State chamber leader touts Northwest Arkansas growth

Fresh off another round of state income tax cuts, Randy Zook is not only ready for what comes next but also eyeing the next decade of growth. The Arkansas State Chamber of Commerce CEO does not fit neatly into the box of advocates clamoring to take personal and corporate income taxes to zero.

“Put me in the camp that says we need to be competitive,” Zook said.

The chamber leader has been supportive of Gov. Asa Hutchinson’s and Gov. Sarah Sanders’ approach to incrementally draw down the top personal income tax rate from 7% to today’s 3.7%. The corporate income tax rate has been lowered in tandem to its present level of 4.1%.

Lawmakers and the governor made modest two-tenths of a percent reductions to both tax rates in a recently concluded special session, despite conservative think tanks and voices pushing an agenda of eliminating the income tax altogether.

“I think incremental steps, like we’re taking, and not locked in, like we’re considering, is the wise path,” Zook said. “I think the Legislature needs flexibility. Things change, needs change, and you don’t want to be locked into anything.

“We’re not driving off in a ditch like Louisiana did at one point, and Kansas did at one point. We’re taking things step by step, and the world is discovering us.”

To emphasize his point that competition is more important than a total elimination of the income tax, Zook notes the American Legislative Exchange Council has consistently ranked Utah as the top state with the best economic outlook over the past two decades. The center-right national think tank recently moved Arkansas to No. 6 in its rankings.

“Utah has a 4.5% flat income tax rate, corporate and individual,” Zook said. “It has well-managed government, not just low taxes, but reasonable, competitive taxes which are vital. They don’t have to be zero … There’s a spot there.”

Zook’s point is that despite the neighboring states of Texas and Tennessee having no income tax, they do have higher taxes — property tax, sales tax, severance tax and more — in other areas. Arkansas’ collective tax package is competitive for many projects compared to all of its surrounding states.

The state has been scoring some big victories lately. A few highlights include the massive billions of dollars in investment in places like West Memphis (where a Google complex will be located), aerospace and defense manufacturing in south Arkansas, timber industry expansion in southeast Arkansas, and the steel industry in the state’s northeast corner.

“We’re finally getting smart about regionalism, and elected officials are finally realizing that a rising tide lifts all boats,” Zook said. “Northwest Arkansas has been a leader in regionalism for decades.”

NWA POWERHOUSE
Northwest Arkansas, with its powerhouse economic acceleration, has been a key catalyst of the state’s economy. One-third to nearly half of the state’s gains in jobs and GDP can often be attributed to Northwest Arkansas.

“Northwest Arkansas is the economic driver of Arkansas, but it’s not the only driver,” Zook said.

He notes that while Benton and Washington counties are tops in growth, three of the five top counties for economic expansion are in central Arkansas. His statewide perch also allows him to see the pockets of strength in other regions of the state, including the aerospace and defense industry in south Arkansas and the steel industry in northeast Arkansas.

Still, Northwest Arkansas leads the curve.

“I think the leadership in this region of the state is smart about thinking further ahead,” he said. “I don’t see them being reactive. They are proactive.”

Northwest Arkansas has to be proactive, Zook emphasizes, because it’s the only way to keep up with the population growth in the region, which is expected to hit 1 million by 2050. The state is gaining new residents, but Northwest Arkansas is the agent of that advance. In a little over five years, Arkansas has gained more than 100,000 new residents.

“Our [state] population is growing way over our normal expectation,” Zook said. “We’ve added the population of Fayetteville since the 2020 census. Think about that.”

To keep the momentum going, Zook sees a lot of planning and collaboration that will pay further dividends in the coming years.

“First of all, they have a convening organization that is regional, the Northwest Arkansas Council,” he said. “At the same time, they’ve got very competent, well-run, community-based chambers of commerce, all of which are conveners, thought leaders and decision makers.”

Zook observed that Interstate 49 and the Northwest Arkansas National Airport (XNA) have galvanized leadership to focus on these critical infrastructure projects, but the future of the region may center on its ability to handle the strain of growth, notably in wastewater issues.

“Their wastewater systems are largely fractional and community-based,” he said. “So they’ve got a lot of investment to make. But they see it, and they’ve identified it and they’re working on it.”

2035 STUDY
Earlier this month, the Arkansas State Chamber of Commerce released a new report analyzing Arkansas’ needs to keep state growth moving in a positive direction over the next decade.

The report, Arkansas Advantage 2035, is a framework for a long-term strategy focused on strengthening the state’s workforce, infrastructure and economic competitiveness. It summarizes several important key findings:
• Job growth — Arkansas increased total employment by 13.7% over the past decade, outperforming all neighboring states except Texas and Tennessee.
• Income and productivity — Real personal income per capita surged 55.2% (from $38,220 in 2014 to $59,320 in 2024), well exceeding the rate of inflation. Real GDP per capita grew by 16.4%, surpassing all neighboring states except Texas.
• Manufacturing excellence — While the South as a whole lost 12,000 manufacturing jobs between 2024 and 2025, Arkansas gained 2,700 manufacturing jobs during the same period.

To build on these statistics, the report touts a steady hand on tax policy and more investment in energy generation, which is an increasingly important tool for landing large-scale economic development projects. The report also encourages continued progress in workforce development, particularly what Zook calls “technical education.”

“Technical ed is still undeveloped. The skills we need, it’s no longer a shop class. It’s no longer just how to be a jake-leg mechanic on a farm or work in a body shop at a Ford dealership,” he said, adding that it includes nursing training, construction trades and a variety of other specialty areas.

“Our technical ed offering is vastly improved from 10 years ago, but we’ve got a long way to go,” he said. “We need to keep investing in it.”

ISSUE 3
Zook explains that a ballot issue this coming November will be crucial for Arkansas’ competitiveness moving forward.

In last year’s regular legislative session, lawmakers referred Issue 3 to voters. The proposed constitutional measure would allow the creation of “economic development districts,” in which cities and counties could offer incentives to attract businesses, housing, and other projects. Other states have this tool and have beaten Arkansas on some job projects because of it.

In short, a community or region could create a district and use the increased tax value of property and infrastructure improvements as a stream to pay off the financing for those improvements. Zook said it comes back to competition.

“Issue 3 will give us a competitive tool,” he said. “We are one of two states that do not have the tools that Issue 3 will make possible.

“These economic development districts at a local level will be controlled at a local level, not statewide, not controlled by Little Rock. For instance, Monticello would be able to decide, ‘Hey, we need to support a retail project of some kind,’ or ‘We need to support affordable housing in some way.’ All those types of local development projects would be facilitated and would be possible to underwrite those without any tax increase, without diverting any present taxes, like from schools or whatever locally.

“It’s a diversion of the tax generated by the project for a negotiated period of time, a limited period of time. This is a tool that has been used to develop Texas. They use these by the thousands. Every surrounding state has these tools in their toolkit. We need to do it to be competitive.”