Hello, HP (Editorial)

The announcement in mid-June that personal computer giant Hewlett-Packard Co. was coming to Conway with up to 1,200 jobs helped take the sting out of the announcement of Alltel’s sale to Verizon just two weeks before. The Arkansas Economic Development Commission described HP’s planned Conway facility as “a state-of-the-art customer service and technical support center.” In a press release, Gov. Mike Beebe went so far as to call it a “historic announcement.”

“Historic” to us means the flood of 1927, but we’re happy with the news that even the lower end of the salary scale at the new facility will be $40,000 annually and the higher end considerably more. With Arkansas’ per capita annual income in 2007 at $30,060 and the national average at $38,611, that $40,000 looks pretty good.

The AEDC has set its sights on bringing IT companies to Arkansas. HP is the world’s largest manufacturer of personal computers, No. 14 on the Fortune 500 list and employs 172,000 people worldwide. It’s a major player in the global IT industry.

Conway and the state put up a lot of economic incentive money to attract HP. Beebe pledged $10 million from his Quick Action Closing Fund, and the Conway Development Corp. is using that to help build a $28 million facility to lease back to HP.

Despite this success, state Rep. Robbie Wills, D-Conway, would like to boost Arkansas’ economic development incentive program even more. Under consideration is Amendment 82 to the state Constitution, which authorized the state to issue bonds to attract so-called super projects. It, however, requires companies to invest at least $500 million to qualify for state help.

Wills thinks that $500 million floor is too high and too limiting. The high-wage jobs Arkansas would like to attract reside in high-tech, and that sector rarely requires a $500 million investment, he says. Wills notes that at the time Amendment 82 was approved, the state had visions of attracting a billion-dollar Toyota auto plant to Marion, a plant that eventually landed in Mississippi.

Wills thinks providing state economic development officials more “flexibility” would help other parts of the state compete for similar knowledge-based, “new economy” jobs.

Economic incentives to attract business are a necessary evil. We fervently wish that high-tech companies offering high-paying jobs would flock to the state just because we’re so friendly. But that hasn’t happened. Arkansas’ per capita income hovers where it has for decades. Currently, we’re third from the bottom among the 50 states. If Arkansas doesn’t provide economic incentives, other states will.

And if Arkansas wants to attract the knowledge-based jobs of the 21st century, it needs to recognize that they don’t necessarily require the capital investment of the manufacturing jobs of the 20th century. It may be time to reconsider Amendment 82’s $500 million qualifying limit.

But – this is essential – we would expect state officials to be prudent in their use of taxpayer-funded incentives. Selling Arkansas too cheaply could be just as bad as not selling Arkansas at all.