OPINION — Editorial

NWA editorial: Unwanted GIFs

State should end funding controlled by lawmakers

Last year, 2016, will be remembered by the Northwest Arkansas political establishment, if there can be said to be one, as the year of the GIF. It's looking like that may bleed over into 2017, too.

GIF is the state's alphabet-soup descriptor of the General Improvement Fund grant program, a pool of taxpayer dollars created when the state's budget experiences a surplus. Since Arkansas' state government is prohibited from operating at a deficit, surpluses have been a fairly standard result of the budgeting process of the governor and the General Assembly.

What’s the point?

State Sen. Jake Files of Fort Smith has helped create one more scenario involving use of state General Improvement Fund money that should be thoroughly investigated.

GIF money is, largely, a slush fund from which incumbent state lawmakers can dole out favors to whatever organizations they like. Officially, the money flows through eight regional economic development districts that have their own boards of directors, but lawmakers hold sway over where the money ends up. While the money has undoubtedly been put to some good, public-minded uses, it's clear it has also been allocated for uses that cannot be easily justified. Giving lawmakers individual control over large sums of money is a recipe for abuse.

Washington County's political universe was upended last summer when state Rep. Micah Neal, a Republican from Springdale who would probably be county judge had he not withdrawn from the race, entered a guilty plea in federal court to accepting kickbacks. For what reason? According to Neal, it was a scheme involving others to deliver GIF money to certain organizations in exchange for under-the-table payments.

Neal's circumstances launched federal investigations into how GIF money is allocated. Federal officials are mum on what may happen next, but it's hard to imagine Neal's guilty plea as part of a plea bargain is the end of the matter.

Indeed, recent revelations out of Fort Smith increase the odor surrounding GIF funding.

The city of Fort Smith recently canceled a construction contract with state Sen. Jake Files' development firm. The firm was supposed to build a $1.6 million tournament-quality softball complex in the city's Chaffee Crossing area. That project is woefully behind schedule and city leaders are now taking it back to figure out how to get it completed. It was supposed to be done last November. The city has paid Files' entity $1.08 million for work completed since 2014.

An attorney the city hired to review the River Valley Sports Complex contract advised the city "irregularities" surrounding the development firm's efforts to procure bids could violate "laws or regulations of any public body having jurisdiction."

After the project stalled, Files last December asked the city to apply for a General Improvement Fund grant for $46,500 to help with the park project. The city did and, miracle of miracles, the grant was awarded. Ultimately, however, a closer look turned up those irregularities.

What's that mean? City documents show Files told Fort Smith leaders he filled out two subcontractor price quotes that were used to obtain the GIF grant. After the grant was awarded, officials at the development agency that formally awarded the grant had trouble confirming one of the subcontractor's addresses or the company's existence. A similar struggle took place with the second subcontractor.

City leaders said they learned in mid-January that Files had direct involvement in influencing the GIF grant award. That, rightly, unnerved them.

Beyond all that, it appears some of the work Files' firm reported to have done is not done.

Nobody has been charged with any crime related to this convoluted failure of Files' firm to accomplish the job the city of Fort Smith selected him to do.

Files' actions has created questions that need to be answered. His influence over the award of state GIF money to a firm he's involved with at least raises ethical concerns, if not more serious ones. His acknowledgement that he created documents to justify the grant reflects some effort to deceive.

Who knows how that ballpark project will turn out? But if nothing else, Files' handling of it provides one more example of why GIF grants should be eliminated. Senate Bill 325 before the Arkansas General Assembly would cease all such grants on July 1. We support the move.

Also troublesome is Files chairmanship of the Senate Revenue and Taxation Committee. It's galling that a public official in a position of leadership participated in a process that has left his hometown reeling and that has, at a minimum, inappropriately influenced decisions about use of state revenue. Files should no longer be chairman of that committee.

We hope federal or state investigators are looking closely not only at Micah Neal's situation or this episode with Jake Files, but at the way GIF money has been handled throughout the state. It seems when someone starts shining light on these funding decisions and grant uses, few Arkansans will like some of what is exposed.

Commentary on 02/19/2017

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