Arkansas A Leader In Tax Incentive Evaluation

Arkansas is one of 13 states “Leading the way” on the evaluation of tax incentives for economic development, according to a recent report from the Pew Center on the States.

The report, released April 12, noted that the 13 states are “meeting both criteria for scope of evaluation and/or both criteria for quality of evaluation.”

In addition to Arkansas, the states leading the way were Arizona, Connecticut, Iowa, Kansas, Louisiana, Minnesota, Missouri, New Jersey, North Carolina, Oregon, Washington and Wisconsin.

Oklahoma was among 26 states “Trailing behind,” with Texas one of 12 states with “Mixed results.” The report also included the District of Columbia.

According to the Pew report, researchers reviewed nearly 600 documents and interviewed more than 175 government officials and experts to determine how states measure tax incentive results. And although Arkansas and 12 other states are doing a good job, the Pew report concluded that better analysis is needed.

Pew officials provided four basic criteria that states should use to determine incentive effectiveness:
• Build evaluation of incentives into policy and budget deliberations to ensure lawmakers use the results.
• Establish a strategic and ongoing schedule to review all tax incentives for economic development.
• Ask and answer the right questions using good data and analysis.
• Determine whether tax incentives are achieving the state’s goals.

While the report makes no mention of an upcoming incentives and tax review, the effort is certain to boost Arkansas’ standings among its state peers.

Sen. Jake Files, R-Fort Smith, and chairman of the Joint Committee on Tax Policy, said the Pew report is “certainly a positive for Arkansas, and I think it is a positive for us as other businesses look at Arkansas.”

“Having said that, by no means are we at the end of the road,” Files continued. “In a competitive economy, we have to find incentives that work. As a Legislature and as citizens, we have to know that is the global environment and that we have to always be competitive. … We have to know what is a good incentive and what is just throwing money away to get a business.”

This article was written by Michael Tilley with our content partner, The City Wire. He can be reached by e-mail at [email protected].