J.R. Davis, the governor's press spokesman, provided me with some additional information on the $87 million state bond issue
Gov. Asa Hutchinson wants to help Lockheed Martin
expand a Camden facility to produce military vehicles, if it wins the federal contract.
Total Amendment 82 Bond amount: $87,145,000
Cash grant to the Company for qualifying building and infrastructure improvements, equipment, and other eligible costs incidental to the project: $83,000,000
Training grant to be used for construction and equipping of training facilities at Southern Arkansas University Tech: $1,645,000
Payment of the State’s bond issuance costs, debt service reserves, and other eligible financing costs incurred or paid by the State: $2,500,000
No other statutory or discretionary incentives are included.
This is a grant to Lockheed Martin.
Lockheed Martin, if awarded the contract, will enter into a 25-year commitment with the state of Arkansas. A detailed summary of the project and agreement will be released Friday. If the project falls through or if Lockheed Martin is not awarded the project, the deal is dead and Arkansas is off the hook for the money.
The payback of bonds for the state is dependent upon market conditions at that time. It will be somewhere between 15-20 years.
In other words, the state of Arkansas will sell bonds so as to give Lockheed Martin $83 million in return for a promise to hire employees. It will cost more than $83 million to pay back the bonds, because they will carry interest, depending on market when sold, for the 15- to 20-year repayment period.
A report is expected this week from a consultant on a cost-benefit analysis of the deal. I've requested a copy.
It's an $83 million handout from one of the country's poorest states — a state that just omitted the bottom 40 percent of its workers out of a $100 million income tax cut — to subsidize federal defense spending with a company whose annual revenue is nine times bigger than state general revenue annually ($45 billion to $5 billion). Perhaps Sen. Jim Hendren could explain how this is the free market at work. Or maybe Sen. Tom Cotton, who likes to talk about welfare recipients who drive luxury SUVs to the grocery to pick up government-paid lobster and filets. I wonder if those SUVs have a Lockheed Martin logo on the side.