Former Arkansas lawmaker's filing: Return $2.5M of state funds

Published 1 November 2017

Former state lawmaker Mike Wilson wants a central Arkansas economic development office to refund more than $2.5 million in General Improvement Fund money to the state treasury, according to a motion filed Monday in Pulaski County Circuit Court.

But Central Arkansas Planning and Development District Executive Director Rodney Larsen says his office has only about $969,000 in GIF money remaining -- and that is already promised for grants to cities, counties and nonprofits.

The Arkansas Supreme Court ruled Oct. 5 in Wilson's favor in Wilson v. Walther, saying it's unconstitutional for individual Arkansas legislators to direct millions in surplus General Improvement Fund grants to pet projects through regional economic development offices.

Wilson's case targeted the Central Arkansas Planning District in Lonoke, which serves Faulkner, Lonoke, Monroe, Prairie, Pulaski and Saline counties.

The state has eight regional planning districts. Public records show they have awarded more than $50 million in GIF grants from individual legislators since 2013, according to an Arkansas Democrat-Gazette survey of public records.

With the ruling, the high court sent the case back to Pulaski Circuit Judge Chris Piazza. Still to be decided are what happens to any remaining GIF funds, plus attorney fees and other issues.

Monday's filing was the first in the legal battle for any leftover money. Defendants have 10 days to respond.

"There likely will be a hearing," Wilson's attorney, John Ogles, said after filing the motion Monday. No date has been set.

Wilson, a resident of Jacksonville, argues that the planning district should return all $2.5 million in GIF funds it had on hand when he filed his lawsuit in February 2016.

Piazza dismissed Wilson's lawsuit on Nov. 1, 2016, after which the Central Arkansas Planning District resumed issuing grants until the state Supreme Court ruling this month.

"We still have a lot of litigating to do," said Sam Jones III, attorney for the district in Lonoke.

Jones said after the district froze all GIF grants in response to the Arkansas Supreme Court ruling, $900,000-plus was left. But local governments and community groups were counting on that money.

"I want to inform Judge Piazza about the nature of the approved grants that were pending at the time of the Supreme Court decision, the magnitude of those, what they were for, and ask for his guidance on exactly what we tell those people and organizations," Jones said.

One of the most difficult situations, the planning district's director said, involves more than $50,000 in grants promised to help build a monument on the Capitol grounds for Arkansas Gold Star families. The $500,000 project is underway with help from the Hershel Woody Williams Medal of Honor Foundation in Louisville, Ky.

Jacksonville resident Paul Garrett is a Marine, a Vietnam veteran and chairman of the Arkansas committee working to build the monument to honor families that lost members in combat or certain other military service.

Garrett said his group spent thousands to start construction and site preparation because legislators promised almost $100,000 in state grant money through the Central Arkansas Planning and Development District.

"Now we are left holding the bag and trying to figure out how we're going to pay for what we've already signed for," Garrett said.

The Central Arkansas Planning District actually prepared a check for $39,000 for Garrett's committee the first week in October, to be mailed Oct. 6, Larsen said. Then came the Arkansas Supreme Court decision Oct. 5, and GIF grant funding stopped.

Asked what his office will do if Piazza orders a return of the entire $2.5 million Wilson has requested, Larsen said: "We don't have it. I don't know what happens at that point."

Ogles' motion also asks for $4,588.09 in plaintiff's costs and attorney's fees of one-third of the court award to taxpayers.

In addition to Wilson's lawsuit, state General Improvement Fund grant money attracted attention in January when former state Rep. Micah Neal, R-Springdale, pleaded guilty in federal court to one fraud charge involving accepting $38,000 in kickbacks in exchange for channeling GIF grants to Ecclesia College in Springdale and Decision Point Inc. addiction treatment center in Bentonville and related entities.

Former Sen. Jon Woods, R-Springdale, Ecclesia College President Oren Paris III and consultant Randell Shelton Jr. have pleaded innocent to fraud and other charges regarding similar grants. The three face a Dec. 4 trial.

Metro on 10/31/2017