Where the money goes
Posted: January 15, 2014 at 5 a.m.
So we’ve successfully interred poor ol’ Mark Darr in deep shame for helping himself literally to hundreds of taxpayer dollars on his state government credit card.
Perhaps now we could turn our attention, if but for a moment, to the irony of how real taxpayer money can get spent sometimes.
By “irony” I refer to extolling the virtues of a detached government and a private market economy when, in fact, we often combine them into a hybrid that is neither.
By “real” money I mean millions of dollars coming out of the state and federal treasuries to invest your tax dollars in some other guy’s private enterprise.
It’s all legal. It’s all intended to stimulate our economy and provide jobs. It’s all designed to enhance economic opportunity. It’s all … worthy of a little exposure to light from time to time, shall we say.
Right now all of us are invested in the network television business targeting black markets.
You and I and all other state income taxpayers essentially are part benefactors and part owners of Soul of the South. That’s a Little Rock-based fledgling television network emphasizing African-American programming and targeting black populations primarily in the South, but also in major metropolitan areas nationwide.
It may be a swell idea. Certain folks seem to think so, by which I refer to the Arkansas Development Finance Authority, the Arkansas Economic Development Commission and the Arkansas governor’s office.
Gov. Mike Beebe, by the way, has received substantial political backing from Richard Mays of Little Rock, the chairman of Soul of the South who is a former justice of the Arkansas Supreme Court and, before that, was the first black state legislator elected in Arkansas in the 20th Century.
Grant Tennille, the governor’s director of the Economic Development Commission, told me that Mays was not among the persons directly communicating with his agency to seek state subsidies for the venture.
He said Beebe knew nothing of the matter or its investors until Tennille’s department recommended that he release a half-million dollars from his Quick Action Closing Fund. That money was needed so that Soul of the South could renovate a building in the Markham-Shackleford area for a newsroom.
Actually, though, Soul of the South says on its website that “the combination of private investments and state incentives was orchestrated largely through the combined efforts of lead investors Judge Richard Mays” and others.
Perhaps “orchestrating” and making your participation known to your friend the governor are two different things. Perhaps Mays himself orchestrated only the private side.
So here’s the deal:
In 2010 the Obama administration, trying to stimulate the economy, set aside a sum of money at the federal Treasury Department that states could qualify to tap to make direct equity investments in new business ventures.
Arkansas designated the Development Finance Authority, which coordinates various forms of public private finance, to administer the program locally.
That agency has qualified for $13.7 million, of which $1 million was given on a contingency basis to this Soul of the South enterprise. The venture, based in Little Rock, intends to employ 150 or more persons in good-paying jobs.
The contingency was that the investors had to raise $4 million privately to get the state’s $1 million. They succeeded in that, but did so with $1.7 million of that privately raised $4 million essentially underwritten by state taxpayers.
That’s because the Economic Development Commission granted the venture the authority to sell investors “equity investment tax credits.” Those devices permitted $1.7 million in private investments in Soul of the South to be taken directly off tax liabilities that otherwise would have flown into the state treasury to join your tax remittances in paying for services.
So that’s $2.7 million—$1 million from Washington through the Development Finance Authority, which was contingent on $4 million that the venture raised in part by selling $1.7 million in forgiven state income taxes.
The $1 million from the Finance Authority bought a direct equity position for the agency that the private investors presumably would buy out as they achieve success.
But then, using a mortgage provided by the private nonprofit Arkansas Capital Corp., the venture bought a building that then needed renovating so that it could provide the network with a newsroom for news programming targeting the market areas.
So that was the $500,000 that the Economic Development Commission recommended the governor tap from his Quick Action Closing Fund. That’s the pot of money supplied by surplus taxpayer dollars to provide the governor discretion and flexibility to get new-job opportunities locked down with late-deal incidentals.
Beebe—otherwise oblivious, according to Tennille—said OK.
So we the taxpayers have put a total of $3.2 million in this television venture, which is not yet available on Comcast Cable in Little Rock.
That would buy a lot of gasoline to get a lieutenant governor’s pickup between Springdale and Little Rock.
But Darr was outside the law. This is within the law and potentially productive—and a lot more money, all at risk.
We can hope for smashing success, which I would describe as steady, good-paying jobs beaming a thriving television network from home offices in Little Rock.
John Brummett’s column appears regularly in the Arkansas Democrat-Gazette. Email him at email@example.com. Read his blog at brummett.arkansasonline.com, or his @johnbrummett Twitter feed.