We?re In For Amendment 2, Too (Editorial)

One would be hard pressed to find anyone who doesn’t believe Arkansas needs some measure to help land “super projects.”

Is Amendment 2 that measure? We believe it can be.

We agree with some of its detractors that it could have been better written, but that doesn’t take away from what it can do to broaden the tax base and create jobs for Arkansans. Besides, much of the opposition to the wording comes from those who would oppose the state paying any corporate welfare, no matter how the amendment was worded. And in 2004, opposing corporate welfare is like opposing gravity. The best we can hope for is that such a powerful tool will be used wisely.

The basic point of Amendment 2 is that it gives the Legislature the authority to issue general obligation bonds of up to 5 percent to state revenue for an economic development project that plans to invest more than $500 million in capital expenditures and to hire more than 500 new employees.

Those bonds would be used to pay for infrastructure needs such as land acquisition, site preparation, road and highway improvements, rail-spur construction, water service, wastewater treatment, employee training, environmental mitigation, training and research facilities, and possible other needs.

Under the state’s current constitution, only a statewide vote of the people can allow the issuance of general revenue bonds. And that process could take longer than companies looking to locate a major plant are willing to wait. Neighboring states have legislation that enables them to more quickly issue general obligation bonds to fund up-front costs to make a suitable site ready for construction.

Amendment backers say limiting the bond issues to “super projects” means a company must make a huge investment of its own to qualify, which most likely translates into a long-term investment in the state.

Amendment 2 leaves it to the Legislature to work out many details, and the lawmakers would have to adjust the state budget to cover repayment costs.

Earlier this month, the University of Arkansas at Little Rock’s Institute for Economic Advancement released a study that showed the arrival of a major automotive assembly plant in Arkansas could generate more than 12,000 jobs and add $1.5 billion to the gross state product. It would also generate $44 million in state tax revenue per year.

We believe Amendment 2 can work.