Amendments 19 and 20

Amendments 19 and 20 to the Arkansas Constitution, which are commonly referred to as the Futrell Amendments, sharply restricted the ability of the legislature to levy taxes, spend the funds, and incur debt. Ratified in the general election in 1934, the amendments went beyond the laws of any other state in limiting the fiscal powers of the legislature and were supposed to guarantee austere and limited government for posterity. The restrictions on borrowing stated in Amendment 20, which required a statewide popular vote before the state could borrow money for public improvements, were loosened in 1986 by Amendment 65, after the Arkansas Supreme Court handed down a strict interpretation that seemed to outlaw what were known as “revenue bonds,” which the court had previously said did not violate Amendment 20.

The amendments, proposed by Governor Junius Marion Futrell in his first inaugural address in 1933, were intended to stymie the growth of government and make it so hard to raise taxes and pass appropriations that the state government would never again undertake responsibilities that were not strictly necessary to protect the “natural rights” of people. In proposing the two amendments, Futrell claimed that Arkansas’s “staggering load of taxation” and debt had driven people to madness and to the verge of revolt. (Arkansas’s taxes actually were low, but its debt was high.)

The legislature put both amendments on the ballot, and Futrell campaigned for them in 1934, saying in a statement three days before the election that taxing, borrowing, and spending were really “war powers,” and that state governments should not exercise them but engage only in activities that were necessary to secure people’s rights. He said Amendment 19 would prevent the legislature from raising tax rates. Voters seemed baffled by the two amendments. Amendment 19 particularly was clumsily worded and subject to many interpretations. Only fifty-seven percent of people who went to the polls that day voted one way or the other on them. Nevertheless, the amendments were ratified.

Futrell was quickly proven wrong about the amendments preventing tax increases. Within a few days of the amendments becoming law, Futrell found himself desperately prodding the legislature to raise taxes and increase spending. Even before the vote on the amendments, Futrell had signed a law at an emergency legislative session raising gasoline taxes to pay bonded highway debt. Over the next forty years, the state and its institutions found many ways to avoid the borrowing strictures in Amendment 20.

Regarding taxes, Amendment 19 stated that existing rates could never be raised except by approval of the voters at a statewide election or, in case of an emergency, by a three-fourths vote in each house of the legislature. The state at that time levied income taxes, excise taxes on cigarettes and gasoline, property taxes, and business privilege taxes. Regarding spending, the amendment said the legislature could never appropriate more than $2.5 million for a two-year period for all purposes. It could exceed that sum only by the votes of three-fourths of each house. It seemed to make exceptions for appropriations for education, highways, Confederate pensions, “just debts of the state,” and perhaps for “necessary expenses of government,” which like other laws would require only a majority vote. The appropriations for 1935 alone far exceeded the two-year limit of $2.5 million.

Amendment 20 prohibited the state from issuing bonds pledging the state’s credit and revenues without the approval of voters at a statewide election, except for re-funding the state’s big highway debt or assuming and re-funding district road bonds.

What may seem today to be wildly erratic behavior by Futrell regarding taxing and spending must be understood in the context of the prevailing economic conditions of the time—the worst since the Civil War. By 1932, when Futrell ran for governor on a platform of ending waste, corruption, and fiscal recklessness, Arkansas lay prostrate, the most destitute state in the union, as a result of twenty years of reckless road-building financed by local and state bonds along with massive corruption and waste in road contracting; the catastrophic Flood of 1927, which washed out 511 bridges and hundreds of miles of roads; the Drought of 1930–1931, which ruined small farmers and devastated the plantation economy; and, finally, the Great Depression, which left much of the population jobless and hungry. Governments were financially unequipped to pay for much beyond their obligations to bondholders. Arkansas’s per-capita income exceeded that of only Mississippi, and it had by far the highest public debt per capita in the country. Its debt exceeded that of every other state except the much larger states of New York and Illinois. It was the only state to default on any of its debt. Much of the state money that was not committed to paying bonds went to the payment of pensions to Confederate soldiers. Arkansas spent more on Confederate pensions—nearly $3.5 million in 1930—than any other southern state, even though it was the least populous.

The federal government stepped into the breach. Although states were supposed to bear some of the costs of relief jobs and food provided by the Federal Emergency Relief Administration (FERA) and other New Deal agencies, alone among the states Arkansas did not, as it had no money. Campaigning for governor in 1932, Futrell had promised to cut state spending by half and lower taxes. He kept the promise in 1933, slashing spending by fifty-one percent and lowering some taxes. The federal government bore the full cost of the jobs program, commodities, most highway work, and the meager pay of most of the state’s public school teachers.

In 1934, Harry L. Hopkins, director of the FERA, began to warn that Arkansas would have to raise taxes and pay some of the relief costs as other states did or the federal government would withdraw its aid. Widespread criticism of the federal relief administration in Arkansas reached Washington DC, along with the intense publicity about the treatment of tenant farmers in Arkansas, where plantation owners were in charge of the distribution of relief.

