To win big, Arkansas needs more power, updates to incentives

Economic development is a competitive business. Businesses have a choice of where to locate and expand. From high-profile projects like Amazon’s HQ2 to multi-billion dollar manufacturing facilities, most corporate location decisions start with a multi-state analysis.

We are often asked, “Who do we compete against as a state?” Just like the Razorbacks compete against Alabama, Mississippi, Tennessee, and Texas in the Southeastern Conference, we find ourselves competing for jobs against “SEC states.”

A quick examination of our competitors will show a focused effort to get ahead. Alabama recently passed “The Game Plan,” a series of bills focused on incentives making Alabama more competitive. Mississippi Governor Tate Reeves dedicated 20 minutes of his State of the State address to economic development initiatives. Tennessee, a state with no personal income tax, proposed an additional $80 million towards economic development in its most recent budget.

Just as the private sector innovates to achieve a competitive edge, our state must innovate to capitalize on the opportunities in front of us.

When Gov. Sanders took office and named Hugh McDonald Secretary of Commerce, Hugh wisely assembled a group of professional economic developers from across the state to evaluate our competitive toolbox. The mandate of the working group was to determine what competitive advantages other states have over Arkansas. Additionally, what incentives are necessary to get ahead of our competition, and what resources are needed to help entrepreneurs scale.

Prior to the 2025 Legislative Session, this group produced recommendations to the Department of Commerce and the Governor’s office. Through extensive analysis by the working group, the Arkansas Economic Development Commission (AEDC), and the Department of Commerce, these recommendations were turned from concepts to legislation, which is now working through the 95th General Assembly. If passed, this legislation represents the most sweeping change to our economic development toolbox since the creation of the Consolidated Incentives Act of 2003.

A few of these opportunities include:

– Support for emerging industries such as data centers and the development of the lithium industry.
– Tools for headquarters expansions and relocations, creating high-paying office jobs.
– Support for working families through childcare tax credits.
– Small business and innovation reforms, including changes to investor accreditation, fostering entrepreneurship and tech transfer to grow the next big business at home in Arkansas.
– Modernization and automation incentives for legacy employers, encouraging investment from Arkansas-based companies that have been here for years, not just the new ones.
– Economic development districts, encouraging mixed-use, retail, and entertainment projects that will generate significant tax revenue for communities across the state.
– Incentives for speculative buildings and funding for greenfield site development, addressing Arkansas’ deficiency of nationally-competitive industrial sites.
– Regional industrial development authorities, paving the way for multi-jurisdiction cooperation for site development and business attraction.

Arkansas taxpayers can rest assured that with every deal, the state runs a rigorous cost-benefit analysis through its econometric model. In many cases, the state receives more than $5 for every $1 of incentives offered. We have an aggressive team at AEDC, a team focused on winning deals for Arkansas, but equally as important, the team makes sure every deal is a good deal for the state.

Separate from incentives but related to the competitive arena of economic development, an increasingly important factor in investment decisions is the availability of power. Arkansas stands at a crossroads. Over the last 12 months in communities across central Arkansas, our team has hosted prospects — including many of the world’s leading companies — looking to invest over $20 billion. This outlook is unprecedented, but there’s one catch. We simply do not have enough power to meet the demands of these opportunities.

To secure unprecedented investment in our state, we must invest in additional baseload power generation while also protecting ratepayers, ensuring that our energy bills in Arkansas remain below the national average.

States around us are aggressively addressing their energy infrastructure. Arkansas must act now. Doing nothing guarantees thousands of high paying jobs will end up in other states. These generational investments are going somewhere. We can stand on the sidelines and watch the world’s most innovative companies invest in Alabama, Mississippi, Tennessee, and Texas … or we can compete and take the necessary steps to win. Arkansas has a chance to move ahead of our competition. Companies are watching, the nation’s top location advisors are watching, and our competition is watching.

Let’s make it happen.

Editor’s note: Jay Chesshir is president and CEO of the Little Rock Regional Chamber of Commerce. Jack Thomas is vice president of economic development at the Little Rock Regional Chamber of Commerce and helped lead the incentives working group. The opinions expressed are those of the authors.