Issue 3: Setting the table for investment in Arkansas - Talk Business & Politics
Every two years, in addition to passing legislation and setting the state’s budget, the Arkansas General Assembly is authorized to refer up to three amendments to the Arkansas Constitution for. . .
Every two years, in addition to passing legislation and setting the state’s budget, the Arkansas General Assembly is authorized to refer up to three amendments to the Arkansas Constitution for the voters to consider at the next general election. Examples of previous referrals that the voters have approved include funding for highways, legislative term limits and the right to hunt and fish. As discussed in more detail below, some of the most significant referred measures voters have adopted fall under the umbrella of “economic development. ”In 2025, the General Assembly referred the full allotment of measures for consideration. The first, which will appear on the ballot as Issue 1, establishes that only a citizen of the United States may vote in an election in this state. Issue 2 will strengthen the right to keep and bear arms by making clear that the right includes the ability to keep them for lawful hunting and recreational use as well as possess ammunition, accessories and equipment. We haven’t checked any of the prediction markets to see if there are odds on the passage of Issues 1 and 2, but we think the smart money is that the voters will look upon them kindly. Issue 3 is what we are here to discuss. The popular name of the measure is as follows: “A Constitutional Amendment Concerning Economic Development in the State of Arkansas; and Authorizing the General Assembly to Provide for the Creation of Economic Development Districts Within Cities, Counties, or Cooperative Areas to Promote Economic Development Within the Economic Development District. ”At the very highest level, if adopted, Issue 3 will allow the Arkansas General Assembly to provide cities and counties with the ability to create districts in which local governments will be able to incentivize development through tax abatements, bonds and/or rebates. Local governments will also have the ability to negotiate improvements to public property whether located in or out of the district. These projects will be customized to the wants and needs of each community and decided upon locally by the community. In evaluating Issue 3, it is helpful to understand the economic development programs available in Arkansas. One of the most significant finds its authority in Amendment 49 to the Arkansas Constitution. This amendment was approved by the voters in 1958 and led to the adoption of Act 9 of 1959. “Act 9 Bonds” are available to our counties to aid in the development of large industrial projects. They incentive investment by abating a portion of the property tax owed by the developer/owner of the project over a set period of time. Amendment 82 is widely known but has only been once used. Known as the “super project” incentive, it allows the state to provide numerous incentives to a proposed industrial development, including the issuance of bonds backed by the State’s general revenue. The only “super project” to date is Big River Steel in Northeast Arkansas. Our state, through the Arkansas Economic Development Commission, is also able to offer certain incentives for select industrial projects, which are largely tied to job creation. We also have one of the most robust incentives in the nation for the rehabilitation of historic buildings. These tools are great and have done wonders for our state. But something is missing. We don’t have anything to attract investment into local retail offerings, office buildings, or housing and recreational development. Want to guess who does have those tools? Forty-eight other states. Arkansas and Arizona are the two outliers. Those 48 states are able to provide local sales tax rebates and tax abatements that incentivize local investment while also ensuring adequate public infrastructure for the specific project and the community generally. Because we don’t, outside investment skips over Arkansas, and local investment is constrained. If you question that, go ask mayors and county judges in border counties around the state. They have lived it, and time and time again seen investments slip away. If the Razorbacks want to compete for the best talent in today’s world, name, image and likeness (NIL) money is a must. Like it or not, that’s the world we now live in. If Arkansas wants to compete with surrounding states for investment and development, Issue 3 is a must. In the near future, we’ll do a deeper dive into Issue 3, how it will work if adopted, and what we might expect to see once in operation. Editor’s note:Justin Allen and Adam Fogleman are attorneys with Wright, Lindsey & Jennings LLP. The opinions expressed are those of the authors. Related