By Rob Moritz
Arkansas News Bureau

LITTLE ROCK — Arkansans should have little trouble sinking their teeth into deciding whether to make hunting and fishing a constitutional right, but officials say raising interest rates may be hard to swallow in a struggling economy.

Voters will face those proposed constitutional changes when they go to the polls in November, along with a third measure that would change the financial criteria for luring large industrial prospects to Arkansas.

The Legislature referred all three proposed constitutional amendments to the November general election ballot. Citizens’ groups failed in efforts this year to gather enough signatures to place initiatives on the ballot, including measures that would ban illegal immigrants over 14 from receiving state services and authorize casinos in seven Arkansas counties.

Issue 1 would provide constitutional protection to hunting, fishing, trapping and harvesting wildlife in the state. Its sponsor, Sen. Steve Faris, D-Malvern, who says a constitutional amendment is needed because in some states animal rights organizations have filed lawsuits that have encroached upon hunters’ rights.

Issue 2 is more complex, with three major provisions which would:
—Remove an interest rate cap of 5 percent above the federal discount rate, now .75 percent, on consumer loans, but would leave a 17 percent cap in place. Lenders are currently limited to whichever cap is lower.
—Repeal an interest rate cap of 2 percent above the federal discount rate on bonds issued by or loans issued by or to governmental units.
—Allow governmental entities to issue bonds to finance energy-efficiency projects and use savings from the projects to repay the loans.

Issue 3 would repeal a section of Amendment 82 that restricts the issuance of economic development bonds to major projects guaranteeing at least a $500 million investment and at least 500 new jobs. It would authorize the Legislature to set new financial criteria for the bond issues.

The Arkansas Chamber of Commerce/Associated Industries of Arkansas is spearheading a campaign in support of Issues 2 and 3.

Amendment 82, passed by voters in 2004, was designed to help the state better compete for large-scale projects like automobile manufacturing plants.

The problem with Amendment 82, said State Chamber President and CEO Randy Zook, is that many companies interested in locating in Arkansas offer less than the $500 million investment or 500 employees and need more assistance than the $50 million in the Governor’s Quick Action Fund. The Legislature authorized the fund in 2007 to give the governor flexibility to close economic development deals.

“So, Issue 3 is designed to alleviate the limitations of those thresholds, with very good safeguards in place and protections to prevent abuse,” Zook said.

The two financial amendments are intertwined and together are designed to make the state more competitive in recruiting industry, he said.

“They’re very important to ensuring that Arkansas has all the tools necessary to compete effectively moving forward on industrial recruitment,” Zook said.

The interest rate relief provided by Issue 2 would help facilitate the issuance of bonds for not only the superprojects targeted by Issue 3, but also bonds for other projects such as community hospitals and convention centers, Zook said.

He acknowledged the complexity of the interest rate measure and the difficulty supporters face in getting it passed.

But it is needed, he said, because the state’s interest rates are now tied a federal discount rate that was in double figures 30 years ago when the state’s current usury laws were approved. The discount rate is now set at near zero as part of the Federal Reserve’s effort to jump-start the national economy.

Arkansas’ laws are the most restrictive in the country, Zook said. Originally aimed at protecting consumers, they now restrict credit in the state and impede the ability of local governments to finance important public projects, he said.

“Right now we’ve got ourselves pegged to something that’s not realistic and doesn’t allow us to do the things we need to do to improve community development, to improve industrial recruitment,” he said. “Passage (of Issue 2) is important.”

However, Gov. Mike Beebe said removing the interest rate cap of 5 percent above the federal discount rate “will be a hard sell.” He said he would likely vote for it despite having some concerns.

“I think it will be an uphill battle to get the public to support that,” Beebe said. “There are situations where it would help our business community and where it would help our finance, but I am not foolish enough to think it’s not the real world, and in the real world people are skeptical of paying higher interest rates, particularly right now and for that reason.”

Neil Sealy, executive director of Arkansas Community Organizations, formerly ACORN, said his group plans to study the issue.

“We are definitely going to be looking it,” Sealy said. “We want to listen to what the proponents say but we have generally … opposed efforts to repeal the state’s usury law.”

Rich Huddleston, executive director of Arkansas Advocates for Children and Families, said his consumer group also would review the proposal.