On November 2nd the voters of Arkansas will once again be asked to address the issue of providing government incentives to attract businesses to our state under the auspices of creating jobs by modifying the existing language of Amendment 82 passed in 2004. The tag line in this morning's ADMZ labeled it "Toss business-lure rules, voters urged". Specifically, under proposed Issue 3, the current requirement that target companies spend at least $500 million in capital expenditures and create at least 500 new jobs would be eliminated, thus allowing greater flexibility in appealing to a wider range of businesses, as few companies can meet the above criteria. The exact language can be found at http://votenaturally.org/2010_elections/hjr1007.html.
While such corporate subsidies have been used successfully in Arkansas, as well as surrounding states, I have always been struck by the irony of how readily corporations are to accept these gifts, more commonly termed "incentives", from the taxpayers while at the same time the business world in general seems to always decry taxes of any kind. In addition some of these arrangements appear to be disproportionate to the size of the investment. For example, it was recently announced that the City of Fort Smith is getting ready to pony up $80 million in incentives including bonds and infrastructure improvements, to attract a $100 million wind turbine plant. Gosh, what business wouldn't love to have that same level of help. And then there is the validity of the impact studies themselves that are made to justify these commitments which, we assume, are based on realistic and supportable data. Since there is virtually no public transparency about these deals, even though public funds are used to finance them, it's impossible to know. (This same argument was made for government contributions to local Chambers of Commerce in great detail in an April 4th article in the Arkansas Democrat-Gazette, but that's a possible issue for another day). The absence of transparency is, in fact, exactly why the Arkansas Public Policy Panel refuses to take a position on Issue 3. And, finally, what follow-up is made after these funds are expended to verify those impact studies, and what happens if the level of job creation on which they were based does not materialize? Or what happens if there are general employment layoffs after the fact as has occurred during this economic downturn? Does the state get its money back? Also, there are the contemporaneous "incentives" from cities and counties which historically are offered, too, which need the same level of scrutiny and safeguards, not to mention the $1.6 trillion in cash corporations are now sitting on which raises the question of why they even need financial help in the first place.
No one, including me, will argue with the need for governments at all level (i.e. city, county and state) to create a business friendly environment to attract companies and create jobs. My only point is that the taxpayers within those government locals need to be assured that the highest level of economic justification is made before doling out those dollars, as well as a continued assessment of that investment to ensure that all job creation benefits actually accrue to the city, county and/or state as proposed. If not, then there should be a mechanism to recoup that taxpayer investment, in my view. That said, I am confident that Issue 3 will no doubt pass, as the need to keep up with the competition and pressure to address employment issues are simply too great.
Laura Raborn at http://paintingsofhome.com and http://claygifts.com
Jim Johnson at http://yessy.com/jimjohnson/gallery.html
Russ Powell at http://powellphotos.com
Linda Flake at http://lindaflake.com
Tom Herrin at http://tommysart.blogspot.com
Matt McLeod at http://firstname.lastname@example.org
Artists Registry at http://www.arkansasarts.org/programs/registry/default.aspx
Sandy Hubler Fine Art at http://sandyhublerfineart.com
George Wittenberg at http://postcard-art-gallery.com
Local Colour Gallery at http://localcolourgallery.com
Chroma Gallery at http://chromagallery.com
Cantrell Gallery at http://cantrellgallery.com
Greg Thompson Fine Art at http://gregthompsonfineart.com
Red Door Gallery at http://reddoorgalleryonline.com
M2 Gallery at http://m2lr.com
UALR Gallery Program at http://ualr.edu/art
Gallery 26 at http://gallery26.com