Rep. Darrin Williams, D-Little Rock, and Sen. Jonathan Dismang, R-Searcy, touted HB 1832, the Arkansas New Markets Job Act, a bill both men say could lead to significant investments in Arkansas.
The bill encourages private sector investment in small businesses, particularly in low-income regions, by providing tax credits tied to private capital investments including at existing businesses.
The bill would authorize Community Development Entities (CDEs) that would coordinate private investment and funding for qualified businesses.
Under provisions of HB 1832, an Arkansas corporation, limited liability company, association, partnership, or other business entity that agreed to retain or create jobs that pay an average wage of 115% of the federal poverty level would qualify for premium tax credits for up to 7 years.
The tax credit qualification would be 0% for the first two years, 12% for years three, four and five, and 11% for years six and seven.
Businesses that derive revenue from retails sales or at least 15% of annual revenue from the rental or sale of real estate would not be qualified for the credits.
“The New Markets approach to job growth is a proven economic development tool,” said Williams. “This legislation will provide entrepreneurs across Arkansas with the investment capital and financing to start and expand businesses in parts of the state that desperately need jobs.”
“These CDEs will support up to $250 million of investment in Arkansas jobs over the next seven years,” said Dismang. “The best part is that by examining data from other states that have this program, we know that it not only pays for itself, but actually earns money for the state.”
Arkansas’ top economic development chief, Grant Tennille, said he’s in favor of the legislation but wants to see some improvements made to the measure.
“We like the concept. There is room in the state for a state new markets credit,” said Tennille, executive director of the Arkansas Economic Development Commission. “We’ve got to make sure we’ve got the safeguards in place to ensure that the state’s ROI [return on investment] is covered when we make state tax credits available.”
Tennille added, “One of the things we’re talking about is requiring that each project that requests these credits go through the same modeling process that we put all of our other projects through and setting a ROI floor of probably somewhere around two, which means the state gets back $2 for every $1 it gives. There may be some room to modify that number in certain areas.”