Past Financial Disasters Show ISSUE 3 Is Dangerous
Proponents of ISSUE No. 3 say it is all about jobs and economic development. Actually, it is all about corporate welfare for the few.
Because of politician made financial disasters, the people of Arkansas imposed limits on issuance of bonds and prohibited cities and counties from appropriating your money to private corporations. Issue No. 3 repeats the mistakes of the past.
Here are two hard lessons from the past and how Arkansans responded:
- Arkansas Defaulted on its bonds. In 1929 Arkansas was near the bottom in per capita wealth but first in per capita indebtedness. Then the Depression hit and from 1933 to 1935 Arkansas defaulted on its bonds.[i] The state struggled for years to work its way out of the mess. “In 1934 the legislature responded to its financial struggles by passing two state constitutional amendments. The first put limits on spending and barred increases of tax rates without voter approval, or, in emergencies, approval by three quarters of the legislators. The second barred the state issuing of new money bonds without voter approval.”[ii]
Over the years, politicians have chipped away at the restriction on issuing bonds. Issue No. 3 destroys the protection by allowing the legislature to pledge an unlimited amount of your money for bonds to give to big business.
- Oppressive taxes for local bond issues. When our Arkansas Constitution was being written “the people of the state at large and of many of the counties and municipalities were burdened with oppressive exactions of taxation laid for the purpose of paying bond issues and guaranties of bond issues, of public and quasi public corporations, granted ostensibly in aid of railroad, and levee building and other such projects, but which projects in reality were never consummated and from which the people themselves received no benefit whatever.”[iii]
In response, the drafters of our Arkansas Constitution of 1874, sought to protect the people by including this restriction: “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.“[iv] Issue No. 3 destroys this protection by allowing local governments to:
- Appropriate money for corporations and even individuals to finance economic development projects, and
- Give money to the Chamber of Commerce and even to individuals to do economic development.
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Issue No. 3 asks you to just trust politicians to not overburden you with debt. Arkansas trusted politicians in the past and it brought economic chaos. So why would you trust them with Issue No. 3?
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“Those who don’t know history are doomed to repeat it.” ― Edmund Burke
[i] http://www.bondbuyer.com/news/regionalnews/arkansas-1930s-default-foreshadowed-puerto-rico-1088386-1.html
[ii] http://www.bondbuyer.com/news/regionalnews/how -arkansas-solved-its-1930s-debt-crisis-1088492-1.html
[iii] 249 S.W. 360, Bourland, BOURLAND, Mayor, et al. v. Pollock et al. (1923)
[iv] Section 5, Art. 12, of the Arkansas Constitution