Futrell’s notions about the poor and the role of government seemed to evolve over his first two years as governor, even as he was campaigning for the two amendments that he believed would put the state on a permanent path of austerity and limited government. His second inaugural speech focused on the state’s needs, and he was soon urging the legislature to find more “revenue”—he found it hard to use the word “taxes” in that context. He issued statements thanking the federal government for helping Arkansas and said Washington had every right to think Arkansas was ungrateful since there had been so much carping from the state. FERA director Hopkins finally gave Arkansas a deadline: it would produce at least $1.5 million for relief and teachers’ pay by March 1, or every form of relief to Arkansas would be ended. Fearing riots when federal aid ceased, Futrell addressed a joint session and pleaded with lawmakers to pass an emergency revenue (tax) bill that he was preparing or a package of their own. In the last three days of the session, the legislature passed a two-percent sales tax, legalized the sale of liquor and taxed it, legalized dog racing and taxed it, and collected new taxes on pari-mutuel betting at the Hot Springs (Garland County) thoroughbred racetrack. A few of the appropriation bills did not get the three-fourths vote that seemed to be needed in the Senate under Futrell’s Amendment 19, but the presiding lieutenant governor declared them to have passed anyway, and Governor Futrell signed them into law.

Since 1934, Arkansas has been the only state to require seventy-five percent of the members of both legislative houses to raise most tax rates or approve most appropriations. A few states have required sixty or sixty-seven percent. There is little evidence that Amendment 19 ever restrained either taxes or spending, but it delivered power over those decisions to a minority of one-fourth of the members in one house or the other. Amendment 19 meant that whenever the legislature and governor determined that more revenues were needed, they turned to the sales tax or other taxes that did not exist in 1934, which could be raised by a simple majority.

Particularly after the modern revenue distribution law was enacted in 1945, defeating an appropriation did not mean that the money was saved but, instead, that it would be spent somewhere else. Small blocs of legislators occasionally used the three-fourths requirement to gain leverage at a state agency.

After the state adopted an entirely new fiscal system with the Revenue Stabilization Act of 1945, the meaning of Amendment 19 became more unclear, and the courts wrestled with how to interpret its already confusing sequence of sentences and phrases. When Futrell wrote Amendment 19, taxes and fees were levied for specific purposes, and each tax usually emptied into its own fund. Then money was appropriated from those funds. After 1945, most taxes went into the vast general fund, and appropriations for schools and most other purposes were from that fund. Whatever money accumulated in the general fund was distributed among all the appropriations from that fund on a percentage basis. So courts had to guess how Futrell or the voters might have intended Amendment 19’s restrictions to apply to appropriations that were not from a single tax fund. In a 1951 case (Humphrey v. Garrett), a unanimous Supreme Court was confused about how the state’s new fiscal system worked and how Amendment 19 should be applied to appropriations from the state’s general revenues.

Amendment 19 caused many minor squabbles over passing appropriations with the supermajority over the years, but there were two big crises. In 1989, the Arkansas Supreme Court declared (Fisher v. Perroni) that the general appropriations bill for the legislature, courts, and constitutional offices should have received a three-fourths vote rather than a simple majority, and thus invalidated some 500 appropriations that followed it—every penny that the state could spend the next fiscal year. The ruling was handed down less than two weeks before the new year began, so the legislature assembled in a hasty special session to pass all the appropriations again to prevent the government from shutting down.

The most dramatic consequence was in 2013 and again in 2014, when blocs of Republicans in the Senate and House of Representatives sought to block the implementation of health insurance for the very poor under the federal Patient Protection and Affordable Care Act by withholding the extraordinary vote for the appropriation for Medicaid programs the next fiscal year. In 2014, it took multiple roll calls over several days to reach the seventy-five-vote minimum in the House of Representatives, but the bill passed and became law.

Governments got around the strictures in Amendment 20, the debt amendment, by asserting that the state’s credit and revenues were not committed if bonds were to be repaid from revenues generated by the project, even if the state’s full faith and credit was pledged as backup to sell the bonds. The Arkansas Supreme Court eventually invalidated the practice (City of Hot Springs v. Creviston, 1986), but an amendment was quickly drafted and put on the ballot that year to legalize revenue bonds again. It was ratified as Amendment 65.

For additional information:
Donovan, Timothy P., Willard B. Gatewood Jr., and Jeannie M. Whayne. The Governors of Arkansas: Essays in Political Biography. 2nd ed. Fayetteville: University of Arkansas Press, 1995.

Dougan, Michael. Arkansas Odyssey: The Saga of Arkansas from Prehistoric Times to Present. Little Rock: Rose Publishing Company, 1994.

Fletcher, John Gould. Arkansas. Fayetteville: University of Arkansas Press, 1989.

Johnson, Ben F., III. Arkansas in Modern America since 1930. 2nd ed. Fayetteville: University of Arkansas Press, 2019.

Ernest Dumas
Little Rock, Arkansas