A recent guest column by Jacob Bundrick completely missed the mark on the purpose, and need, for the state's Quick Action Closing Fund.
The question posed in the column "Subsidy snags" was whether Arkansas government could "create jobs by providing cash subsidies to select businesses." In reality, the Quick Action Closing Fund by itself doesn't "create jobs," but what it does do is help strengthen Arkansas' hand when it comes to landing and closing economic development projects.
Our state has a lot to offer existing and potential employers, as evidenced by the strong job growth and record unemployment we've seen over the past several years. U.S. Department of Energy data ranks Arkansas just outside the top 10 for our low cost of electricity for industrial consumers. And, according to the most recent census data, our uninsured rate has dropped below the national average to 7.9 percent--an astonishing reduction of more than half over a three-year period.
Furthermore, according to data compiled by CNBC for its "Top States for Business" rankings, Arkansas stood seventh nationally for lowest cost of doing business and fourth for cost of living in 2017.
That's the good. Unfortunately, according to that same analysis, we still lag in other areas important to employers, including Education (38th), Business Friendliness (39th), Quality of Life (47th), and Technology and Innovation (48th), putting us 41st overall when compared to other states. Not to mention that Arkansas falls well behind the national average when it comes to educational attainment, and the quality and readiness of our work force continues to be an impediment to business growth.
Whether we like it or not, when it comes to landing new economic development projects or existing corporate expansions, Arkansas will always be compared to our neighbors on a host of criteria important to employers.
We agree with Bundrick that the state should prioritize broad fundamental reforms to make our business climate more robust and attractive for economic growth. In fact, our organization has led the charge on a number of important issues to make Arkansas more competitive, including unemployment insurance reform, workers compensation reform, the reduction of sales tax on repair parts and machinery, the reduction of sales tax on industrial energy use, and tort reform. Many of these efforts have made Arkansas more attractive than our peers.
Yet at the same time, improvements in the business and regulatory climate take time to change, and even more time to take effect, while we're being evaluated and judged based on our competitiveness as it exists today. That's where the value of the Quick Action Closing Fund comes in for Arkansas.
The purpose of the fund is not to "create jobs," but rather to incentivize investment in the state when we may not be the top choice on paper. Businesses make business decisions, not emotional ones. If the Quick Action Closing Fund can be utilized to reduce the cost of capital expenditures, improve the operability of existing facilities, or provide necessary working capital for job training, that could be the difference between landing a new economic development project here or having it go to Mississippi, Alabama, or Louisiana.
Moreover, as noted by the author in his study with Dr. Thomas Snyder, several nearby states including Texas, Oklahoma, Kansas and Mississippi have similar funds used to close deals. Unilaterally disarming by eliminating our Quick Action Closing Fund would do nothing but make Arkansas less competitive with our neighbors, costing jobs, investments, and tax revenue to the state.
We unequivocally agree that policymakers should focus on reforming our regulatory environment, investing in areas such as education and work-force development, improving our business climate through tax reform, advancing the governor's computer science initiative, and continuing other pro-business changes that have helped our state make such tremendous employment gains in recent years.
But until we're able to turn the tide so that more of our liabilities become assets for economic development, the Quick Action Closing Fund will remain a vital tool to tipping the scale our way as we collectively work to grow Arkansas in the years to come.
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Randy Zook is the president and CEO of the Arkansas State Chamber of Commerce/Associated Industries of Arkansas.
Editorial on 03/01/2018