The Arkansas General Assembly voted Thursday to submit three constitutional amendments for referendum, including one that would allow virtually unlimited funding for business incentives.
“The proposed amendment would remove a cap on bonds the state can issue for [economic development projects],” and would also allow cities to offer incentive deals to companies, the Southwest Times Record reports.
Supporters argue that the cap on so-called “Super Project Obligation Bonds”—which is set at 5 percent of the state’s general revenue from the most recent fiscal year, or about $250 million this year—prevent the state from attracting new jobs, while opponents deride the measure as corporate welfare. (RELATED: States May Have to Disclose Business Subsidy Costs)
“If we don’t do something to change this (cap), then we would be completely out of the ballgame on super projects for the next 5 to 10 years,” predicted Republican Rep. Lance Eads, who introduced the measure in the House.
Eads noted that, “Volvo is looking at the possibility of doing a project in the United States,” implying that Arkansas would be unable to compete with other states unless the incentive cap is lifted.
However, GOP lawmakers were not unanimous in their support, the Beaumont Enterprise claims, saying the amendment “splintered House Republicans, some of whom called the incentives anti-free market.”
“Corporate welfare is just wrong,” said Republican Rep. Nate Bell, adding, “It’s fundamentally wrong to take money from the taxpayers and give it to corporations.” (RELATED: McAuliffe Sets Record for Business Incentive Deals)
Republican Rep. Douglas House offered a more pragmatic objection, saying the amendment would not hold businesses accountable for following through with promised investment and job creation. “Just to give away money in hopes things will work out great is a disaster waiting to happen,” he argued.
According to the Northwest Arkansas Democrat-Gazette, House also pointed out that one project, a $1.3 billion steel mill, has received about $600 million from Arkansas taxpayers, but only created 500 jobs.
“I find it morally repugnant, to be quite honest,” House said, calling the amendment “corporate welfare plain and simple.” (RELATED: These Billionaires Make Bank When Taxpayers Subsidize Business)
Voters will have a chance to approve or reject Senate Joint Resolution 16, sponsored by Republican Sen. Jon Woods, through a referendum in the 2016 general election.
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