A group originally founded by major investors in the Big River Steel mill project is voicing its opposition to the $1.1 billion deal.
On March 21, Americans For Prosperity’s Arkansas chapter sent an email to legislators titled, “Big River Steel: A Bad Deal For Arkansas Taxpayers.”
AFP was founded with the support of David H. Koch and Charles G. Koch, both of Koch Industries, which will be a 40% stakeholder in the steel mill superproject with a $120 million investment.
The AFP email begins with a note from Teresa Crossland-Oelke, Arkansas director of AFP. She says, “I hope that you take a moment to ask yourself if the cost of this plant being built here at home is worth the amount of money for which Arkansas taxpayers will be on the hook.”
AFP was influential as a third party independent expenditure group sending mailers in support of successful candidates in the 2010 and 2012 elections that led to Republican majorities in both chambers of the Arkansas legislature. The group’s stated mission is to educate and inform voters and lawmakers on issues related to smaller government and economic freedom. Its policy positions carry significant weight with conservative legislators.
The email further criticizes nearly $325 million in tax breaks, grants, loans – some of which are a part of a $125 million bond issue Arkansas lawmakers are being asked to approve, some of which is tied to performance-based incentives if Big River Steel launches in Arkansas.
“The state will need to issue $125 million in new bonds to pay for the new grants and loans and, even under the most optimistic of assumptions, will not receive the full $50 million loan back,” the AFP email states. “Even the head of the Arkansas Economic Development Commission said this deal ‘is not without risk.'”
State economic development officials and a study of the project conducted by Delta Trust and Bank contradict the AFP assertion on the loan’s payback. Both have both indicated the state would likely see the $50 million loan paid off within 4-6 years.
The AFP email also contends that financial incentives do not matter as it relates to this project.
“Companies will always ask state and localities for hand-outs; the less of their money at risk, the better. In the end, these incentives are not what truly attract a company to an area. Big River Steel was offered even more funding from the state of Mississippi, but it chose Arkansas instead,” the email said.
Big River Steel officials did consider sites in Mississippi, but it denies that Mississippi extended an offer to locate the project in that state.
Oelke offered an additional statement to Talk Business Arkansas for this article:
“AFP is opposed to the Big River Steel Legislation. We have consistently advocated for equal opportunities for all Arkansas businesses and opposed economic development carve outs that benefit only a few. AFP doesn’t fault businesses who pursue incentives. Companies will pursue state and localities for hand-outs; less of their money at risk, makes good business sense for them, but not for taxpayers.
“According to the Tax Foundation, Arkansas’s state business climate ranks 33rd, well below regional peers such as Kansas, Texas, and Tennessee. This ranking shows how heavy the tax burden is on existing Arkansas businesses and why the state has to offer large incentives to attract jobs. The best policy for job creation is a favorable business tax environment that benefits all Arkansas businesses.”
State lawmakers convene at 2:30 pm today to hear presentations from two independent legislative analyses of the Big River Steel superproject.