Arkansas Blog

Good summary, Max. Important topic. Wonder how the existing employers competing for those workers feel about this subsidy for HP? Can we expect Acxiom to insist on retroactive corporate welfare?

An interesting observation from the commentary yesterday. It sounded like this wasn't a long drawn out process that was highly competitive. It sounded like HP came to us and we didn't really have that much selling left by the time we made their short list. Did we really have to give away that much or was it such a slam dunk that the state was falling over themselves to provide corporate welfare that may or may not have been provided. If I recall, it is to HP's advantage to move call centers back to the US from India because of the quality of support in India was costing business. I'm not sure if it is good or bad that Arkansas is considered the next step up the rung from the developing nations. On top of that, how much did we really have to give away to land these jobs. And last but not least, are we providing subsidies for workers from the Delta to train and relocate to Conway.

Probably not and that will continue to leave us with fairly large holes of poverty in our state. And I also agree with PV. For companies needing technical workers, will the state provide them a similar subsidy to offset the new cost of government financed competition for labor.

The added payroll will generate roughly $3.5 million per year in income taxes for the state and roughly $1.5 million per year in state sales tax. If Faulkner County and Conway each have a 1 cent tax (ignoring hamburger taxes) they should each reap about a quarter million per year from the new workers assuming they do most of their shopping locally.

That's before performing any voodoo about "multipliers".

The sales tax breaks are almost certainly the base breaks offered all businesses so no story there and likely small dollars compared to the other elements of the deal.

A couple of points on the other side of that issue:

1. Conditions under which such a tax credit agreement can be granted are clearly laid out in the Arkansas statutes and AEDC regulations; the latitude involves the period of time over which (there is a maximum) the jobs will be created and how many will be created by certain dates, and other things of that nature. Ditto the percent-of-payroll rebate for job creation. The schedule at which HP plans to hire may be something it wants to keep quiet, for competitive reasons. Or because it can. The point is the portions of the agreement which may be kept private are, essentially, not the meat of the agreement, which is "how much and under what circumstances."

2. Clawbacks. Most iArkansas ncentive agreements with which I'm familiar have included clawback provisions for failure to meet investment or job creation goals. I would assume this one does the same.

3. If the company is getting a $200,000 per year property tax break, it is still paying some $100,000 a year, which is $100,000 a year more property taxes than are being paid on that property now.

I would suggest there IS, in fact, accountability all the way around on this project, and other incentive deals. It does not take intimate knowledge of the inner workings of the company's finances to see whether HP hires the people it says it will hire, pays what it says it will pay, in Conway. If it does, and there is no reason at this moment to expect it will not, Conway and the entire state of Arkansas will benefit. Congratulations to Conway and the AEDC team.

The problem with giving welfare to corporations is that they never learn to stand on their own. They get fat/lazy because their companies have come to depend on government handouts...rather than hard-working independent businesses. It's not good for em. We should intervene and help. Perhaps some government training programs that will give them refresher courses on that Market stuff and how to redirect resources now used to lobby/gain government handoutsto producing products that can compete in the marketplace.

What's the problem? That's what it means when you have a "Go To Guv" Max!! You should assign Doug Smith to write another blow job profile for the cover.

And then there's Mississippi. They gave away the farm to beat out poor Marion, Arkansas, to get that plant to assemble those giant V8 Tundra 4WD Toyota trucks. Even bought commercials in network prime time welcoming their buddies, Toyota, as "partners."

Then gas hits $4 and the Tupelo Tundra Train derails.

But the grinning "partner" commercials keep running.

Right, Zelda. And you know how government-created dependency cycles from generation to generation, the children of these corporate billionaires just can't make it on their own. So we have to pay taxes to take care of these lazy misfits.

So . . . it turns out the Conway jobs really ARE call-center jobs moved back onshore from Bangalore? Not that it makes a lot of difference; wages are wages.

But didn't I read early on in the run-up to the H-P announcement that these were going to be high-tech jobs along the lines of software-writer jobs or some other type that would take up the slack in the work force caused by Acxiom layoffs?

One factor that the head honchos at Acxiom better be considering -- hundreds and hundreds of Acxiom technically talented employees who live in Conway might now for the first time have a second viable employment opportunity without having to move. Acxiom's role as the sole choice has kept many Conway folks there. Now they might have an option -- assuming the pay is high enough. And you KNOW that hundreds of Alltel employees have been polishing their resumes and sending them on to the Conway Chamber, which is fielding them rather than HP. This deal is a huge, huge, HUGE feather in the cap of Brad Lacy, who heads up both the Conway Chamber and the Conway Development Corporation.

Right on, Max. It seems to me that corporate enterprise authorized by government charter, presumably to provide needs of the governed with their consent, has become the power to which government is supplicant instead of the people. Many of the same people who see it as okay, even desirable, for "big government" to share (socialize) the costs and risks that private capital must take to create an enterprise with success unceertain will scream bloody murder if the enterprise succeeds and government proposes to share in the profits by way of progressive taxation.

I don't know what the solution is, but there is something wrong with states such as Mississippi and Arkansas competing, elbowing each other, and bowing and scraping to win the favor of private legal persons (corporations), only to lose out (usually) to a state like Texas which is already a government of, by, and for corporations.

I think we should provide cash incentives for down-and-out Arkansans to relocate to Texas, Oklahoma, Missouri, Tennessee, and Louisiana. This would be an excellent way to increase the percentage of high-paying jobs in Arkansas while simultaneously reducing our long-term outlay on public schools, rural services, and entitlements. Probably decrease crime, too . . .

Kidding, of course.

I'm not necessarily an opponent of providing incentives to induce companies to come here, provide jobs, and add to the tax base--so long as those incentives are reasonable. But how can one determine what's reasonable when "terms of the agreement are private"?

We have a pretty stringent FOIA law in Arkansas. What specific exemption is being cited?

49th in per capita income.
49th in percentage of adults with a college degree.

Are we trying to make it to 50th or 48th? The choice is ours.

Be glad for the HP deal. You don't have to love it. You don't have to agree with all the details. It may not be pretty. You may have to hold your nose a bit. Deals have to be done. Economic development for Arkansas is number one, two and three priority, And it can not be at the pace it has been done here in the past. It is not risk/free. But it s not an option.

What wonderful logic! "It's not an option". That's it, huh? Just declare people who disagree with you to be out of bounds.

I'm afraid it is...we taxpayers can choose not to re-elect politicians who sign these sorts of secretive deals. We can protest and call them on their BS.

Everything begins with choice.

I'm with you, IABL1969. But somewhat like I said yesterday, we negative, suspicious Arkies would complain if FedEx decided to return its total operation with thousands of new jobs to Little Rock without incentives of any kind having been given. We are a paranoid, foolish lot. Always have been. And I've come to the conclusion that we always will be. Really sad.

aerotive

I'm not saying the secrecy should be part of the deals. I've posted elsewhere here or on the other related thread today that I was dead against that. I'm saying deals have to be done, economic development deals. That is not an option. The world is moving at light speed. You are either going backward as a state or moving forward. There is no staying in place. As a state, a region, you have to be in the game. You have to get in the trenches. you have to get dirty. You have to work with what you've got. And you have to go with your best insights and knowledge and act. And you learn and then you do it all over again, hopefully better each time. It will never be perfect. But you have to go make it happen. That is not an option.