) and then went belly up;
- Then there was that time that Nordex got $8 million from the QACF, before it closed up shop;
- And then Hewlett-Packard got $10 million from the QACF before it cut 500 jobs last summer.
So, I guess if you’re measuring success simply in terms of “dollars wasted,” these are all great examples.
Of course, these are just the recent failures that have received significant media attention: taxpayers will never know exactly how much of their money has been flushed down the toilet, because the state economic development commission has successfully insulated themselves from most Freedom Of Information requirements.
In response to the letter from the top cronies, Democratic nominee for governor Mike Ross and Republican nominee Asa Hutchinson both issued statements. Ross was unequivocal in his support for the slush fund, even criticizing Hutchinson for using the term “slush fund.” But I was genuinely impressed with what Hutchinson had to say about the program:
As Governor, before I would reauthorize funding I would require (1) stronger protections for the taxpayers in the clawback requirements when an industry does not create the jobs promised; (2) I would require a cost benefit and risk analysis prior to the release of funds; and (3) there should be greater transparency when a company fails to meet its end of the bargain.
I should be clear: the QACF is a model of an inherently wasteful program that is built on a mistaken and unworkable economic idea. An ideal response from any candidate, in my opinion, would be “Let’s gut it. It’s wasteful, it doesn’t work, and it’s not the proper role of government.” But I understand political realities: Hutchinson wants to look like a builder and a reformer, not a destroyer. With that said, his statement — which just so happens to incorporate some of AAI’s suggestions for QACF reform — shows an impressive commitment to moving Arkansas in the right direction on this issue, albeit incrementally. If Hutchinson becomes governor and is successful in implementing these reforms, taxpayers will be the beneficiaries.
Cutting corporate welfare and short-circuiting cronyism is truly a bipartisan issue. It is simply common sense that, at a minimum, if taxpayers are going to be financing large corporations, they should have the ability to know how that money is being spent and recover some of those funds if the subsidized entities fail to meet their promises. Hutchinson’s proposals are serious and necessary. In stark contrast, Ross’s failure to identify any concerns about the slush fund is alarming and disrespectful to hard-working Arkansas taxpayers.
(By the way, if you’re interested in this topic, check out my new colleague Caleb Taylor’s latest story about another cronyist program that’s failing to provide a positive return for taxpayers.)