Gov. Hutchinson, AEDC director laying groundwork for aggressive job growth plan for 2017 session

by Wesley Brown ([email protected]) 199 views 

Editor’s note: This is the first of three stories about economic development policy plans for the upcoming 2017 Arkansas Legislative Session.
As the state’s globe-trotting, chief job recruiter, Gov. Asa Hutchinson keeps a running tally on the number of new workers that have been added to Arkansas’ labor pool during his tenure as governor. He proudly touts his economic development agenda at nearly every event he gets an invitation.

To date, there have been 54,000 new jobs added to employer payrolls during his 20-month tenure as governor. In recent speeches, Hutchinson jokes that when things are going good, the person in the gubernatorial office – whether Democrat or Republican – gets the credit for those successes.

Less than a year on the job in December 2015, when the state’s jobless rate fell below 5% for the first time since the summer of 15 years ago, Hutchinson said the state’s Great Recession-wracked economy was now heading in the right direction. Six months later in June when the state’s jobless rate fell to its lowest level in the state’s history at 3.8% and another 11,000 jobs had been added to the state’s 1.36 million civilian labor pool, Arkansas’ chief executive told the Rotary Club of Fort Smith that the state’s success could be attributed to several key factors, including the “right philosophy” to grow the private sector at a faster rate than government.

“We are doing that,” Hutchinson said in Fort Smith. “We want to have lower taxes, fewer regulations so we can expand the private sector of our economy, and have a business friendly environment.”

At the recent annual Arkansas Hospitality Association (AHA) convention in Little Rock, Hutchinson boasted to convention-goers about the record number of 28 million visitors that came to the state in 2015 – which produced an estimated $7.2 billion in total travel expenditures, up 8.69% compared to 2015.

Mike Preston, director, Arkansas Economic Development Commission
Mike Preston, director, Arkansas Economic Development Commission

“Economic development and bringing jobs to Arkansas has been my number one priority as governor,” Hutchinson said.

Still, with less than five months to go before the 91st General Assembly of the Arkansas Legislature begins in January 2017, Hutchinson and his chief economic adviser, Arkansas Economic Development Director (AEDC) Mike Preston, have been laying the groundwork for an agenda they believe will keep the state on its growth path.

In recent interviews with Talk Business & Politics, Hutchinson and Preston offered a glimpse at possible legislation that could take center stage during the 2017 session. At the top of list, both have said, is the renewal of AEDC’s Quick Action Closing Fund, which was established in 2007 to aid the state’s top election official in acting quickly and decisively in highly competitive situations to finalize a deal with a potential company looking to locate to Arkansas.

“We certainly have seen success with our Quick Action fund and want to have it renewed,” Hutchinson said after the recent announcement by American Airlines’ Envoy regional carrier that announced it was landing an aircraft maintenance facility at the former Hawker Beechcraft hanger at the Bill and Hillary Clinton National Airport.

Envoy is getting a good incentive deal from local and state officials, including a $500,000 grant from AEDC’s deal-closing fund to help with hangar modifications. Envoy will make modifications to the existing 370,000 square foot hangar to accommodate the larger E175 regional jets and expects the new facility to be operational by year end.

In a July 15 letter to Sen. Bill Sample, R-Hot Springs, and Rep. David Branscum, R-Marshall, the respective chairs of the Budget Hearings Special Rules and Policy Positions of the Legislative Council and Joint Budget Committees, Preston describes similar deals the state closed with the help of the Quick Action fund and how Hutchinson has used the bounty in the race against other states to retain and bring jobs to Arkansas.

“This fund allows the governor to act quickly and decisively in highly competitive situations to finalize an agreement with an employer to locate its business in Arkansas,” says Preston, who was hired as the AEDC chief in the middle of the 2015 regular session.

According to an accounting of the Quick Action fund in a recent annual report submitted to Sample, Branscum and other lawmakers, expenditures from the fund between 2007 and 2015 have totaled $99.1 million prior to fiscal year 2016.

In fiscal 2015, Hutchinson was partially responsible for $19.4 million expended during his first six months on the job. Former Gov. Mike Beebe also used the fund during his tenure, including the last half of fiscal 2015. In fiscal 2016, which ended on June 31, the state’s chief executive had doled out $11.3 million to companies to stay in Arkansas or entice others to locate or bring more jobs to the state.

At the time of Preston’s letter in mid-July, another $13.4 million had been committed and a whopping $32.2 million had been offered to projects that had not yet accepted the offer to come to Arkansas. Altogether, a total of $156.2 million has been allocated to the Quick Action fund, minus unpaid commitments, unpaid balances, unaccepted offers and nearly $6 million in clawbacks, since lawmakers passed Act 510 of 2007.

Under the nine-year old act creating the executive job recruitment tool, the AEDC must come back to lawmakers at each regular session to renew and appropriate new monies for the discretionary fund. Lawmakers in the 86th and 87th general session allocated $50 million each during the initial outlays to the fund in 2007 and 2009, respectively. Since then, the governor’s discretionary fund has declined to $15.7 million in the 88th session in 2011, and another $20 million and change in the 89th and 90th regular session in 2013 and 2015, respectively.

According to Preston, the 73 companies that have submitted Quick Action proposals to the AEDC and received funding through fiscal 2016 have invested more than $3 billion in local projects across the state, leading to the creation or retention of more than 18,235 jobs at an average wage of just under $20 an hour.

“We’re very good in terms of the incentives we are able to offer and we want to continue funding … the governor’s Quick Action Closing Fund – one of the most effective tools – if not the most effective tool that we have in our arsenal to use to close the competitive projects that we need to,” Preston told Talk Business & Politics.