In 2002, Marion, a town of about 9,000 people on the edge of eastern Arkansas, tried very hard to persuade Toyota to build a pickup-truck factory nearby. It would have put hundreds of people to work in eastern Arkansas, which is the poorest and neediest part of the state.
Even though Marion was ideal for the plant — cheap electric rates, next to interstate highways and close to the Mississippi River, the Memphis international airport and thousands of people wanting better jobs, etc. — Toyota was anxious to get underway so it decided to go to Texas.
Why? Texas as well as South Carolina, Missouri, Mississippi, Tennessee, Oklahoma and many other states have laws that allow their legislature to issue bonds for economic development projects right away. Arkansas offered to issue bonds for Toyota, but it would have taken awhile because in this state everyone has to vote on such bonds, a long, complicated and expensive procedure that could easily be defeated if the people didn’t understand the project or resented it because it was not going to be in their county.
So there will be an attempt on Nov. 2 to persuade Arkansans to vote for an amendment to the Constitution that would enable the legislature to decide whether to issue bonds to help large companies wanting to come to Arkansas. The amendment says that the legislature can issue bonds only to help finance companies that agree to spend at least $500 million in Arkansas and hire at least 500 new employees — a way to bring big business and high-paying jobs just like it’s done in other states. Bonds to help build stores, office buildings and small factories coming into a county or town will have to be voted on by the citizens who live there just as they do now.
Also, the amendment (it’s No. 2 on the ballot) puts a limit on the amount of bonds for economic development projects — 5 percent of the annual state revenue, which sets a limit of about $180 million. The money could be used for infrastructure, buying land, building roads and railroad spurs, site preparation, employee training and other unspecified purposes. It’s estimated by Jim Pickens, the former chief of economic development and the leader of the coalition supporting the amendment, that paying off $100 million in bonds would cost the state about $8 million a year for 20 years.
Last week an Arkansas Democrat-Gazette poll showed that 51.2 percent of people planned to vote yes for this amendment, but many persons in all areas said they had not made up their minds. What’s responsible for some of this is that several newspapers (including the Arkansas Times) have said they were opposed to the amendment because of these complaints:
What if the company goes broke and leaves? Not very likely when dealing with the biggest companies. Also, another company might want to move into the structure.
Could the legislature vote to issue bonds more than once for one of these large companies? The amendment doesn’t say that it couldn’t, but Pickens said it would be "inconceivable."
Do legislators have the ability to decide whether a company is worthy of this kind of help? Even if the legislature doesn’t have the ability, the backers say bond proposals will be reviewed by the governor and the experts in the Arkansas Department of Economic Development and the Arkansas Finance Development Authority.
Nothing is said about monitoring to see that the company lives up to the requirements. A method to do this will be worked out in enabling legislation passed by the legislature.
Without being asked or ordered, the University of Arkansas of Little Rock’s Institute of Economic Advancement has made a study of what effect a major auto assembly plant would mean to Arkansas. In 10 years, the report says, it would add $1.5 billion to the gross state product and create 12,700 new jobs. The average yearly salary would be $68,000. Other auto supply plants would come to the area, creating 3,000 more jobs, and 6,700 other jobs would be generated in house construction, etc.
Amendment 2 should be adopted. Governor Huckabee and the leaders of both houses of the legislature, Jim Argue, president pro-tem of the Senate, and Jay Martin, the majority leader in the House, are in favor of it. So is every business organization in the state.
Northwest Arkansas is the state’s only growing area, and that’s because several big companies like Wal-Mart are there hiring many people. Young people in other areas are leaving Arkansas when they finish school, and the only way to stop this is to create more and better jobs. Pickens says, "I want to stop the brain drain."