Legislative Overview: Economy

January 13, 2003
Posted at: 10:30 a.m. CDT

LITTLE ROCK, Ark. -- State legislators are worried that moves to boost economic development in Arkansas may take away from the need to fix public education. They're wondering where they can find the money.

Governor Mike Huckabee says that Arkansas can't afford not to invest in economic development. He says you can't separate development and education. Arkansas has an already-tight budget and legislators must figure out how to comply with a state Supreme Court mandate to increase funding and performance in 310 school districts.

Some are arguing that a large manufacturing plant -- like the one Toyota may bring to the state -- would generate revenue.

But efforts to attract an automobile manufacturing plant to Arkansas will compete with orders to increase spending on an underfunded public school system. Somehow, the Legislature and the Huckabee administration will try to find money for both.

However to attract it, Arkansas will likely have to spend money up front and offer continuing incentives, such as tax breaks or low-interest loans.

The state Supreme Court ruled late last year that Arkansans don't spend enough on education and that they funds aren't spread out evenly. The court said Arkansas' 450 thousand public school children were underserved and education experts say a remedy could cost the state $1 billion a year.

State Representative Marvin Parks of Greenbrier says the answer is to lure clients like Toyota to the state. However he said Arkansas can't give the store away when it's got other needs. Arkansas, Alabama, Tennessee and Texas are said to be finalists
for a Toyota truck plant valued at $750 million. Sources say Toyota's decision to postpone a decision may have been to give Arkansas and Texas legislators time to assemble more lucrative incentive packages.

Arkansas' legislative season opens Monday; Texas' opens Tuesday.

To achieve the economic development goal, Governor Huckabee proposed a five-eighths-cent sales tax hike. That would include nearly $40 million to establish a project to make the state more competitive in developing major industrial plants.

Huckabee in the past has said he doesn't want to give away too much to land a big project, and pointed to success on a smaller scale, such as Nestle and Frito-Lay plants in northeast Arkansas. Near the end of the fall political campaign, however, Huckabee
announced that Arkansas was a strong contender for Toyota, and that he would meet with Toyota officials.

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