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Arkansas in minority without closing fund to lure industry Sunday, Jan 21, 2007 By Jason Wiest Arkansas News Bureau LITTLE ROCK - Many states already give their governors discretionary money to close major economic development deals, and some economic development officials say Arkansas needs to do the same to compete. Gov. Mike Beebe has proposed carving $50 million from the state's projected $843 million budget surplus for what he has dubbed a "Quick Action Closing Fund." "If it catches us up to make us competitive, or if it gives us an edge, it's much needed," Beebe said Friday. Florida's governor has $70 million at his disposal to seal deals to bring jobs to the state. Alabama's governor has a $100 million discretionary fund. The fund in Texas is $295 million. "If you're in competition for major projects it takes a substantial amount of money to be competitive," said Jay Chesshir, president of the Little Rock Regional Chamber of Commerce. Without a closing fund, Arkansas has not been competitive enough in some areas, according to results from an Arkansas Business and Economic Development Incentives Study. The study noted gains in Mississippi, where DaimlerChrysler plans to build a new plant, and Alabama, which landed a Hyundai manufacturing plant. "Clearly, more than statutory incentives were offered in order to attract superprojects to these locations," the study said. The October 2006 report studied 12 Southern states and was conducted by Fluor Corp. for the Arkansas Bureau of Legislative Research. Missouri Gov. Matt Blunt has no quick closing fund, according to that state's governor's office. The kitty in Louisiana is $10 million. Beebe's proposal would vault Arkansas past its neighbor to the south, as well as Georgia and North Carolina, which each provides its governor with about $15 million annually to close economic deals. In 2004, Arkansas voters approved a constitutional amendment that authorized the Legislature to meet in special session to approve incentives to land economic development projects that bring a $500 million investment or 500 new jobs. The incentive could equal 5 percent of the net revenue from the last fiscal year, or about $200 million. A quick closing fund would be a good supplement to the incentive fund, Chesshir said. "Incentive packages are a constantly evolving process," he said. "When one state feels like they have a competitive advantage, other states create a package to make themselves equal or better." The governor's proposal would help Arkansas keep pace with its neighbors and should be replenished every two years, said Kirkley Thomas, president of Arkansas Economic Developers. "We've had inadequate dollars in previous years for infrastructure especially," Thomas said. More incentives would make Arkansas more competitive, though the state has effectively attracted some industry without the closing fund, Chesshir said. "No amount of incentives will make a bad site good, therefore most projects are not driven strictly on incentive packages," he said. Still, closing funds in other states have been highly successful. Closing fund projects created an expected 5,063 new jobs with an average annual wage of $50,727 in Florida's fiscal year 2005, according to former Gov. Jeb Bush's 2006-2007 economic development budget proposal. Florida expected $545 million in new capital investment in fiscal 2005, and a projected return of $9.40 for every state dollar invested over 10 years. Businesses that receive closing fund money from Florida must meet annual, predetermined, contractual performance measures or repay the incentive plus penalty. Beebe has not provided such details about the closing fund he has proposed but said he is willing to work with the Legislature to set conditions for businesses to qualify for funding. "We'll work with the General Assembly to ensure that the criteria is consistent with what they believe to be sound economic development opportunities," the governor said. Both Florida and Texas set up their funds so that other leaders, such as the Senate president pro tem, House speaker, lieutenant governor and, in come cases, state agencies review how the governor spends the money. Beebe appeared agreeable to similar oversight. "Obviously it needs to have some degree of discretion, but I'm expecting and would welcome oversight and good parameters or good outlines or guidelines on the part of the Legislature to ensure that it was spent only for those purposes for which it's intended," the governor said. |
